"From what we have seen from empirical studies, they [co-operatives] seem to be really able to adapt to different contexts," he says. He warns, however, that the co-operative movement has to be prepared to move with the times and be alert for new business opportunities: "We mustn’t just repeat the same recipes, the same models as in the past."
More precisely, Salvatori talks about the possibilities for co-operatives in areas such as social care and personal services, healthcare, education and renewable energy generation – often areas of the economy which are being exited by public sector bodies under pressure to reduce public spending. Salvatori’s own country, Italy, has seen considerable growth recently in what are known as social co-operatives, delivering services to groups such as the disabled and long-term unemployed. More broadly there is growing interest internationally in the so-called social and solidarity economy (SSE), of which co-operatives comprise a major part. SSE was the theme of the January European conference in Strasbourg, previously reported on in this forum.
In Britain, the ‘new ventures’ panel established by Co-operatives UK suggested more than ten years ago that the movement should consider entering potentially promising sectors such as childcare, old people’s homes provision and energy, areas where co-operative values could be directly relevant. Midcounties Co-operative has since successfully built up a chain of children’s nurseries and launched the national energy supplier Co-operative Energy. It has withdrawn from an experiment in old people’s care homes, however, on business grounds.
Midcounties’ ventures, and the parallel move by the Co-operative Groupinto legal services, are examples of established co-operatives moving into other sectors. If this can represent the fast track to growth, the more traditional co-operative approach adopts a steady-as-she-goes route of building a new venture through reinvesting profits. This has been the approach chosen by the telephone services provider Phone Co-operative. First established fifteen years ago, it has gradually built up to its present £10m turnover, last year making a record £414,000 profit for its 10,000+ members. The Phone Co-op’s story shows that new consumer co-op businesses can both be got off the ground and also be successfully grown.
Nevertheless the Phone Co-op remains a tiny operator in an industry dominated by giant non co-operative firms. Not every recent foray into new business sectors works out, either. The workers’ co-operative Poptel, set up in 1983, was an innovative early IT and internet service provider with at its peak over fifty employees. However it found itself starved of the venture capital it needed to break through to the big time and was eventually forced to demutualise and, later, cease trading.
If start-up capital for co-ops can these days be found with relative ease from specialist lenders such as Co-operative and Community Finance, there remains a potential issue facing established co-operatives hoping to scale up their operations once they have passed the test of the first few years. It’s a challenge which Gianluca Salvatori understands very well: “At an early stage, co-operatives can find more difficulty than traditional companies in finding capital. It is difficult to find the equivalent of venture capital and other forms of capital like that, ” he explains. But he argues that by contrast in the longer-term – freed of short-term shareholder concerns with returns – co-operatives can have more flexibility to reinvest in business development and growth.