More on Profits and People

In Ben's post on "People not Profit" there is a comment by a member who raised some good points, and asked some good questions, and to which I would like to respond. She writes:

First, haven’t we been making some profits this last year? Does this not count because it’s going to paying old debts?

We are indeed running a profit for this year. It by no means covers the unpaid tax debt of 05/06; we had to take out a loan to cover that debt. By "running at a profit" I mean "slightly more money is coming in from revenues than going out to cover expenses." Very slightly. About 1.5%. It's makes extremely good business sense to run at a slight operating profit for a consumer co-op. Retail sales are a volatile business. If we attempt to run at exactly zero profit, and we have a bad couple weeks of sales, we could end up unable to pay our bills. By running a slight profit, we are able to build a running "rainy-day-fund" which helps keep us in the black. But there's a more important issue here. My understanding of the objections most people have about "profiit" is related to the question "Who profits?" Let's say sales are healthy (they are at the moment!) and stay that way for a year. Let's say also that the co-op has no debts to repay. We can then make decisions about things that really need fixin', like broken cooler doors and bulk bins, and re-invest that profit into the store. Or we can purchase new equipment to provide new services. Or, if there's simply no place to spend the money to help the store, and we have plenty saved for the next rainy day, the money can go back to the members in the form of patronage dividends (one of the legal advantages of the cooperative structure.) The important point here is that no private individual profits off of food sales, as is true at non-cooperative grocery stores. Instead, the entire co-op profits. And in the end, that means the community profits. The money funds no trips to Bermuda. It builds a better store. The "People not profits" idea has its heart in the right place, but uses a word that's loaded with multiple meanings, and elides a consideration of how businesses work. So maybe the "People not profits" mantra should become "Bulk bins not Bermuda?" I don't know. Another member point:

Second, it’s a bit disingenuous to not acknowledge that part of the reason prices are higher is that overhead is higher due to hiring managers and other paid workers where the coop did not have so many in the past.

It is true that the co-op spends more on management and staff than it used to. I think that the overwhelming response to that change has been positive, as reflected in comments by members to the board, in the survey results, in the growth of our membership, and the increase in sales. But I want to take a moment to reflect on where we would be without management right now. We would be several months away from closing our doors for good. The co-op spent about a decade talking about how to relocate under its previous form of management (or more appropriately, under its lack of management.) Everyone wanted to do it, but no one knew how, and the structure wasn't in place to make the decisions necessary to make it happen. In the two years since we moved to a management structure whereby managers make decisions under board oversight, and in particular in the year since we hired our first General Manager, we've gone from musing to being ready to move. And we are now in a position of no longer being offered continued tenancy in this space. I know with confidence, based on the immense amount of work that has taken place to prepare for this move and based on my experience as a volunteer and a paid staff member under the previous structure, that the co-op would have closed its doors in the summer of next year without empowered management. The final point to which I would like to respond:

We need to have more discussion about more specifics, like the profit question, that people are unhappy about.

I agree wholeheartedly. The question is: how? Engaging the membership in dialogue is hard, and we're constantly looking for better ways to do that. For example, Jacqueline held a forum a while back, heavily advertised, with the sole topic of discussing the profit question and pricing. She prepared a document on where each cent of your dollar goes each time you shop, and on how prices are set. She came ready to listen and to answer questions. I believe 5 people showed up, and Jacqueline and I were two of them. The board and management will continue to engage the membership on issues such as these. In fact, it's the primary job of the board to do so, and that's why this blog exists, and why I'm spending my Saturday morning posting to it! I hope my comments help further understanding on this issue, but I also hope the discussion doesn't stop here. We'll be having a membership-wide strategic visioning process in January, and it's my hope that we can get a large turnout of members for that day-long event, and that together we can do some soul-searching and, well, visioning on how to best proceed in the future. I'd like to thank MJ for her comments, and encourage others to use this forum to add to the discussion. Peace, -Clint CGFC Board Chair