Co-operatives more resilient than business start-ups

New co-operatives are almost twice as likely as start-up companies to survive their first five years, according to a new study.

The UK Co-operative Economy 2018, which has been published today (26 June) by trade body Co-operatives UK, reveals that just 44% of companies survive the difficult early years while 80% of co-operatives are still going strong.

According to the report, after the first year 93% of businesses remain in existence.

There is a marked drop to 76% after the second year followed by another significant fall to 61% after year three.

Co-operatives are far more resilient with a survival rate of 96%, 91% and 87% after the first, second and third years of existence respectively.

The report also reveals that 7,226 independent co-operatives operate across the UK, ranging from well-known retailers like The Co-op and John Lewis to farmer-owned businesses, community sports clubs and web developers.

Their combined turnover hit a five-year high of more than £36.1 billion in 2017, while a record 13 million people now own and have a say in how the UK’s co-ops operate.

‘We know co-operatives are resilient and sustainable businesses and these incredible stats reinforce that view,’ said Co-operatives UK secretary general, Ed Mayo.

‘It begs the question why are there not more co-operatives?’

Mr Mayo added: “It’s no surprise there’s a prevalence of empty offices and boarded up shops in high streets across the UK’s towns and cities when more than half of all companies fail in their early years.”

Co-operatives enjoy strong sector support which today has been given a boost through the announcement of extension funding for The Hive – a specialist business support programme for new and existing co-ops – until the end of 2020.

A £1 million programme spread over three years, the Hive was launched in spring 2016. Funded by the Co-operative Bank and delivered by Co-operatives UK, it has provided over 500 organisations with specialist support and training.

By 2020 it is projected that the Hive will have supported 1200 groups and co-ops with support worth £1.3m. The programme will also have helped co-ops raise £6.5m of finance through community shares – enabling communities to take control of valued local assets that otherwise would have been lost.

‘We welcome the additional funding from the Co-operative Bank to extend this vital support for co-ops in the crucial early years of operation,’ added Mr Mayo.

‘Here’s an option that gives businesses twice as much chance of succeeding and in today’s climate, this is precisely what the economy needs, but where is the wider support? We want to see the co-op business model promoted by government and professional services, in the education sector and even more vocally by co-operatives themselves.

‘If we want to see a more successful economy, where people have a say in decision-making and receive a fair share then we need more co-operatives.’