Transitions are the truest test of an organization’s strength. Though the Board and management of Common Ground have known (even before the last expansion) that our co-op would eventually need to expand to fulfill its mission, and even though we have been doing a lot of work to understand how expansion impacts co-ops and their communities, the rubber has really started to hit the road this past month.
Your General Manager Jacqueline Hannah has been working closely with her staff and a variety of consultants for months to assess the feasibility of an expansion into our adjoining space, and to determine the best possible approach to this project. Her work has involved detailed analysis of the current and projected financial situation at Common Ground, of the market we currently serve and how it would change with expansion, the possible approaches for raising the necessary capital, the design features and limitations of the new space, among many other details. The Board has been working with consultants as well, learning about how to assess feasibility of an expansion, how to conduct proper oversight of an expansion project once it has started, and how to communicate with management, the owners, and the public as the project evolves.
In April we will make the decision, based on Jacqueline’s proposal, on whether to go forward with an expansion. Just three years ago our Board was in the process of making this same commitment in a tiny room across from the store in the basement of 610 E Springfield. We have made great strides together since then, but as stewards of our co-op we must answer the same types of questions we did then:
- Financial feasibility: Can we adequately finance an expansion and generate enough sales afterward to pay back our debts? The Board has been studying the financial pro-forma developed by Jacqueline and Cooperative Development Services consultants, with an eye toward key indicators such as our debt to equity, cash asset, and debt coverage ratios, and toward how those indicators change over the key years immediately following expansion. This type of analysis was crucial in our relocation to our current space, and we’re relying heavily upon it again.
- Market feasibility: Is there a need for a larger Co-op, and will the community support a larger store with its grocery dollars? We’ve been looking at the details of our own phenomenal growth in sales and equity, and also at the marketing study Jacqueline and her consultants completed recently, which gives us predictions on how many more people we can expect to serve, and in what new ways, in a larger space.
- Design feasibility: Can a larger Co-op work in this space, and what is the best possible use of the space available to us? Jacqueline has been working with a store designer and builders to construct a proposal for the space that best meets our current needs and those of the coming years.
- Internal readiness: Can we manage this growth and meet the challenges entailed, both operationally and in terms of governance by the Board? Can we successfully execute the transition into a larger space? What weaknesses and strengths do we have in our organization, and what risks and opportunities do those predict? Visiting consultants have provided good insight into these questions, and a lot of honest self examination and reporting by the Board and management has as well.
- Owner support: Is this what our owners want, and will they support it through patronage, and critically, through the owner loans that will be necessary to fund this project? This means looking at the feedback we’ve gotten in surveys, through comment cards and email, through round-table discussions with owners, from staff interactions with shoppers, and from our own Board members talking to owners in the Co-op on Saturdays, to determine whether the Co-op as a whole is ready (and eager) for growth. Perhaps most importantly, this means looking at what a bigger Co-op means in terms of the Co-op’s Ends, the value-based goal statements that guide our operation. The Board has also been doing a lot of work over recent months on this issue, by communicating with co-ops across the country that have undergone recent expansions, and understanding how this impacted their missions and their communities.
I have confidence that we will be able to make an informed decision on behalf of the owners, and I have no doubt that the design and implementation of a plan for expansion would be in capable hands with Jacqueline and her team leading the way and the Board providing support and oversight. It is going to be a very busy spring!
Written By: Clint Popetz