Creating a Handcrafted Jewelry Business with Your Friends with Cooperative Economics

You are the independent type, a self-starter who works well without supervision and you think you would make a great entrepreneur; but it's not that simple. You have looked at traditional businesses, gift shops, toy stores, pizza parlors; but you can't risk quitting your job to go into a venture that might run through all of your money then fail. Besides, you can't afford to quit your job, lose your income, invest all of your savings and borrow the rest of the money it will certainly take to get started. That would be economic suicide.

You have checked out alternative 'businesses.' Part-time network marketing presentations promise a great income if you just buy a starter kit and talk enough people into joining your down-line organization; but that's not for you. You've looked into door-to-door cosmetics companies who used to call you a representative but now say you are operating 'your own business.' You're pushing their products, of course, so who really makes most of the money there? What about selling legal plans part time? No way. That's not you.

So your best option is to suppress your desire to be an entrepreneur and stay on your job indefinitely. You can save your money until your retirement benefits kick in. With a retirement income and lots of free time on your hands you can invest in the business of your choice. Of course, by then you'll be too tired to do anything but sit in a corner and rest.

You've thought through this whole small business thing and the one thing that makes sense to you is that to succeed you should do something you love.

You Love To Make Jewelry, Don't You, But Who Has Time To Make It And Sell It?

Remember those jewelry classes you took a while back. Although you never thought of it as more than a hobby, you were pretty good at it. You know lots of people who sell their jewelry and quilts and wooden widgets at arts and craft shows and in gift shops; and they keep encouraging you to do the same. But that takes time and you do have a full time job.

A Cooperative Economic Venture-

If you create jewelry or quilts or wooden widgets, even, and are looking for a new way to spread your wings into the small business world, the answer may very well be a cooperative venture. Cooperative selling is a viable option where a you might not be able or willing to bear the burden of a small business alone. It allows you to unite with a group of like-minded individuals to share the load.

This method works particularly well with handcrafted goods such as jewelry, quilts and other crafts; where working with friends or acquaintances can make the creation and selling process seem like a social event. Together you can learn how to run a small business, earn some money and gather enough information to decide if entrepreneurship is really the thing for you.

Cooperative methods have been used for years by food buying clubs, stock purchase groups.., etc. to save money and money by sharing the load. There are functioning craft cooperatives across the country selling products like purses, jewelry and bean soup, to name a few. You can borrow some of their ideas to make money and learn a few things about your business acumen without a huge financial risk.

Your Business Partners-

A cooperative idea works best if you already have in mind a group of people you wouldn't mind working with. One test of your cohesiveness and cooperation as a unit, is your initial ability to compromise on up-front decisions as to how you will operate your venture. You operating philosophies will be whatever you decide together; but you will need to agree on the following at least:

-A written agreement outlining participants, general practices and procedures

-A clear idea of a product or service

-An organized system of sharing of duties

-A clear formula for dividing the earnings and reinvesting capital

-An agreed-upon method for resolving disputes

Artists, crafters, quilters and others who design and make things others might want to purchase are particularly good examples of the types of people who could function well in cooperative business owners. They may have jobs and spend much of their free time creating, so they have little remaining time to market their work.

To avoid long weekends selling at arts and craft fairs when they would prefer to be at home creating, some artists and crafters pay huge gallery commissions to have someone else sell their work. Others sell under similar circumstances through consignment stores.

Some artists and crafters create beautiful pieces and don't sell them at all because it's too much of a bother. They often end up giving their work away; but if they combined their time and efforts, they could each create for the business and each devote some time to marketing, inventory, bookkeeping, whatever business skill they could handle best.

The cooperative economic method works best as a home-based business and growing from there as necessary. While huge profits may never be realized, as a participants, your venture will give you an idea as to how your products will be received by the general public. You may also get an idea of your actual ability (or inability) to participate in running a business. A cooperative can be used as an incubator to get your feet wet and then move out on your own.

Good Girls Jewelry: A Hypothetical Cooperative

Mary, Jane, Betty, Lucy and Wilma met years ago. They all make jewelry as a hobby but have never tried to sell it even though they receive many complements on their work. They know other people who make handcrafted jewelry and sell it at craft fairs, and they would love the extra income, but Mary is too shy to talk to people. She likes doing paperwork. Betty doesn't want to sell at all, but she makes really creative earrings. Lucy has two toddlers and can't work weekends, but is good with organizational skills. Jane is great with selling as long as it's on the phone. Wilma has a job marketing and loves dealing with people face -to-face, but can never make enough jewelry to do a show on her own.

Looks like we the makings of a cooperative business. The first step was a meeting to decide on the work necessary to get their creations to market and divide the responsibilities:

-They all agreed on a name for the company- Good Girls Jewelry

-All of them will create jewelry

-Betty will design the packaging and business cards

-Jane will call shops for appointments to show their line

-Wilma will keep the sales appointments

-All the women will keep an eye open for marketing opportunities

-Lucy will call the local government offices about permits and licenses and keep sales records

-Mary will maintain the records of inventory and supplies

-They elected a President, VP, secretary, and treasurer

-The President and Treasurer arranged for a checking account and credit card capability

-Together, they drew up an agreement covering sales, and distribution of income. The secretary maintained a signed copy of the agreement and each person kept one.

-Eventually they will all rotate or share jobs to learn each other's skills

-They agreed to allow new, like-minded members from time to time

The Points Of Agreement

-The Good Girls (GG) will each contribute an initial 100 dollars to purchase supplies.

-Initial and subsequent orders of supplies will be divided equally. Distribution should be recorded

-Each GG is responsible for turning in jewelry and showing how the supplies were used.

-Each GG is responsible for purchasing their own tools

-They will meet each Saturday to make jewelry as a group, review sales and share new ideas.

-Meeting/work sessions will be rotated house-to-house each week. The hostess will provide lunch

-On meeting days they will turn in any completed pieces and help quality control each others work.

-When sales are made, the person making the piece will receive 50% of the selling price with 50% going back to the Good Girls Jewelry account for ordering future materials. These percentages may be adjusted as necessary by a majority vote of the Good Girls.

-On the Third week of the month income will be distributed according to agreed percentages and records of sales.

-The treasurer will keep track of the money, deal with checks and charges wherever possible to minimize problems. The President will cosign any check.

-All income and expenses should be reviewed at a scheduled meeting.

-The agreement contains provisions for separation of one of the members from the group should they chose to leave. (An example of a separation clause could provide that a separating member should get all of her personally created pieces, one fifth of any undistributed materials and one fifth of the cash on hand in the bank account to be distributed by 30 days after separation from the group.)

Although The Good Girls Jewelry Cooperative is a hypothetical example of how people can combine their efforts to make supplemental income, I have worked with an actual cooperative group for over ten years. Although they are sponsored by a non profit organization, the model is workable for many situations.

The goal of the organization was to act as an overseer, administrator and incubator, with total responsibility for all methods, procedures and disbursements. We had instructors teach sewing, quilting and water color painting. I taught jewelry-making and home-based business skills.

We encouraged but did not require the members to leave after they became independent enough to stand on their own. Some of them did separate from the group to operate their own little jewelry businesses for a larger income, but many kept up their affiliation with the group. The cooperative model gave them a chance to have a business owners experience and develop the contacts and confidence while sharing the risk with others.

The Good Girls example above is a workable as a business alternative, but the explanation is somewhat idealistic. The initial agreement may not be as simple as the one above or not as complicated. It should be drafted in plain language, simple enough to explain all responsibilities and expectations of each member of the group. It should be flexible enough to be changed when ideas outlive their usefulness or as the organization grows.

Tasks should be divided fairly so that all participants are giving a comparable amount of effort to run the business. Resentments can build when one member of a cooperative is perceived to receive equal profits for lesser efforts.

With some minor adjustments, this same model could be used for a business that re-sales imports or wholesale items purchased from others.

Cooperative economics is a business option whose time has come. It is a chance to learn, share and have a little fun with the people you know while making money.