Outline - Whitman



Table of Contents

1. The Business

1. Description of business

2. Marketing

1. Product mix

2. Competition analysis

3. Marketing

3. Operating procedures / Structure

1. Cooperative structure

2. ASWC Relationship

3. Operational options

4. Personnel

1. Volunteers

2. General manager

3. Work-study

4. Estimated labor costs

5. Location requirements

6. Business insurance

7. Bank loans

2. Financial Data

1. Capital equipment and supply list

2. Balance sheet

3. Break-even analysis

4. Profit and loss statements

3. Three Year Summary

4. Supporting Documents

1. Implementation timeline

1. Implementation of vision

2. List of licenses and other legal documents

1. The Business

1. Description of Business

The Whitman Community Food Co-op will be a venue for members of the Whitman and Walla Walla communities to collaborate and invest in sustainable living. Its cooperative structure will work in concert with its mission. By providing goods that are environmentally sustainable and responsibly purchased, it will supply a variety of services intended to nourish the minds, bodies, and souls of its customers. A healthy individual provides the basis for a healthy community, which in turn leads to a healthy world.

Mission: We strive to unite our community by providing socially responsible goods that are environmentally sustainable and responsibly purchased. We believe that through the creation of a financially self-sustaining cooperative food store, we can promote these values while making healthy, quality goods and services available to all.

Values: We value cooperation with our customers, the community, and the planet. As such, our products will be environmentally sustainable, organic, and locally produced whenever possible. Our fiscally and ethically responsible business practices will embody our cooperative values to encourage informed consumer choices, decrease costs, and promote financial stability and sustainability.

The co-op will provide:

• A wide range of organic, local, fair trade, and environmentally sustainable products;

• An intersection of community, cooperation, and social activism;

• Community meeting space, consumer awareness information, and art displays;

• An interactive medium for education in concert with Whitman’s educational mission.

As a non-profit cooperative business, it will be owned collectively by its members and run by an elected Board of Directors in a manner that is transparent, inclusive, and fiscally responsible. Its membership will include from 200 to 2,000 people from the Walla Walla and Whitman community. Though anyone may shop there, members will receive a discount and share in financial performance.

The feasibility study included an extensive surveying of buying needs, analysis, and research into cooperative food stores of various sizes and ages.  The results have informed this Business Plan and concluded that the Whitman Community Cooperative Food Store is feasible.

To be successful, this business entity will be:

• Organized as a non-profit cooperative;

• In a leased location close to the Whitman campus of 800 to 1200 square feet;

• Governed by a Board balanced between students and community;

• Utilizing $125,630 in starting capital from ASWC, investors, members, and grants;

• Managed by an experienced General Manager;

• Who supervises 2 Full-Time Equivalents of Work-Study employees and Volunteers;

• That is Open 6 days a week, 6.5 hours per day;

• Offering an inventory that is about 70% unique in the local market;

• At prices competitive on those items that are available elsewhere in the local market;

• With an inventory value of about $40,000 at any given time, turning 12-14 times per year;

• And also managing a responsive Special Order system (eventually online);

• With Break-Even performance at about $574,300 Gross Revenue with 25% Gross Margin;

• And the potential for Net Retained Earnings in the third year of  $12,000 to $26,000.

1.2 Marketing

1.2.1 Product Mix

Our product mix includes approximately $40,000 worth of goods divided into various categories: bulk, frozen, refrigerated, and grocery foods, personal care and non-food items ("green" cleaning items, etc.), and a small selection of supplements. The distribution of these products is shown below:

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Based on the estimates of food-business consultants, we expect .5-.7 turns of inventory per month initially, with these figures growing to over 1 turn per month.

Various methods are also being considered to supply local produce when available. We recognize the consumer desire for fresh produce and hope to satisfy it responsibly. As such, cost and loyalty to our goals of providing “environmental sustainable, organic, and local produce whenever possible” will guide produce inventory decisions. Finally, the co-op may carry baked goods and other products available from local businesses that share the co-op’s values.

A detailed inventory list (100+ page Excel document) is available upon request.)

1.2.2 Competition Analysis

Members of the Task Force compiled the competition analysis to assess if the co-op would fill a unique niche in the Walla Walla natural foods market. It includes Albertson’s, Andy’s, Rose Street and Plaza Safeway locations, Super 1 Food, and the Health Cottage. The following criteria were evaluated:

• Product mix

• Special order options

• Delivery options

• Ambience

• Convenience/location

• Hours

• Distributors

• Case price discount

• Percentage of organic food

• Customers/day or week

• Sales/day or week

• Square footage of store

• Percentage of bulk products

• Number of employees

The results indicate that the co-op’s proposed product mix is primarily different than any of these stores, none of which carry more than 25% organic products. On almost all comparable products, the co-op’s prices can be competitive. The co-op also has the opportunity to differentiate itself with a more “hip” ambiance that features its values. A location close to the Whitman campus would also offer a huge competitive advantage in increased convenience for Whitman students and faculty.

The co-op’s larger potential competitors, namely Safeway, Albertsons, and Super 1 Foods have an advantage in hours, total inventory, number of employees, and buying power. Super 1 Foods caters specifically to the Latino population and has an advantage in accessibility to this customer base, and the Health Cottage’s main advantage is community loyalty.

The partnership component reveals potential for collaborative relationships with Andy’s and the Health Cottage, which the Task Force has preliminarily explored.

Albertsons

Product comparisons showed that Albertsons carries a limited number of the foods that we have included in our product mix. Approximately 20% of our product mix can be found at Albertsons. Albertsons carries another 20% of products comparable to ours, but a different brand. We did not find items similar or comparable to the remaining 60% of the items in our product mix. Sample price comparisons follow to show how co-op prices would compete with Albertsons on products carried by both stores (all co-op prices assume average non-member 33% mark-up). Lundberg long grain, brown rice (2 lb. bag) at Albertson is $3.29 and at our co-op the price would be $2.66. A Balance Bar Company peanut butter balance bar is $1.50 at Albertsons and would be $1.48 at the co-op. Annie's Alfredo Shells and Cheddar (6 oz. box) is $2.49 at Albertsons and would be $1.70 at the co-op. The organic and natural foods are often hard to find because they are grouped together in obscure locations in the store. In many of these locations there are special order forms provided, presumably because availability of these products is limited. There is no delivery option. The percentage of organic produce was not impressive, but this may change with the seasons. The store is also not conveniently located for the student population and does not have proximity to the downtown area. Albertsons is open 24 hours a day 7 days a week. It is large compared to other grocery stores in town. With a customer card, there are two-for-one (or similar) discounts. Customer service was very helpful. The employees are intent on helping customers in a polite and friendly manner. Despite the store being difficult to navigate, the overall ambiance is welcoming. Products and the services available at the store include: bakery, ATM, ARS, drive- through pharmacy, check cashing, Coinstar machine, interactive voice response, copy machine, pharmacy, dairy, deli, one hour photo, pickup, photo imaging, floral, gift certificates, general merchandise, grocery, shampooer rentals, lottery tickets, WIC, money orders, video rental, holiday, postage, meat, produce, FLAVORx, blood pressure machine, seafood, service floral, Starbucks.

Andy's

Product comparisons showed that Andy's carries, at most, 10-15% of our suggested product mix. Organic foods are not a high priority there. The bulk section is extensive, but very few of these products are organic (for instance, of 49 types of flour, only one is organic). The quality of the products is not held to the standards the Co-op intends to uphold. All of the snacks (including candy and trail mix) have artificial flavor or hydrogenated oils. Variety in the few areas where organics are available at Andy's (such as juices) is minimal, and the choices for products that are natural (no preservatives or additives, artificial ingredients) are also limited. One exception to this statement is the natural packaged cereal section, which is fairly extensive. However, our overall product mix looks to be considerably more comprehensive than Andy’s. Andy's does not offer bulk spices or condiments. Much of the dried fruit is sulphured and a large percentage of the TVP has flavor, additives, and hydrogenated oils. No organic pasta is available. Organic dairy products are minimal, and there is a small selection of soy yogurt and soymilk. The grocery section of soymilk is the store's most complete natural food grocery area. Organic condiments are extremely limited. The main grocery supplier is Western Family, a brand we would not carry. The selection of tofu includes Small Planet Organic, Island Spring Organic, and Soy Deli Organic, as well as "Tofu 2 Go," which we plan to carry. There is a full line of refrigerated meat substitutes provided by Yves. Organic pasta sauces and canned tomatoes are limited. Andy's offers a full line of Amy's frozen foods and carries Morningstar veggie burger (we plan to carry several others as well). Organic frozen juice, fruits, and vegetables are not available, and fresh organic produce is limited (may vary by season). Andy's does not offer environmentally friendly paper goods, cleaning products, or pet foods. Natural body care products are extremely limited. In summary, it appears that the majority of sales at Andy's are not organic or natural foods or products.

Andy's Market is located in College Place, approximately a 10-15 minute drive from Walla Walla. This is a very difficult distance for students who do not own cars.  They are a 7th Day Adventist store, with open hours of Sun-Thurs 7am-9pm, Fri 7am-1 hour before sundown, and closed Saturday. The store is approx. 24,000 SF, and services a range of 1400-2000 people a day. It employs 80 people at the moment, including construction workers. Most employees are part-time, college or high school students, which accounts for cheaper labor costs.  3-5% of daily sales are in bulk. Special orders are taken (Andy's website also has a limited selection of special order items and an online order form), but experience has shown that they do not excel in this area. Case discounts are offered only twice a year, and only on bulk products or the canned veggie foods such as Worthington/Loma Linda (which we do not intend to stock).  There is no delivery service, but they are willing to ship. The ambience is subjective; from this viewpoint, upon entering, one is greeted with a flower section inside and garden plants outside. The store could be cleaner and the employees lack extensive knowledge of product location and information. Customer service varies, with the focus seeming to be on stocking rather than satisfying the customer.

Partnership: Members of the Task Force have made initial contact with Andy’s management to explore a potential partnership with Andy's in order to gain greater buying power.

Plaza Safeway

The Safeway store at 1600 Plaza Way is similar to Albertsons in percentage of product overlap with our initial product mix. The store is considerably larger than the Rose St. Safeway and has a significantly more extensive variety of products. Organic products include: cereals, baking ingredients, produce, dairy products, soy products, eggs, snacks, pastas, frozen foods, prepared foods, and condiments. The store also stocks a limited number of natural personal products and cleaners. The following sample price comparisons show how our prices would compete with Safeway's (all co-op prices assume average non-member 33% mark-up). Annie's Alfredo Shells and Cheddar (6 oz. box) is $1.99 at Safeway (currently $1.75 with Safeway club card) and would be $1.70 at the cooperative. Brown cow yogurt (8 oz.) is $1.19 at Safeway, and we would sell it for $1.04. A 10 oz. bag of Sunspire organic chocolate chips is $5.99 at Safeway, and the co-op price would be $3.49. A number of deals are available with a free Safeway club card. Organic and natural foods are difficult to find because they are scattered illogically throughout the store. Safeway does not offer bulk foods or delivery. The store does not have close proximity to campus, and therefore is not popular among students. The store is open seven days a week from 5 AM to 1 AM. The customer service was not excellent, not because the people were not helpful, but rather because there seemed to be too few employees giving customer service help for such a large store. Warm, somewhat dimmed lighting, along with the size of the store and the huge number of aisles, gave the store a dark and lonely ambiance. Products and services available at the store include: deli, bakery, pharmacy, floral, video, liquor, produce, one-hour photo, seafood, and gift cards.

Rose St. Safeway

Product comparisons showed that the Safeway near Whitman College, located at 215 E Rose Street, carries an extremely limited number of the foods that we have included in our product mix. The Safeway across town, located at 1600 Plaza Way, is larger and has more selection, though it is still not a place to go to buy organic/natural foods. Prices are comparable to the Plaza Safeway store. Safeway pales in comparison to Albertsons in terms of the selection of its organic and natural foods. The major types of organic foods it has are: some organic produce, organic flours, organic eggs, some organic dairy products, and organic soy products. However, in comparison to Albertsons there is much less selection and variety, especially of brands. Safeway offers no bulk foods. Organic and natural foods are often hard to find because they are not grouped together in any way. Unlike Albertsons, this location does not provide special order forms. There is no delivery option. The percentage of organic produce was not impressive, but this may change with the seasons. One advantage of the store at 215 E Rose is that it is very conveniently located for the student population and has proximity to the downtown area. Safeway is open seven days a week, 7 AM to 11 PM. The store at 215 E Rose is very small in comparison with Albertsons, while the store at 1600 Plaza Way is comparable in size. With a customer card, there are numerous discounts. Customer service is less helpful than that of Albertsons, and the employees, while friendly, do not go out of their way to help customers. The store is difficult to navigate and the overall ambiance is less than pleasant, especially the lighting. Products and services available at the store include: deli, bakery, pharmacy, floral, video, liquor, produce, one-hour photo, seafood, and gift cards.

Super 1 Foods

The Super 1 Foods store on Ninth Avenue seems to cater to the Latino population in the area by stocking a number of baking goods, chili peppers, cheeses, and other products used in Latino cooking that cannot be obtained elsewhere Walla Walla. The product overlap with the co-op's initial product mix is extremely limited, the main distributor being Western Family (which we will not carry). However, there are good selections of comparable teas and coffees, organic baking goods, organic cereals, boxed pasta, rice, and grain meal mixes (Annie's, Near East, Lundberg, Casbah, Seeds of Change, Fantastic). In addition to this the store stocked a selection of rice milks, organic pasta sauces, and a number of soy-base products. Refrigerated and frozen organic foods were nearly non-existent. Super 1 carries a number of bulk products including: beans, nuts, cereals, flour, sugar, instant corn mesa, tamale, and flour tortilla mixes, condiments, pastas, and canned fruits and vegetables. However, none of these product are organic. The following are sample price comparisons (all co-op prices assume an average non-member 33% mark-up). A 6 oz. box of Fantastic Foods Tabouli Salad mix is $2.38 at Super 1 and would be $1.79 at the co-op. A 6 oz. box of Annie's Alfredo Shells and Cheddar at Super 1 is $2.18 (currently on sale for $1.67/each when you buy three), and the co-op price would be $1.70. The store was somewhat dirty, and with high ceilings and wide aisles, the ambiance was more like that of a warehouse than a retail grocery store. The customer service was adequate, but the employees seemed to have limited knowledge of product location and information. The store has a limited number of services available. The location is not close enough to campus to attract the student population, and it is presumably less attractive to students than Safeway and Albertsons, perhaps because it is unknown. The store is open 24 hours a day, seven days a week.

Health Cottage

According to our product comparisons, about 10% of the items stocked are included in our product mix, with another 20% in similar stock. The Health Cottage sells food, drinks, and vitamins, but offers a fairly narrow selection in each area. While the coop does not aspire to be another Safeway or Albertsons, it will carry a far more comprehensive product selection. Falafel mix and organic rolled oats constitute the entirety of the bulk section, with none of the other key bulk products (i.e. flour, dried fruit and beans, pasta and grains) that the coop anticipates selling. There is wheat and gluten free bread (Food For Life brand) and organic pasta (GardenTime Organic Spaghetti) sold, but in very limited quantities. They also stock organic diced tomatoes and tomato and pizza sauce. Their most complete supply areas are canned vegetables and organic cheeses. They stock several types of vegetarian beans, chilies, and meat imitation products. Six varieties of Organic Valley organic cheeses are available, as well as Vegan Rella, Follow Your Heart, and Soy Moon cheese alternatives. The co-op product mix includes similar cheese substitute products, but availability of tofu and soy products is limited. The Health Cottage also stocks a variety of snack foods included in the co-op’s product mix. Some are at comparable prices, such as organic banana chips at $1.89/lb, while others would be cheaper at the co-op, such as Barbara’s Bakery Organic Honey Go-Go Grahams for $3.75/12 oz at the Health Cottage and $3.19/12 oz at the co-op and 9 oz Kettle Foods Kettle Chips for $2.19 at the Health Cottage and $2.18 at the co-op (assuming, again, an average non-member 33% mark-up for all co-op products). While the coop’s product mix is far more extensive in terms of food, the Health Cottage maintains a considerable variety of supplements and vitamins. Annie’s natural organic dressing is stocked, as well as organic cocktail and tamari sauce, and frozen organic juice and soy ice cream are available. Spectrum and Rapunzel organic olive and safflower oils, brands we may consider carrying, are also on stock. The co-op product mix similarly includes Desert Essence Tea Tree Oil, Clear Conscience Multi-Purpose Solution, Clearly Natural Glycerin soap, and Tom’s brand toiletry items. The Health Cottage stocks Seventh Generation paper products, as well as several “green” cleaning products (Bi-O-Kleen Hand Dishwashing Liquid). In summary, the coop’s emphasis on providing a wide range of organic and natural foods, as well as extensive information about ingredient sources, are competitive advantages that will help us cultivate a unique niche in the market.

The Health Cottage is located at 5th and Rose, a five-minute drive or 10 minute bike ride from the Whitman College campus. It is not far enough to be prohibitive to students without cars, but the limited selection limits impetus for students to shop there. It is run by 7th Day Adventists, which means it is closed on Saturdays. Operating hours are Sundays from 10am-5 pm, Monday through Thursday 10am-6pm and Friday from 10am-2pm. The store is approximately 2,000 square feet and employs less than 10 people. There is a special order form for out of stock and bulk items, but it is used rarely. Case discounts are available year round, but only on an extremely limited amount of canned vegetables, beans, and canned meat substitutions. The staff is friendly but the ambiance is somber and lackluster. Employees are more than willing to help and knowledgeable about supplements and vitamins, but are not as knowledgeable about food sources.

Partnership: Due to the proximity of the Health Cottage to the Downtown/Whitman campus area, partnership or a buy out are both strong possibilities.

Sustainability Resource Center

The Northwest Renewable Energy Festival has received a grant to establish a Sustainability Resource Center. It will provide community outreach throughout the year to educate people to value and use our environmental heritage conservatively, which means minimizing waste and using resources wisely. The Center would be a good pairing with the Whitman Co-op, and could be located in a space within the store. What is required is space for a desk, file cabinet, bulletin board. The Center would be responsible for its own staffing and any expenses related to its function (phone, computer, etc.). The grant will be funded in July 2005. Environmental problem to address: reducing waste and preserving resources. People to involve: individuals, schools, youth, businesses and organizations. Actions to remedy the problem: establish a Sustainability Resource Center (SRC) in downtown Walla Walla that will provide free information, educational outreach activities, and workshops regarding sustainable activities to people in the local and outlying communities. Consumers will be introduced to new technologies and will be given practical aid in the form of contacts for resources, how-to guides, workshops, and information on how to incorporate these strategies into their daily lives. SRC will strive to generate interest in making Walla Walla a sustainable community among all community members, including the large Hispanic population, young people, and the older generation. SRC will also host the sixth annual Northwest Renewable Energy Festival with experts who will provide hands-on and one-on-one opportunities to educate people regarding using renewable resources and minimizing waste. Activities include speakers, exhibitor displays, product and educational demonstrations, tours of local wind farms and renewable energy sites, off-grid concerts, Electrathon electric car racing, and a Kid Zone that features renewable energy and recycling activities (solar cooking, paper-making, model solar car races, recycling materials into musical instruments, etc.). SRC will partner with the Walla Walla County recycling center to develop recycling programs in at least two local schools that currently have no recycling programs. SRC will also form partnerships with local agencies to establish and promote the use of a gleaning hotline so that excess food supplies can be utilized for the hungry. SRC will work with local builders and contractors to help them understand the benefits of building more sustainable homes, using environmentally friendly alternative building materials, and renewable energy systems. SRC will partner with Habitat for Humanity to help them build a model sustainable house that sits lightly on the land, requires little fuel to heat or cool, operates on little electricity, and is healthy to live in. SRC will update and help maintain the Walla Walla County recycling center's online website, 2good2toss, for directing builders, contractors, and consumers to reusable building materials and large household items. Finally, SRC will partner with the Franklin Public Utility District to host their energy fair in Pasco, WA, during Earth Day celebrations. The mission of SRC to provide education and assistance in achieving a higher level of sustainability is very compatible with the mission of the co-op. Buying and eating sustainable goods is only one of the many parts of sustainable living, and this partnership has the potential to expand on those ideas. If the space is available, this seems like a logical partnership to consider.

1.3 Operating Procedures/Structure

1.3.1 Cooperative Structure

Legal and Tax Structure

The Cooperative will be incorporated with the federal government as a subchapter T cooperative corporation and will claim non-profit, tax-exempt status as defined in Internal Revenue Code (IRC) Section 501(c)(3) and Revised Code of Washington (RCW) Section 24.03.015. IRC Subchapter T stipulates that the cooperative must allocate patronage dividends (or discounts, if certain requirements are met) in proportion to patronage and within state limits as set by the state of Washington. IRC Section 501(c)(3) provides exemption from federal taxes, providing that the corporation is organized for a limited number of purposes and not for the private gain of any individual or group of individuals. The organization also may not participate in propaganda or make any other efforts to influence legislation and may not "intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." RCW Section 24.03.015 provides exemption from state taxes with stipulations similar to those of IRC Section 501(c)(3). RCW Section 24.03.030 puts limitations on the actions of the corporation. Under this section the corporation may not: "have or issue shares of stock," "make any disbursement of income to members, directors, or officers," or "loan money or credit to directors or officers." The corporation may: "pay compensation in a reasonable amount to its members, directors or officers for services rendered" and "confer benefits upon its members in conformity with its purposes."

The legal structure of the cooperative will be determined by the articles of incorporation and the bylaws. In accordance with RCW Section 24.03.025, articles of incorporation will include: name of the corporation, period of duration, purpose(s) for which the corporation is organized, provisions which the incorporators elect to regulate the internal affairs of the corporation (this may include distribution of assets upon dissolution, definition, limitation, and regulation of powers of corporation, directors, and members, and eliminating or limiting liability of a director to the corporation or its members for monetary damages for conduct as a director), address of its initial registered office, number of directors constituting initial board of directors and names and addresses of initial board members, name and address of each incorporator, and name and address of any individual or corporation to whom net assets will be allocated upon dissolution. As stated in IRC Section 24.03.070, the bylaws of the cooperative will be adopted by the board of directors upon incorporation and will be subject to amendment, repeal, and alteration by the board of directors. The bylaws will include "any provisions for the regulation of the management of the affairs of a corporation not inconsistent with law or the articles of incorporation."

Membership Structure- Adapted from "Cooperative Principles & Practices in the 21st

Century”

Members share in both ownership and control. Their money helps finance the cooperative and they alone reap the benefits and suffer the losses associated with the cooperative's performance, so they have important duties to perform to ensure the cooperative remains viable. Members establish the purpose of the cooperative, define how goals should be achieved, approve and amend the Articles of Incorporation, and approve adoption and amendment of the bylaws.

Membership responsibilities include:

• Attend and actively participate in all cooperative annual meetings.

• Serve on cooperative committees and be willing to run for a board seat.

• Provide constructive feedback and do not expect special treatment.

• Keep informed about the cooperative's business from official sources

• Adopt and amend articles of incorporation, bylaws, and any resolutions or motions presented at annual meetings.

• Elect and remove directors.

• Help ensure that directors, management, and employees abide by the cooperative's bylaws and policies.

• Require an annual review of the co-op's financial standing and the CEO's performance.

• Contribute equity to the cooperative.

• Patronize the cooperative to the fullest extent possible and pay accounts promptly.

• Abide by the decisions of the cooperative board and management.

• Choose to leave the cooperative if unhappy.

Membership Fees

Student: $10/year

Community: $20/year

Volunteer: $5 one time-fee + 12 hours volunteering/quarter to maintain membership status

Student Volunteer: $5/year + 16 hours volunteering/quarter to maintain initial fee

Meetings

The general membership shall meet twice a year. The first meeting is held in May and is called the "Annual Meeting." The second is held in November and is called the “Semi-Annual Meeting.” Both meetings are chaired by the Board President and include information and feedback on how well the cooperative is meeting its goals, and plenary elections for decisions such as changes to the bylaws or approval of business plans the Board creates. The membership elects Board members during the Annual Meeting.

Board of Directors- Adapted from "Cooperative Principles & Practices in the 21st

Century”

The board is legally responsible for the cooperative's continued viability, charged with safeguarding the assets of the members and representing their interests, and with establishing policies to implement the cooperative's mission. At monthly meetings the board evaluates performance and sets overall performance goals. The board hires and supervises employees, including a General Manager.

Board member responsibilities:

• Attend every board meeting and actively participate.

• Be prepared for board meetings (read newsletters and packet prepared by management, etc.)

• Seek additional information or training when needed for decisions.

• Elect board officers (President, Vice President, etc.).

• Hire and supervise the General Manager. Ensure management abides by the bylaws and policies.

• Avoid micromanaging the General Manager.

• Abstain from voting in situations where there is a conflict of interest.

• Do not expect special treatment from the cooperative.

• Bring appropriate decisions to the general membership during annual meetings.

• Financial involvement: raise capital, supervise loan repayments, manage member equity, select financial institutions and auditors, and determine and distribute annual patronage refunds and dividends.

Board Composition

The Board will be composed of nine members, each elected popularly by the general membership at annual meetings. At least four Directors must be Whitman College students and at least four Directors must not be students. Student Directors will serve one-year terms. Non-student Directors will serve two-year terms. After the initial election, the Directors with two-year terms should have staggered terms to preserve board institutional knowledge. Directors are eligible for election to three consecutive terms, after which they must wait another election year before running again. The general membership shall vote on all Board candidates (on both student and non-student candidates) through the instant-runoff voting method.

The Board shall elect four officers from its membership at its first regular meeting after each election: a President, Vice President, Secretary, and Treasurer. The President is responsible to call, chair, and set the agenda for all Board meetings, as well as represent the Board and maintain strong relations with staff and membership. The Vice President assists the President and takes over in the case of the President's absence. The Secretary is responsible for taking minutes at all meetings (including annual general membership meetings), preserving a written record of minutes and publications, and assisting the General Manager in preparing newsletters for the general membership. The Treasurer is charged with overseeing cash flow and assisting the General Manager in preparing financial statements. The General Manager shall attend all Board meetings as a non-voting member.

At least seven Directors must be present at meetings to establish a quorum for Board decisions. Meetings shall take place monthly and be scheduled to accommodate Whitman's academic calendar (meetings should not fall during Whitman's Thanksgiving, Winter, or Spring breaks). Anytime a Director will not be in town for a meeting, including students during summer months, the Board shall arrange for accommodations to include them (such as through conference calls, etc.) All meetings shall be open to members unless the President decides to call a closed meeting to deal with personnel issues.

The Board shall form committees as needed, which may include Operations (a small group led by the President that is available to work with the General Manager on an ongoing basis as pressing decisions arise that cannot wait for a full Board meeting); Fundraising (a group chaired by the Treasurer and charged with working with investors to raise capital for debt service, growth, and programs); and Planning (a group dedicated to researching opportunities for business growth and mission fulfillment—note that the entire Board sets the cooperative's direction, while this committee focuses more on implementation). Each committee besides Operations may include non-Director members to help accomplish tasks. Committees report back to the full Board.

Given the Board's responsibilities, its members should collectively possess a wide variety of skills, including but not limited to financial and legal experience, meeting facilitation, community credibility and connections, and retail management. It is the general membership's responsibility to ensure the Board is well equipped with diversity of skill. Given the required number of student Board members, however, not every member is expected to have experience in these areas. All members should possess dedication and a willingness to learn. The Board is responsible to equip itself to adequately perform, either through the on-the-job training that Directors will provide each other, or through other means.

In the event of an indiscretion by a board member and the subsequent need for removal of that member, or in the event that the members or the board is compelled to remove a member of the board for some other reason, the board and the members of the cooperative shall follow procedures as set forth in the bylaws of the corporation.

1.3.2 ASWC Relationship

Assuming that the co-op receives start-up funding from the Associated Students of Whitman College (ASWC), the ASWC Finance Chair and the President of the Cooperative's Board of Directors shall serve as liaisons between the two organizations. Because the Cooperative was started in large part due to ASWC financial support, and because the Cooperative will continue to serve Whitman College students, the two organizations will remain in contact in perpetuity, unless they mutually decide to terminate the formal relationship.

Liaison responsibilities:

• Facilitate communication between the co-op Board of Directors and ASWC Executive Council.

• Report to their respective organizations and solicit ongoing feedback about the relationship.

1.3.3 Operational Options

Special Order

One service we are planning to offer is a special order service. Customers will be able to order products that we do not carry from catalogues in our store. They will then be able to pick up these items when they arrive at the store. We have therefore included this service in our financial scenarios.

Produce

Because it is not immediately financially feasible for us to stock produce as a regular item, we are seriously considering having certain days when produce is available in order to satisfy the needs and desires of our customers. We have therefore included this service in our financial scenarios.

1.4 Personnel

1.4.1 Volunteers

• Because we are a non-profit company according to IRC section 501(c)(3), we can have volunteers; the clerks and inventory personnel would either be volunteer or work-study.

• Reduced membership fees for volunteers (see chart in Cooperative Structure, section 1.3.1).

1.4.2 General Manager

Job Description:

• Full-time, 40+ hr/week position

• Responsible for running the store, ordering inventory, coordinating workers and volunteers, and delegating tasks

• Non-voting member of the Board of Directors

• Registered agent of the corporation; legally responsible

An ideal general manager would:

• Have a strong business background in terms of running a business, and bookkeeping. Education in business preferable.

• Have previous leadership experience, and an ability to work well with others (In our case, college students and people younger than them who have a say in the structure of the Co-op).

• Understand and be excited about the mission and values of the Co-op and agree with these values.

• Be local or plan to live in Walla Walla for at least 5 years.

• Have had experience in selling retail, food, or Co-op. (2-5 years)

• Have the ability to manage conflicts and "think on his or her feet."

The selection process would include an interview with the Board of Directors, or a few members of the task force. Resume, application, and references will be required.

1.4.3 Work-Study

Work Study Main Points

• The Co-op will be applying for eligibility in the Washington State Work Study program. This means that the State of Washington will pay 65% of the wages of our work-study employees.

Requirements For Eligibility

• We must pay a comparable wage to work-study and non-work study employees for doing the same job.

• Our business and work-study positions cannot be political/religious in nature.

• Work-study employees must have work-study as part of their financial aid package from Whitman.

• The work itself must be related to the educational or career goals of students.

• Work-study students can work only up to 19 hours/week during the school year and 40 hours/week during the summer.

How It Works

• We get a Federal Tax ID number.

• We fill out a contract and a description of our business and the work-study positions and send them to Whitman.

• Our positions/business are approved based on the above criteria.

• We keep track of employee hours and make sure that they don't work beyond the amount allowed by their financial aid package.

• We pay our employees the full amount of their salary, at least monthly.

• We send applicable time sheets to the Higher Education Coordinating Board, and they send us a check for 65% of wages earned by work-study students. This takes 3-6 weeks.

• Contracts with the HECB run from July 1 - June 30, and must be reapplied for each year.

• The person who signs the contracts for HECB MUST be the person who is authorized to approve expenditures for the Co-op (a treasurer or president?)

• Students cannot start work before the date listed on their financial aid award, and they cannot end work after the end date on the award.

• The person who signs students' time sheets must be their supervisor or manager.

• We must keep the HECB and Whitman informed of changes in students' employment status and wages.

• Complete rules and guidelines for the Washington State Work Study Program are at hecb. or (360) 753-7800.

1.4.4 Estimated Labor Costs

Scenario 1: Work-Study

Total Labor Cost: $41,885/year

• Including General Manager, employees paid by Washington State Work Study, and unpaid volunteers

• The co-op would be eligible for Washington State Work Study, which pays 65% of qualifying students’ wages

• Assuming that the co-op is open almost all year round

• General Manager will work 40 hours/week for 50 weeks/year (with a two-week vacation) and receive basic benefits

• During the school year, there will be 40 hours of work study labor and 40 hours of volunteer labor per week

• During the summer and holidays, there will be 60 hours of work study labor and 20 hours of volunteer labor per week

General Manager

(40 hours/week x 50 weeks/year)

Salary + $24,000

OPE + $7,200

WA State Work Study employees during school year

(40 hours/week x 4 weeks/month x 6 months/year that school is in session)

Salary + $1,400

Less 65% - $910

WA State Work Study employees during summer and holidays

(60 hours/week x 4 weeks/month x 6 months/year that school is not in session)

Salary + $2,100

Less 65% - $1365

Volunteer labor during school year

(40 hours/week x 4 weeks/month x 6 months/year that school is in session)

Volunteer labor during summer and holidays

(60 hours/week x 4 weeks/month x 6 months/year that school is not in session)

Total Labor Costs = $41,885.

Scenario 2: No Work-Study

Total labor cost: $52,200

• Including General Manager, employees paid by Washington State Work Study, and unpaid volunteers

• The co-op would be eligible for Washington State Work Study, which pays 65% of qualifying students’ wages

• Assuming that the co-op is open almost all year round

• General Manager will work 40 hours/week for 50 weeks/year (with a two-week vacation) and receive basic benefits

• During the school year, there will be 40 hours of paid labor and 40 hours of volunteer labor per week

• During the summer and holidays, there will be 60 hours of paid labor and 20 hours of volunteer labor per week

General Manager

(40 hours/week x 50 weeks/year)

Salary + $24,000

OPE + $7,200

Paid employees during school year

(40 hours/week x 4 weeks/month x 6 months/year that school is in session)

Salary + $1,400

Paid employees during summer and holidays

(60 hours/week x 4 weeks/month x 6 months/year that school is not in session)

Salary + $2,100

Volunteer labor during school year

(40 hours/week x 4 weeks/month x 6 months/year that school is in session)

Volunteer labor during summer and holidays

(60 hours/week x 4 weeks/month x 6 months/year that school is not in session)

Total labor cost: $52,200

1.5 Location Requirements

The following characteristics are involved in rating a potential real estate option:

• Square footage- looking for 1,000 sq. ft.

• Monthly rent- $600-800 ideal.

• Location- we want a location that is accessible to both students and the community.

• Renovations- we do not want to have to make significant renovations.

• Parking spaces- we would like at least 8 spaces for customers.

• Delivery- we will need a spot for trucks to unload goods.

• Storage- ample storage room a plus.

• Bathrooms- definitely important.

• Natural light- Windows affect ambience and energy bills.

We are considering several possible locations, which can be viewed in the Word document titled “location.doc”. For legal reasons, we cannot name them all, so each location is designated by a different letter.

Members of the Co-op Task Force have committed to reside in the “Cinderella House” in 2005-2006. While this house is not suitable as a store location, it will serve as a focus of organizing and implementation activities.

1.6 Business Insurance

• Brian Jones of Cox-Jones Insurance estimates that our insurance coverage will cost $1,000-$1,200 per year.

• This figure has been confirmed by Mike Warren, former owner of the Health Hut.

• An additional bond of $300/year for employee dishonesty is strongly recommended for the first few years.

• Our estimates are based on having approximately 1,000 sq. ft. in area, approximately $60,000 in inventory and fixtures, and $375,000 minimum gross revenue.

• Our figures may change based on whether we repackage food and the content/value of our coolers/freezer.

1.7 Bank Loans

In addition to a $35,000 grant awarded by ASWC, our start up costs will need to be covered by a loan. Based on our income analysis and bank research, we plan to obtain a loan of $80,000, payable over five years in increments of $1580 per month at a 7% interest rate. We plan to cover $700 of each monthly payment with membership fees.

2. Financial Data

2.1 Capital Equipment and Supply List

Below is a brief summary of capital equipment and supply costs for three scenarios. A complete list of equipment and supplies can be viewed in the Word document titled “Capital Equipment and Supplies.doc”

Core Operations- this scenario represents the store without any extra services.

Capital Equipment: $52,024

Supplies:

• Start-up- $372

• Bi-yearly- $98

• Monthly- $368

• Total Start-up $1206

Special Order- this scenario includes the normal store with a special order service, where the customer can order products we do not carry and then pick them up on a specified day.

Capital Equipment: $52,024

Supplies:

• Start-up- $372

• Bi-yearly- $106

• Monthly- $454

• Total Start up- $1440

Produce Day- this scenario includes the normal store with one day per week of seasonal produce offerings.

Capital Equipment: $52,224

Supplies:

• Start-up $372

• Bi-yearly- $98

• Monthly- $368

• Total- $1206

2.2 Balance Sheet

(Please refer to the Excel document titled “finalbalancesheet”)

The Balance Sheet included reflects the 14-month Break-Even analysis.

Working Capital of $31,000 will allow the first two months operations expenses to be met, and leave $10,000 in Cash Reserves. Initial Inventory will be $42,630. Equipment costs are $52,000.

Total Initial Capital Need is therefore $125,630. The plan counts on $80,000 in bank financing. Repayment of this amount is included in the cash flow. The remaining $24,600 in Member Equity represents funds raised in Memberships and from other initial investors, including ASWC. The terms of any ASWC investment are yet to be finalized. For this reason no liability to ASWC appears on the Balance sheet. ASWC repayment is not included in cash flow projection at this time.

2.3 Break-Even Analysis

(Please refer to the Excel document titled “Break-even Three-Year Plan”)

The first 14 months of operation are analyzed in the appended Spreadsheet.

Gross Revenue of $574,300 allows the Co-op to break even, given the assumptions regarding expense levels. These sales figures were developed from the results of the surveys, using conservative per-customer rates of sales. See 3.2.1, Assumptions, for details.

As a verification of the feasibility of this volume, other co-ops’ revenue per square foot per Year were checked.

|Store |Gross Revenue |Square Feet |$/Sq.Ft./Year |

|Astoria |$700,000 |1,100 |636 |

|Wheatsville |$5,500,000 |5,100 |1,078 |

|Whitman (Proj,) |$548,800 |865* |634 |

|*Average $1.04/sq ft; | | | |

|$900/mo in projections | | | |

These results indicate that attaining the break-even Gross Revenue can be accomplished with the square footage being contemplated.

2.4 Profit and Loss Statements

(Please refer to the Excel documents titled “3 Year Special Order” and “3 Year Produce,” which represent the operational options discussed elsewhere in the plan.)

3.0 Three-Year Summary

Core Operations

Year 1:

The projected costs outlined in the three-year plan are based on student and community spending, cost of goods, payroll, marketing, loan repayment, occupancy, operations, and supplies.

In this plan, student spending is not included during months of summer break, as student spending will be negligible at these times. The largest revenue will be produced during the winter holiday season, while the lowest revenue will be produced during the months of summer vacation. It is important to note that the absence of significant student spending in the summer results in a lack of net profit over this break. However, the higher rate of spending during the school year makes up for the summer deficit and allows the coop to break even. There is a revenue increase of one quarter of one percent per yearly quarter.

The cost of goods in this plan is simply the core costs, and does not contain produce or any special orders. $250 will need to be spent each month on marketing for us to have enough publicity to make our projected revenue. The projected payroll includes the full time general manager as well as two 20hr/wk work study positions during the school year, with one and half full time work study positions during vacation and holidays. The remaining necessary labor will consist of member volunteers.

The loan is re-paid at a rate of $1580/mo. $700 of this money per month will be obtained from membership fees, while the other $880 comes from revenue. Rent accounts for $900 of the $1,245 occupancy figure, while utilities and insurance account for the remaining cost. The supplies figure accounts for the cost of basic cleaning and office supplies.

Year 2:

All calculations are now made by quarter, so the cost of each category is a three- month, as opposed to a monthly (as in the first year projected costs), figure.

In the second year, the manager receives a 10% raise in the monthly salary. The wage workers (work study) will receive a monthly three percent increase in their wages during both summer months and the school year. There is a 5% monthly increase in cost of utilities. All other quarterly costs remain consistent with the costs projected for three months of the first year costs.

Year 3:

Calculations are again split into equal quarters.

The wage laborers again receive a 3% monthly increase in their wages in both the summer months and during the school year. Utilities increase by 5% each month. All other costs remain consistent with the projected quarterly costs of the second year.

Special Order Services

Year 1:

With the implementation of special orders, the margin will increase to 28% due to the fact that we have a higher percentage of inventory that we are assured to sell. The labor costs will increase to $600 per month due to the increased labor time that must be spent on organizing and preparing the orders. The supply costs will rise by $86 per month with an additional $8 needed biyearly due to increased need for paper, ink cartridges and other organizational and ordering supplies.

Year 2 and Year 3:

Alterations in the revenue and expenses are the same as in the basic three year summary plus the additions from Year 1.

Produce

Year 1:

With the addition of produce to our inventory, we predict a marked increase in traffic, and therefore sales. This estimate is due to a high demonstration of interest in fresh local produce by members of the Whitman and Walla Walla community. The majority of this produce would be available from April to October each year.

Our three year summary with the addition of produce sales is adjusted for a $200 increase per month of student sales in April, September, and October. In May there is a $100 increase in student sales. The figures are adjusted for a $900 increase in community sales in April, September, and October. In May we predict and additional $1,000 in community sales, and in June, July and August we predict that community sales will rise $2,200 with the addition of produce to our inventory.

In addition to an increase of revenue through the addition of produce, there will also be an increase in Capital Equipment (see Capital Equipment and Supplies.doc).

Year 2 and Year 3:

Changes are the same as in the basic three year summary while reflecting the addition of produce to the inventory.

3.2.1 Assumptions Upon Which Projections Were Based

In order to break even in our core operating procedures, we needed to use community and student spending estimates that were slightly higher than our “Pragmatic” assumptions, but a membership level that was in between the “Sad” and “Pragmatic.”

All of these assumptions were based on survey results collected from 79 community members and 478 Whitman students. Further assumptions were based on the experience of similar co-ops and people who have worked with other food businesses in the Walla Walla area.

For detailed numbers, please view the Excel document titled “Income Assumptions.”

4.0 Supporting Documents

4.1 Implementation Timeline

Days: |1 |15 |30 |45 |60 |75 |90 |105 |120 | | | | | | | | | | | | |Shell Board Creation | X | | | | | | | | | |Membership Drive | |( |( |( |( |( |( |( |( | |Other Fundraising | |( |( |( |( |( |( |( |( | |Incorporation

|( |( | | | | | | | | |Financing

| | |( |( | | | | | | |Manager Search/Hiring | | |( |( |( |( | | | | |Location/Sign Lease | | | |( |( |( | | | | |Permits

| | | | |( |( | | | | |Distributor Arrangements | | | | | |( |( |( | | |Building Prep

| | | | | |( |( |( |( | |Employee Selection/

Hiring | | | | | | |( |( |( | |Marketing Plan Development | | |( |( |( | | | | | |Marketing Plan Implement | | | | | |( |( |( |( | |Board Selection | | X | | | | | | | | |

Implementation Timeline Notes:

• “Other fundraising” includes the pursuit of additional starting capital through sources of Cooperative development grants, individual investors willing to take an equity position with deferred return, and fundraising events for seed money with which to engage in subsequent capital development activities.

4.1.1 Implementation of Vision

While we have a clear vision of our ideals and what we would like to see in the cooperative, we are also realistic about what we can achieve in our first year. Because of this, we have set goals to ensure that our vision is implemented in a timely manner. The following ideas are to be considered by the board of directors and the members in the next three years:

• We will expand beyond a produce day to include produce in the store at all times, and we will explore the possibility of stocking produce outside of the regular, local growing season.

• We will gauge interest in and explore the feasibility of acting in compliance with the regulations set forth by the state concerning meat handling to stock meat in our store.

• We will organize and implement a system of deliveries to maintain our promise of accessibility to all community members.

• We will also facilitate the inclusion of the Latino population, low income families, and other groups not regularly associated with food cooperatives by accepting food stamps, integrating the use of Spanish into our materials and information, and by developing other programs and practices that make us more accessible.

4.2 List of Licenses and Other Legal Requirements

• File an Articles of Incorporation (specified at ) in such a manner that we send duplicate copies which have been signed by incorporators to the secretary of state. ($30)Submit Master Business Application:  ($15)

• Master Business Application addendums for:  Tax Registration, Industrial Insurance

• Unemployment Insurance

• Trade Name Registration ($5)

• Agriculture / Egg Handler ($30) / Refrigerated Lockers ($10)

• Weighing and Measuring Devices ($5/device)

• Unemployment and worker's compensation insurance

• Apply for Employee Identification Number @

• File B&O taxes, via depending upon when we want to file (we are retail sellers)

• File taxes, via forms 1120 and 1120a, instructions attached as PDF, form also attached (these are for last year though, so not the form we would use)

• File I-9 and W-4 for every employee

• Register with the Development Services Division at the City Service Center: (509) 517-4535

• Call City Clerk (527-4424) to see if there are any additional permits and regulations

• Property must be reporter to the assessor (527-3216)

• WA State Department of Agriculture must be contacted once the exact relationship with farmers, agricultural products is established: (509) 225-2616 or commerch@agr.

• Food Safety Program @ WA State Department of Agriculture must be contacted: (306) 902-1876... I assume this is food handling certification, etc.

• Hiring must be reported at

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