Case Study: East Aurora Cooperative Market—Benefits of 4 in 3 Model to Launch Startup

Case Study: East Aurora Cooperative Market—Benefits of 4 in 3 Model to Launch Startup

Columinate | 02-09-2014

From September-October 2014

East Aurora Cooperative Market
East Aurora, NY
Year founded and incorporated: 2010
Number of members: 910
Equity investment: $200
Opening goal: Spring 2015
Retail square feet: 5,000

The East Aurora Cooperative Market got its start when a group of people in the East Aurora community saw a need for a high-quality grocery store that would fulfill a deeper need for marketplace connections among local farmers and consumers in the area. The town is located in a semi-rural area of western New York state surrounded by many small farms. It’s also a place that is tight-knit and community-focused. The startup co-ops organizer believe that having a cooperative grocery store in town would be a great addition to a place that already has a sense of civic pride. Cooperation felt like a natural fit.

sheila-conboy-quote2East Aurora is also known around the country for its effort 15 years ago to reject a Walmart store in their community. “Our whole community is so local-ownership and economy oriented. It would have been devastating,” said Sheila Conboy, the co-op’s current project manager, about Walmart’s potential entrance into the market. “Our hope with the co-op’s capital campaign is that we show a similar passion to bring something positive to our community.”

The startup is also located 30 minutes from the Lexington Cooperative Market in Buffalo, New York, which has played an important part in East Aurora’s development. General manager Tim Bartlett was instrumental in introducing the group to co-op development and expansion consultant Bill Gessner. “Tim Bartlett said ‘hire Bill and do exactly what he says’ and that’s what we’ve done,” Conboy said. As part of their development, they’ve also adhered closely to the Four Cornerstones in Three Stages model developed by Gessner in collaboration with other co-op development experts. The model is based upon the four cornerstones of vision, talent, capital, and systems that are each within three stages of food co-op development: organizing, feasibility and planning, and implementation. Conboy said that there are multiple reasons why their co-op is in the implementation phase and slated to open next spring, and they all point to adhering strongly to the model.

“Co-ops are not the same as other businesses. Many successful business people gave us well-meaning advice, but we always stayed with the 4 in 3 model and it has worked,” Conboy said. She believes one of the benefits of the model is that there is so much co-op expertise and experience that has gone into creating it that it helps groups reap the benefits of the best in co-op business practices.

“It gives us credibility,” she said. “It shows people we’re not winging it.” Conboy said that they’ve used graphics of the model to help their owners and people in the community understand the effort that goes into a startup—especially when they get impatient with the process. “The model shows what it involves,” she said. She also said it helps them provide transparency into the process, as well as demonstrate how they are accountable to their owners. “We’re by-the-book because we have to answer to our members. We’ve never strayed from the 4 in 3. We don’t want to take chances.”

Conboy said one important take-away from using the 4 in 3 model is that startup groups have to build a sense of ownership into the development process. “If we won the lottery it would do us no good,” she said about the task of raising capital (which they launched in June). “It has to come from member buy-in and people taking ownership, and seeing their contribution as important.” She said impatience with the process and scheming to raise money quickly to open right away has the potential to “thwart ownership.” She believes that the build-up to opening the co-op’s doors is just as important as opening the co-op doors, because educating themselves and the community is a big part of organizing a startup.

But because they’ve done their due diligence, they will be able to secure some conventional bank financing, in addition to loans from LEAF and the Northcountry Cooperative Development Fund. That’s why the 4 in 3 has been so instrumental to their startup effort.

They’ve also been savvy communicators as a group, and have created ways to invite people into the process and reward their willingness to participate. One of their most impactful campaigns was to create a lawn sign for new owners that says, “Proud Owner of East Aurora Cooperative Market” which dot the landscape around town. Those who invested in preferred shares or member loans got a sticker to add to their lawn sign. “People are just so excited to be part of it,” Conboy said. “It’s one of the best things I’ve ever done in my life.”

Read about Four Cornerstones in Three Stages

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