Mentoring Startups

Two years ago food cooperators made a bold pronouncement—we will help launch at least 200 new co-op stores over the next 10 years—bringing the total number of food co-ops nationwide up to 500 stores. In the past two years, a lot of energy has been put into marshalling resources and creating an infrastructure to better support the creation of new food co-ops, and this has been a transformation welcomed by cooperators in many areas of co-op development.

The goal became the name of a new project: Food Co-op 500. An organization devoted to enhancing current resources for food co-op development, Food Co-op 500 was formed as a result of efforts by Co-op Development Services (CDS), National Cooperative Bank (NCB), and the National Cooperative Grocers Association (NCGA).

As part of the work in these beginning stages, a groundswell of questions for existing food cooperators has also emerged:

What and how is the best way for current food co-op operations to support the creation of new co-ops?

What is the proper level of involvement or leverage necessary from existing co-ops?

What is the function of a mentor, and how can leadership from existing
co-ops be used most effectively?

This report looks at the relationships of various co-op startups with existing co-ops around the country. By doing so we begin to get a sense of the triumphs and challenges to both current and new co-ops working more closely together and we gain evidence of what needs to be accomplished by different stakeholders in order to meet the goal of 500 food co-ops by 2015.

We know there was a dearth of startups for many years for at least one key reason: isolated groups often had to rely on the patience or generosity of whichever co-op was nearby, or whoever would give them the time of day. Existing co-ops did what they could to help, but their assistance could be inconsistent because they had their own stores to run. The whole process was daunting for everyone. A lucky few did emerge through sheer willpower and talent, most notably Weaver Street Market in Carrboro, N.C. in 1988. There was no template for helping startup co-ops at that time.

The development of Food Co-op 500 has helped facilitate the process of getting startup groups to resources faster. It has given existing co-ops a place to send people for contacts and financial help. (For background, see “Meet in the Middle,” CG #128, January-February 2007.)

However, the methods existing food co-ops use to mentor or assist startups have, in large part, yet to be determined. The good news is that existing co-ops are contributing a lot to the development of these groups even without formal connections. The opportunity for current co-ops is to better define their role in new co-op development, and how to strategically manage resources and expectations.

Need for mentoring startups
Even with all the progress that’s been made in organizing resources on behalf of startups, some of the same issues that have prevented good mentorship relationships are still prevalent. Time and money are always top concerns, but increased competition has added a new and challenging dynamic. “Every store out there is recognizing the pressure of competition,” said Stuart Reid, food co-op development specialist with Food Co-op 500. Competition may make it even more difficult to help a startup. But for the food co-op sector to grow, individual cooperatives have a role to play helping startups confront the same challenges.

The challenge for the sector is how to protect its current assets while supporting the expansion of other stores in the marketplace. Existing co-ops agree in principle to the philosophical underpinnings of cooperation among co-ops, but realistically feel squeezed by the resource conundrum of building their own while helping others who need a lot of support.

Marcie Gardner from Chatham Real Food Market, a new co-op in Chatham, New York, said that that group doesn’t have the luxury of entering the market and learning as they go. Like a lot of startups, they feel like they have to meet high expectations in an atmosphere of urgency. Gardner said, “We have to open full-blown. The more information and advice and expertise we can glean from those who came before us, the better. The world can’t afford to wait 25 or 30 years for us to develop. We have to be here for our communities as soon as possible.”

James Watts, operations manager at Weaver St. Market, said, “Individual co-ops can’t grow the movement as fast, and we need startups in the movement. The problem with that is the retail food industry is competitive and precise. Selling food is not complex, but requires diligence and consistency—stuff startups are not always good at.” He said that to mitigate the challenges to helping startups, identifying good opportunities for development is as important as leveraging the mentor relationship of an existing co-op.

This can be doubly challenging because co-ops are not ordinary retailers in search of marketplace potential. In order for a co-op to garner the necessary support to do business, a committed group of people needs to step forward. For some communities, local ownership could be the only way for them to have a grocery store, but some locations have built-in limitations that better mentoring or advice could help them avoid or overcome.

Looking at specific case studies of existing co-ops and their closely related startups, we can see how mentoring as a tool for helping build new cooperatives is working now and consider next steps for developing these relationships further.

Bloomingfoods and Lost River in Indiana

In southern Indiana, Bloomingfoods Market and Deli (a 31-year operation with three locations) has been mentoring Lost River Community Co-op, a startup in Paoli, about 70 miles away, that is set to open this fall. George Huntington, general manager of Bloomingfoods, was particularly aware of the challenges to his own co-op as they assisted another. Bloomingfoods is opening its third location in June 2007.

Huntington said it “wasn’t ideal” for Bloomingfoods to be supporting a startup concurrent with its own expansion, but he thinks it was easier due to the existence of Food Co-op 500. Rather than one co-op trying to be everything to a startup, the responsibility can be spread around, as well as focused on providing the right expertise. “Our ability to mentor people has been enhanced by Food Co-op 500 providing resources so we don’t have to reinvent the wheel. I can send them along, and then they can call me back if they need to, so the burden doesn’t fall on any one co-op, organization, or individual. It makes mentoring easier.”

Bloomingfoods has given Lost River assistance with governance, organizing, and operations that covered a wide spectrum of staff and board training and activities. From Lost River’s perspective, the assistance from Bloomingfoods was invaluable. Debbie Turner, a board member and Lost River’s project manager, said that especially pivotal in their development was how Bloomingfoods staff helped link them to “the outside co-op world” and also served as presenters at community meetings as Lost River became seriously organized.

Huntington recognizes that not every co-op has the resources to assist another the way they’d like to, but he believes what Bloomingfoods has given Lost River will be returned tenfold. “If I can donate three hours of my time to save someone months of head scratching—that’s good.” Lost River is also pleased to able to return the favor. It turned out that Bloomingfoods’ concurrent expansion activity was win-win for both co-ops. Lost River learned more about how to open its own co-op as it helped Bloomingfoods set up and stock its new location.

Weaver Street Market and Chatham Marketplace in North Carolina

In Pittsboro, N.C., with a population of 3,000 people, Chatham Marketplace has been open over a year now. It’s been long enough that their customers have stopped comparing them to Weaver Street Market, which has two locations and a restaurant in nearby Carrboro and Chapel Hill. Mary DeMare, Chatham’s general manager, feels like the new co-op is just starting to come into its own identity in the community. “We’re getting there,” she said, and although they have lost money this year (as they expected), sales are on an upward trend, and they have recruited over 1,300 members.

Weaver Street has helped Chatham Marketplace in much the same way that Bloomingfoods did for Lost River, providing advice and assistance with governance, organizing and operations. However, geographic proximity, in some ways, has made their relationship more complex. To some extent, the two co-ops share the market built by Weaver Street Market.

The Pittsboro community wanted a co-op, and Weaver Street didn’t want to expand there. For Weaver Street, it wasn’t that it was an inferior location, but there were other opportunities for their co-op that were better. According to Watts it was a “very interesting conundrum.”

As Chatham Marketplace carves out its own niche, their success will be a testament to their ability to building community in a challenging market, and they recognize Weaver Street’s contribution to helping them grow. “Every conversation was useful and gave us a different perspective,” DeMare said, and that has helped bring up their confidence that the co-op will succeed.

Ashland Food Co-op and Medford Market Co-op in Oregon

In western Oregon, Ashland Food Co-op and the startup Medford Market Co-op share similarities to Weaver Street and Chatham Marketplace in that they are geographically close. They also share a market, but there are two towns in the 15-mile stretch between them, creating somewhat of a geographic boundary.

Ashland Food Co-op also had conducted a feasibility study as part of a plan to look at how they could potentially grow, and ultimately decided not to plan a location in Medford. For years, people in Medford said they wanted a food co-op, and Annie Hoy, Ashland’s outreach and owner services manager started a list of those people who came to her with that feedback. When people in Medford said they wanted to look into starting their own co-op, Ashland Food Co-op was ready to help them bring people together.

Ashland’s board members, general manager, and Hoy attended initial community meetings and served as inspiration and a sounding board. They also shared their market study, helped with legal issues, offered advice on hiring a general manager and finding a site, and also gave them a $10,000 grant.

After the first burst of organizing activity, however, the Medford group cast about for how to focus the energy of their community, and that was something they had to do for themselves. “It was important for Medford to have its own grassroots,” said Hoy. “That way the community owns it. It’s not like they were ‘infiltrated’ by Ashland.”

“The challenge was how to harness community interest,” said Velda Welch, president of the Medford Market board. “It took a lot of talking.” Eventually, the Medford group hooked up with Food Co-op 500 and got Seed and Sprout fund dollars, but from Welch’s perspective she wished that would have happened sooner. “In the long run it might have affected the outcome sooner if we had realized we had that resource,” she said. Medford Market is planning to open its store this fall.

Strategically strengthening the mentor relationship

As we examine these case study mentor relationships, we see that a mix of resources was provided. When looked at in aggregate, the existing co-ops put forth quite a panoply of support and services separate from those through Food Co-op 500. On the financial end, co-ops gave money and shared site studies as well as legal and consultant fees. They helped the startups with networking, not only for their own communities, but with connecting to the greater co-op movement. Operationally, existing co-ops helped with business planning, financials, hiring a general manager, finding a site, and offering experienced staff and training materials.

Taken as a whole, most areas of cooperation and retailing were touched on, and those who helped were most generous. But were enough resources given at the right time by the right co-op or individual? There’s a lingering sense from both startups and existing co-ops that there wasn’t. That’s why a deeper consideration of what it means to be a mentoring co-op, and how that development role can be strategically planned, is one of the sector’s next steps.

Annie Hoy said Ashland Food Co-op would do anything to help Medford Market succeed. Certainly most cooperators would feel that way about any startup. But as she said about their role in helping them, “We’re trusting that the process is working for them.”

Last year, Food Co-op 500 formally adopted a development model that combines the four cornerstones of vision, talent, capital and systems to be used to implement three stages of development: organizing, feasibility and planning, and then implementation. Through Food Co-op 500, startup groups are monitored throughout the process, so existing co-ops do feel a little more secure in knowing startups are getting the help they need.

However, yet to be developed is a similar plan or model for how existing food co-ops can best support startups systematically for the purpose of growing the whole sector. James Watts at Weaver Street said he’s concerned that startups may encounter a lot of different beliefs or practices that may be in conflict when they start interfacing with a variety of co-ops. “The challenge when mentoring is to be clear about what you think are best practices and be consistent with your advice.”

Stuart Reid of Food Co-op 500 said, “Food co-ops are already acting as committed partners,” through some of their current collaborative activities. “Getting to startup groups right away with good practices will get them to be flourishing stores faster. A big piece of that is the mentoring relationship,” he said.

Strategic mentoring relationships are a critical part of food co-ops successfully replicating around the country.

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Patricia Cumbie has written many articles on cooperative development and is editor of “The Mix,” newsletter of the Twin Cities Natural Food Co-ops ([email protected]).