It’s 8:00 a.m. August 18th 2030 and I’m checking my email. Yet another offer in my inbox to sell us their food company and convert it into a co-op. Of course they want to sell to us. We can pay well for their business and it’s in the seller’s interest to get a good exit. We pay well because we have the expertise and skilled labor to add significantly more value to any food businesses we buy and convert. Everyone wins, the seller gets a good exit, our cooperative get’s a viable business that we can apply our expertise to significantly increase the company’s value ( and increase significantly more than we paid). Our cooperators get meaningful and secure work and growth in equity. Once the word got out how much value our business could add to a food business, we didn’t have any trouble sourcing good deals to expand and lenders came out of the woodwork.
We make it look easy, but it wasn’t always so. It took years of hard work, trial and error, and hand wringing to make this a reality. It all started with our original direct to consumer meat marketing business. At first we struggled, but after some suffering, we realized that our in-stock rate and speed of delivery was a key factor in improving our business. In an environment where our customers expected delivery in one or two days and 100% availability, we were able to offer two day delivery to 99% of the US while keeping our products in stock 100% of the time. We did this without any significant expansion of inventory. Keeping products in stock ended up increasing profitability by more than 100%. Our accountant couldn’t believe it. She thought we might be doing something illegal. It was just common sense we said.
The next step was to look back at our manufacturing. We spent time investigating the constraining factors in our operation. Turns out, we weren’t maximizing our smokehouses (our business constraint) and we exposed some significant capacity. That significant capacity allowed us to sell more products and generate more contribution margin … and it turns out, the wasted capacity we uncovered in our operation existed in many meat processing (and food processing) plants across the country. Every plant was different, but every plant had a constraint and if we could identify and exploit that constraint, we could significantly increase the profitability of the business.
In the end, we were able to develop a checklist of questions to ask before we buy each business. With these questions, we could figure the potential increase in profitability if we applied our management solutions to each potential acquisition. Suddenly the opportunities were all around us. The only thing missing was the right people to help us expand.
So we developed a training program that could rapidly train new managers and new cooperators, which allowed us to greatly expand the business. Our training systems were so robust that we could find and train good leaders from all walks of life. At this point, because we were able to train effectively, there was no shortage of great people. If anything, we needed to work harder to get this abundance of great people the great career opportunities they deserved. At this point, we were able to rinse and repeat: Find the Deal, improve the business with our proven methods, generate some cash, train the people, then do it all over again. Today no one in our industry questions what a coop is and whether it is something that works. It is considered the gold standard for business governance, management, and workers.
We’re not the only ones either. I recently read an article in Fortune, a large coop was looking to build a new headquarters. Municipalities were competing to bring them to their town. Seems like everyone recognizes that coops are the best form of business, so much so, that towns are competing to bring them into their area. That only used to happen for big corporate outfits. The coops time has truly come.