Lack of competent management. The day to day operation of the co-op must be left in the hands of qualified management. Although cooperatives by nature are collaborative entities, a co-op s success depends more on the manager than on any other individual. It is equally important for the board to compensate a manager adequately, using performance incentives if possible, and to establish clear goals and objectives for management. Failure to identify and minimize risks.
Risks are inherent in any new business.
However, the co-op s risks can be minimized by carefully studying the competition, pertinent government regulations, environmental issues, big picture economic forces, and industry trends. Lack of adequate financing. Most new businesses are underfinanced. Reasons for this include faulty assumptions in the business plan, inefficiencies in start-up, and a variety of delays. Adequate financing, from both members and lending institutions, is necessary to survive the first few months of operations when most of these issues arise.