Community Business

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Community Business

The term refers to situations in which communities form community companies to address difficulties they encounter jointly. There are numerous forms of community businesses in which trade products and services. Locally owned and operated businesses such as grocery stores, transportation hubs, farms, pubs, gardens, and community centers can all be considered community businesses. Businesses are increasingly being used by local communities to regain control over their circumstances. They are all accountable to their community, and the revenues they make have a positive effect on the local economy.

Community businesses are committed to improving society positively through sustainable commerce. All profits from a community-owned business are reinvested in the local community. Moreover, they are intended to help a particular local geographic region. Community businesses assist in improving places. Starting with the preservation of local shops and the creation of leisure facilities, to providing training opportunities for local people and aiding in the construction of affordable housing, they have taken a wide range of actions to improve the quality of life in the communities they serves.

Similarities exist between community businesses and place-based charitable trusts that manage assets. However, a community business is held accountable to the community it serves, which could mean that local residents are involved in official participation or even legal ownership.

There are many different kinds of community businesses. Locally entrenched entities that are accountable to the community, trade for community gain, and have a broad community influence are particularly influential in enabling citizens to improve their local communities.

Characteristics of Community Business

  • Local origins: A business founded by locals that will assist the surrounding community.
  • Accountability to the local: The community has a genuine influence in the operation of the business.
  • Benefit to the local: Local businesses supply goods and services in and around their community.
  • Broad impact on the community: Community businesses interact with a number of different organizations in their community and respond to a variety of community needs. They may have a particular focus on a disadvantaged population or provide broader community support.


The concept of community business is associated with the concept of community ownership and, more generally, co-operative ownership structures.

Community Ownership

The term refers to the act or degree of ownership and responsibility adopted by the community in relation to any initiatives or activities conducted in the community. It is also the act of controlling and being accountable for any projects or programs that would ultimately empower the community.

Traditionally, community ownership has been portrayed as a mechanism for achieving a variety of high-level government goals, including social justice, social cohesion, and community empowerment. There are arguments that community ownership of infrastructure projects, such as dams and irrigation, increases the community's response to its requirements and increases the community's appreciation of the initiatives.

Community ownership can generate radical change because it alters the mindset of individuals. For instance, this gives the chance for residents to shop at their own store, as they are no longer required to choose between leaving town to visit a large store or purchasing locally.

Advantages of Community Ownership

  • It promotes accountability and responsibility among community members.
  • It encourages cooperation, coordination, and collaboration among stakeholders and community members.
  • It enhances community leadership and empowerment.
  • It encourages new ideas and strategies by employing a bottom-up strategy.
  • It adapts to the demands of diverse populations.
  • It fosters community engagement.

Community-Owned Businesses

Community-Owned Businesses are community-managed assets or organizations that are owned and governed through certain representational processes that allow a community to influence their operation or use and reap the advantages resulting from such involvement. A COB is a business that is owned and operated by local residents. There are limits on the number of shares each person can buy in order to prevent someone from wielding too much power. Moreover, community-owned stores have the added advantage of favoring the purchase of local goods (and can include such preferences into their mission statements), which redistributes funds to other local businesses and improves the local economy.

Community-owned businesses (COBs) encompass a variety of business forms and structures that are funded and held exclusively by local residents. Locally significant unmet needs that are unlikely to be supplied successfully by a single entrepreneur are frequently the impetus for the development of such organizations.

COBs offer a good prospect for urban neighborhoods, yet, they have begun most commonly in rural regions where giant chain supermarkets or "superstores" have driven out small-town grocers or merchants, leaving locals with nowhere to purchase essentials. Unsurprisingly, the majority of these stores have arisen in states where winter storms can isolate inhabitants, cause dangerous shortages, and force dangerous road travel.

Structures of COBs

According to Bloom, there are four major structures of COBs:

  1. Cooperative: a business owned and operated collectively for the benefit of its members.
  2. Community-owned corporation: a for-profit organization incorporating social entrepreneurial ideals.
  3. Small ownership group: small, ad hoc investors that form a partnership or closely-held corporation to finance and/or run a business.
  4. Investment fund: a community-based fund that invests in local businesses through debt or equity.

Cooperatives

A cooperative is an independent association of people who come together to achieve their basic economic, social, and cultural needs and ambitions through a democratically owned and controlled enterprise. It is common for cooperatives to be incorporated as non-profit businesses, but they frequently pay surplus funds to its members in the form of "patronage dividends." Each member of a cooperative has an equal voice in the decision-making process.

  • An example for a cooperative is the International Cooperative Alliance; an organization that promotes and supports the global cooperative movement.
  • An example of a cooperative business is The Coop created by Harvard students in 1882, to sell textbooks.

Community-Owned Corporations

Community-owned corporations are not cooperatives, but rather community-owned for-profit businesses. Anyone may purchase shares in the corporation, and individuals may hold varied numbers of shares.

  • An example is Family Matters (Malta, MT), a community-owned family clothing store.

Small Owner Groups

These forms of COB whether partnerships or closely held corporations are the most flexible and adaptive. They are capable of acting rapidly and with minimal effort. Small-group investing reduces the risk for each individual investor, making it acceptable to them. A company can raise capital reasonably fast if the members of the group contribute money as one of their primary resources. Additionally, due to the absolute control provided by a small ownership group and owners' interest in the business, they are likely to be involved in, and support, day-to-day operational decisions, which helps avoid "owner-agent" issues.

  • Examples of businesses managed and capitalized by a small group include restaurants.

Investment Funds

The majority of community-owned businesses are funded through the sale of shares, such as in a cooperative (where all shares are equal and each member owns one) or a community-owned corporation (where individuals may hold several shares).

An investment fund gives venture funds (equity) or loans (debt) to an entrepreneur. Contrasting typical venture capital, community-development investment funds are less concerned with large profits and more concerned with inspiring new firms – particularly innovative business concepts that cannot obtain finance (or sufficient funds) through standard methods. Instead of directly owning and operating a business, this mechanism enables a community to invest in one or more enterprises – and, possibly, to reinvest the capital over time in further new businesses. Community-based enterprises can also use crowdlending platforms (e.g., VirginMoney) to obtain debt funding from friends, family, and other non-bank investors.

  • An example is Clean Yield Asset Management located in Greensboro, Vermont, assists local private investors in making equity investments in Vermont-based local startups.

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