Elwood Hometown Cooperative Market

A community journey

Population 710, 2010 census Non-consolidated grade school and high school 3 churches Convenience store 2 banks Gosper County seat Gas station Restaurant New library - $350,000 DED grant Downtown Revitalization Grant - $350,000 awarded in

2012 Market study - $1M in grocery sales available in Elwood,

addition $800,000 at Johnson Lake & surrounding area

About Elwood

January 15, 2012 – Elwood Market closes Last week January– Survey distributed door-

to-door. February 6 – First community meeting

◦ Results of survey shared◦ Options discussed◦ Jim Crandall presentation on Cooperative model◦ Steering committee formed

March 18 – Second community meeting May 4 - Incorporation

Timeline

June 8 – Banking & Finance June 18 – Membership kick-off Oct 1 - “Go” financial threshold reached Oct. 5 – Building purchase completed Oct. 6 – Community demolition day January 14 – February 3 – Stocking and

inventory load February 3 – Shareholder, donor & volunteer

preview February 4 – Open for business!

Timeline

88 responses 73% shopped at the store weekly in 2009 54% would like to purchase more than 50%

of their groceries at a store in Elwood 67% said a convenience of a store in Elwood

was Very Important 79% said price was Moderately to Very

Important 22% would like to purchase 76 to 90% of

their groceries in Elwood

Survey

Ed Houlden – Security First Insurance, Village Board Member LeahAnn Brell – Brell Realty & Chamber President Steve Lofquist – Lofquist Welding, Inc. Dustin Lofquist – Lofquist Welding, Inc. Sindy Fiene – Mary Kay Consultant Phyllis Dunlop – Member of Chamber, volunteer at Gosper

County Senior Center and church Joe Welch – Paulsen Construction Sharlette Schwenninger – small business owner, Chamber

Executive Director, Village Board Member Lyanne Weissert – FSA, husband owns construction business Nancy Schutz – The Home Agency, accountant

Steering Committee

Finance/Business Plan Facilities Surveys Incorporation Public Relations/Marketing/Membership

Sub-committees

Analyzed and evaluated past businesses Talked to past business owners and Brenda

Johnson from Bertrand about seasonal trends

Developed a financial plan including all start-up costs, wages and one years income and expenses –created 2 year proforma later

Determined that it was feasible to re-open and operate as a member owned cooperative, contingent on a successful membership drive.

Financial/ Business Plan

Toured the building and evaluated flooring, shelving, electrical and other needs

Compared remodeling costs with new construction

Provided estimates to the Financial/Business Plan committee

Determined and prioritized “what we have”, “what we need”, and “what would be nice in the future”

Facilities

Explored options for incorporation ◦ Limited Liability Corporation◦ Cooperative◦ Limited Cooperative Association

Found resources to advise us Recommended to the Steering Committee that

a Cooperative is the best option for Elwood Contacted an attorney who specials in

Cooperative Law Incorporated May 4, 2012 Banking and Securities approval June 8, 2012

Incorporation

Members are owners and are users Members benefit Members govern through Board of Directors One person, one vote Member investment is for access to

services, not for return on investment Store open to non-members

Cooperative – What is it?

Authorized capital stock - $500,000

◦ 500 shares of common stock at $500 per share

◦ 500 shares of preferred stock at $500 per share

◦ $25 membership fee

The Offering

$500 par value One share per member Voting share No dividends paid

Common Stock

$500 per share No voting rights Individual or entity can purchase as many

shares of preferred stock as they wish, until the $275,000 offering is filled

At the discretion of the Board of Directors, a dividend may be paid.

If Cooperative is dissolved, priority for redemption at par value over common stockholder

Preferred Stock

Owners of common stock will meet within 12 months from May 4, 2012 to elect Board of Directors

Seven board members with staggered terms will be elected to replace the acting Board

Board of Directors will supervise the Store Manager

Store Manager will manage the store and employees

Suggestions come to Board, not to Store Manager

Cooperative Governance

Beginning inventory $70,000 Working capital 41,700 Building and signage purchase 42,500 Cost of remodeling 55,500 Purchase of fixed assets 80,000 Pre-opening training and labor 1,600 Legal and accounting costs 6,000 Advertising and Grand Opening 2,400 Supplies, insurance & other 7,800 Total $307,500

Projected Cash Outlay

Drawing for shareholders who invested by July 6

Logo contest - One share of common or preferred stock, donated by a local business

Incentives with kick-off

Before…

Before…

More than 40 volunteers

Used shareholder’s building down the street for lunch and breaks

Demolition Day

Demolition Day

Demolition Day

Demolition Day

Demolition Day

Demolition Day

Demolition Day

Demolition Day

Demolition Day

Demolition of existing office and storeroom area All new wiring Floor strengthened with plywood overlay, new VCT tile Tin ceiling spray painted and faux metallic highlighted New bathroom & storeroom New receiving doors New windows – Downtown Revitalization Grant Insulation – Downtown Revitalization Grant Lighted awning – Downtown Revitalization Grant Repair brickwork New lighting

Remodeling

Remodeling Process & Progress

Remodeling – Ceiling Paint

Remodeling – New Windows

Remodeling – New Floor

Remodel - Awning

10 new cooler doors 15 used freezer doors 2 used drink coolers Used shelves Used meat case Used produce case Used checkout stand Scanning system – The General Store

Equipment

Ads in local paper and around town Manager – Mike Burkink, 40 years on

grocery business Assistant Manager – Julie Poggendorf,

previously worked at Elwood Market and other grocery store experience

Clerk – Ann Neville, grocery store and convenience store experience

Staffing

Budgeted for 60 hours◦ 9 a.m. – 6 p.m. Monday - Saturday, 10 a.m. to 2

p.m. - Sunday 1 Full time manager, 1 28 hour assistant manager

and 20 hour clerk Changed hours to:

◦ 8 a.m. to 7 p.m. – Monday through Saturday◦ 10 a.m. to 2 p.m. – Sunday

Taking assistant manager to 40 hours Taking clerk to 28 – 30 hours Will be hiring another part-time if needed

Hours

Equipment

Equipment

Equipment

Equipment

Postcards sent to volunteers, trades, donors, shareholders and members

Cookies and coffee Shopping bags given to attendees Open for business $950 in 2 hours

Shareholder/Member Preview

Preview

Preview

Preview

Preview

Preview

NTV news spot featuring first customer Article in Kearney Hub and Lexington Clipper Approximately $3500 in sales first day Sold out of bread in one day Manager cut meat every day – sometimes

twice Positive comments from everyone New shareholders Increased employees hours and will be hiring

more part-time help

First week

Had the right mix of experience on steering committee

Steering committee members met weekly Used the local and regional newspapers and

radio to promote Kept the community informed of our

progress Met one-on-one with prospective

shareholders Went door-to-door with information when

needed

Why we were successful

Set deadlines or nothing gets done Be flexible with our budget and planning –

there will be curveballs At community meetings, answer as many

questions as possible in the presentation Finish all construction before receiving new

equipment and inventory, if possible (we cleaned several times…)

What we learned

Questions?