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How to Launch a Community-Owned Store

Date: 12 Feb 2008 | posted in: Retail | 0 Facebooktwitterredditmail

In more than a dozen towns across the country, citizens have seized the reins of their local economies by starting community-owned stores. These stores are local stock corporations, owned by residents who buy shares in the business. Shareholders meet periodically to vote on major matters and elect a board of directors. The board, which is typically comprised of local civic and business leaders, oversees the enterprise, while a store manager handles day-to-day operations.

Community-owned stores are designed by residents to meet specific local shopping needs. Most of those that have opened thus far are downtown department stores that sell affordable clothing, shoes, and housewares, and offer an alternative to chains like Wal-Mart and Target. But the model could be applied to many other types of retail businesses.

Unlike most stock corporations, community-owned stores typically have provisions in their charters and bylaws that prevent out-of-state residents from buying stock and limit how many shares any one person can own. This ensures that the business remains locally and democratically controlled.

This democratic structure makes community corporations fairly similar to cooperatives. Indeed, fledgling community-owned department stores can look to the success of grocery co-ops for inspiration. These consumer-owned stores, which began to proliferate in the 1960s, now number nearly 300 and have annual sales of about $1 billion.

Cooperatives and community corporations differ modestly in some respects. By law, the activities of co-ops must be fairly closely tied to meeting the needs of their member-owners, whereas community corporations may have somewhat broader missions. Setting up as a community corporation may also make raising sufficient start-up capital a little easier, because a single investor can buy multiple shares.

How to Launch a Community-Owned Store (download the PDF of this 6-page fact sheet)

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.