Setting up as a cooperative

teenie-quaggard commented 4 years ago

Hey everyone! Here is a bit of preliminary research that I have conducted about what the next steps would be for Yalla to incorporate and become a co-operative.

In terms of what the next step is... I think that Yalla needs to work out a structure where we could flesh out a feasibility study (see below) together. I've had a look through the Notion as well as the other issues in Master Reference and it seems that Yalla has already begun some of the more 'business-y' discussions, but there are still a number of gaps that need to be sorted before we can apply for help with Hive.

Feel free to have a read through my notes and please drop any questions or comments in the thread below!

Note: I conducted most of the research under the assumption that Yalla would register as a cooperative in the UK. I'm going to continue to look into what the benefits would be of registering elsewhere (somewhere in Europe?) and will let everyone know in the thread below. I also need to get some advice on whether or not UK cooperatives can legally have members based elsewhere.

The big question

Is a co-operative the right business structure for Yalla? If Yalla wants to limit ownership to just a few people, even as the co-operative grows, then a co-operative may not be right.

What is a co-operative (co-op) anyway?

Co-ops are businesses owned and controlled by their members.
Members have an equal say in how the business is run
Members choose what to do with profits, whether distributing among members, reinvesting in the business or giving to the community.

Cooperative values

Self-help, self responsibility, democracy, equality, equity and solidarity

Ethical values

Honesty, openness, social responsibility and caring for others

The co-operative principles

Voluntary and open membership
Democratic member control
Member economic participation
Autonomy and independence
Education, training and information
Co-operation among co-operatives
Concern for community

Why should Yalla incorporate (become a legal entity)?

Incorporating would mean that Yalla can enter contracts as an entity. This means that risk can be more equally distributed between members.

At some point, Joe mentioned that he is currently signing off on all the contracts between clients and Yalla. That means if anything goes wrong, Joe will be singularly liable for any legal fallout.

What needs to happen before Yalla can incorporate / register as co-operative?

Yalla should have a clear business plan (more on that below)
Yalla must create its governing documents (also known as 'articles'). This document includes documentation on the company aims, lists its members, outlines who is acting as its governing body, and documents what happens to surplus and what happens to assets when the organisation is sold or taken over.For co-ops specifically, the governing document must embed the 7 co-op principles listed above.
In order to register, Yalla will need at least 2 directors and 3 founder members who will be asked to sign the paperwork. Yalla will also have to decide who will take the role of secretary. I am not sure if all of these individuals need to be in the UK.

Note: Cooperatives UK offers a paid-for service to help guide potential coops in the legal process of registering. It starts at £250

Step 1 - Conducting a feasibility study

A feasibility study is basically a workshop day which prepares Yalla for the creation of a solid business plan. It helps to test the business idea and checks that it serves the purpose you intent it to.

Click here for workshop. Synopsis of the steps below. I have longer notes on each of these points so if you are curious about something, just note a question in the comments below.

Motivation Analysis - Why does Yalla want to become a cooperative?
Mission Statement - What is your mission statement, or the purpose of your business.
Identifying the community Yalla serves and its stakeholders.
Thinking about a business model - defining commercial activity, member benefit and social impac
Defining organizational structure
Deciding who is involved with setting up the cooperative
Undertaking market analysis
Thinking about investment
Thinking of the critical factors for success
Creating an implementation plan

Step 2 - Contact Hive and apply for support

https://www.uk.coop/the-hive/apply/pathway-1 Application guidance: https://www.uk.coop/the-hive/apply/guidance#pw1

Get advice on cooperative model/structure, get help fine tuning our governance, etc.
Will need to pay a nominal fee for around £100 to access support

Step 3 - Create a business plan

The business plan covers areas that are very similar to the feasibility study – but you must complete a feasibility study before you start on your business plan.

A feasibility study is your chance to work through and test different aspects of your business, to fix any issues – it can also be the time where you realise you need to go back to the drawing board.
A business plan will be your document to say how you will do it. A lot of the information will come from your feasibility study. Once it’s ready, and everyone is on board, you can move onto setting up your co-operative by acquiring resources and establishing your legal form.

For a business plan workshop see here.

Step 4 - Set up a bank account for Yalla

Need to do a bit more research on this...but also Hive may be able to provide a bit of context concerning what a small cooperative should look for.

This bank account for cooperatives was mentioned on the cooperative UK site

Monzo also has a business account which has a lot of extra functionality including invoicing.

A Transferwise business account would streamline paying members who are outside of the UK as well as the process of being paid by clients outside of the UK. This may be especially important post-Brexit..

jema28 commented 4 years ago

Hey @teenie-quaggard, I think for feasibility study step it could be really useful to add the key headings/sub questions in a notion document and then we all add ideas under each heading and meet to discuss/consolidate.

When are we roughly looking to apply to Hive? We could schedule in time for this weekly so we meet this deadline. Can imagine this taking a couple of weeks/a month to complete if we do a chunk a week. What does everyone think?

teenie-quaggard commented 4 years ago

@jema28 - That sounds like a good idea to me. How does everyone else feel about this?

I'm not really sure about deadline...I think the sentiment is kind of ASAP. I think a realistic estimate might be the end of this year to complete the feasibility survey, business plan, governing documents and get registered as a coop.

teenie-quaggard commented 4 years ago

Hi everyone - I'd like to suggest a timeline of getting this all set up by the end of Q1 2021.

If there is time in the schedule, I think it makes sense getting the feasibility study done within the next two weeks (before October 9). @jema28 - I like your suggestion of creating a shared Notion document; I'll work on building this up in Yalla's notion. @thejoefriel and I had spoken about clearing a morning in everyone's schedule so that everyone would have some time dedicated to answer the questions on their own. We could then meet in the afternoon to discuss / collate. @thejoefriel - do you think it's possible to get this scheduled in the upcoming weeks?

After the feasibility study is completed, I'll be in a better place to contact Hive and get their support in building up our business plan and registering us as a co-op.

I would say that we could probably get the vast majority of this done before Christmas, but I'm not just not sure how quickly Hive will be able to offer their support or how long the application process will take to get officially registered as a co-op.

thejoefriel commented 4 years ago

Thanks for this @teenie-quaggard - this is really comprehensive and gives us a roadmap to getting set up. One quick thing is on some advice from a few lawyer friends, I'm looking into setting up a LLP in the meantime with indemnity insurance, just something we can quickly implement to ensure I am a bit more protected from our current contracts. I'll keep people updated on this :)

A few points to discuss:

How to handle multiple territories I think you're right that it could be tricky for us to have shareholders for a uk cooperative with ppl outside of the uk. One potential option I was thinking is whether we set up silos in each territory (e.g. UK, Germany and Gaza) and then set up a contract that connects all of them and ensures everything is distributed equally. This might be a bit weird, but could have a few benefits: 1.) Makes it easier to set up contracts with clients in UK and Europe post Brexit 2.) Everyone can be shareholders / have ownership of Yalla 3.) Also means in future we could move to full employment for members if that is something we wanted

For me it's crucial that the core members have equal ownership of Yalla. I think this might be difficult with just a UK coop and so we may need to be creative to get around this

Is Co-op the right structure? This is an interesting point. Talking to Anni the other day she said it was important to make sure we first pick the right business structure for us rather than necessarily shoe-horning into being a co-op. One route she suggested that could be worth exploring is setting up as a Benefits Corporation (B Corp). Here's some links she has shared to help us: https://bcorporation.uk/ https://companieshouse.blog.gov.uk/2018/07/18/choosing-the-right-business-structure/

Bank account Transferwise I think is the best option. It's what FAC uses in their transfers with MercyCorps so keeps things simple. We should also consider tying in with Xero as well for accounts management

thejoefriel commented 4 years ago

OK no in terms of how we get moving with this:

Dedicated time for people to read this I've booked into the capacity planner half a day for @RamyAlshurafa @dupreesi and @fadeomar to read through this next week :) Just to make sure we've all read it and added comments here

Next steps @teenie-quaggard what is the next step after people comment on this? I'm wondering whether rather than a group workshop, it could be good if you carried out a series of 1-to-1 chats with the proposed core members: @dupreesi @RamyAlshurafa @fadeomar @jema28 and myself. I can also then carry out the 1-to-1 with yourself? In these chats we can cover perhaps the insights you need to help with the feasibility so this could be things like:

How do you want to be paid?
What do you think a core member vs an outer / non member should be? For example, we have Ahmed who is a valuable part of Yalla but does not want to be a core member. How do we accommodate this? And also importantly what are the added benefits and responsibilities from being a core member vs outer member?
What would your exit plan be? I.e. what would you want / expect if you ever chose to leave the co-op

The reason I suggest this approach is:

It ensures everyone has their voice heard
People can speak honestly as we could offer that all this is even kept anonymous if you like
We then get the desires of the core members and can shape the structure around that which I think is crucial

If you think this is a good approach, we could set these 1-on-1 chats over the next fortnight?

teenie-quaggard commented 4 years ago

Hi @thejoefriel - thanks for looking through this!

That sounds like a good idea to incorporate as an LLP. One thing to note...co-ops actually come in all many different types of legal structures (including LLCs), so I think it would still be possible to register as a co-op and keep the same legal structure. I'll need to do a bit more research, but if so, then it may be possible to set up the bank account as soon as you have registered as an LLC with little need for annoying changes later. Here's a bit of information on that: https://www.seedsforchange.org.uk/legalforms.pdf

I'm happy to have one on one calls with everyone over the next fortnight. I'll wait for everyone's comments and then schedule in chats the following week. :)

RamyAlshurafa commented 4 years ago

thanks, @teenie-quaggard for this, Thanks @thejoefriel @jema28 as well

i think we should list all the responsibilities of core members, if we can have these listed then we can split them among us to make sure the load is distributed in a way to make everyone comfortable.

@thejoefriel @teenie-quaggard I'm happy to follow your lead on the legal stuff as I'm not familiar with here in Gaza (LLP and other parts)

@thejoefriel the one-one sessions looks a good idea when this should be done? before the Hive's workshop or after? I think after is better maybe after the workshop things would be clearer for us.

teenie-quaggard commented 4 years ago

Hey everyone!

Here are the results from the 1-on-1 interviews that we met for last week. Overall it seems like there are quite a few commonalities - that's great! Please note, that although our conversations were based around all the same questions, there may be some things mentioned below that we did not touch on in your conversation. If there is something that you'd like to add or change, feel free to write a comment below or contact me if you'd prefer to remain anonymous to the rest of the group. I'm going to have another look at the feasibility study and get back to you on what I think the next steps should be later this week. Thanks!

Payment

Areas of commonality (or, at least no expressed dissent)

Increasing pay
Simplifying and making the payment process more transparent for the entire team
Being paid for the days you work, despite it being over estimation, or administrative work

Areas of conflict

The notion of moving towards salary based pay was a minority of members. For some, the reasons not to move to salaries were tax based, for others, it was more a question of fairness. Many members also questioned whether or not salaries would be far too much overhead for Yalla to take on at this time.

Areas for discussion

What to do when a client does not pay? What kind of protocol needs to be set up?
Should internal rates be a flat structure or should their be different rates for different tasks?

Core vs. outer members - responsibilities and benefits

Areas of commonality (or, at least no expressed dissent)

Core members share all responsibility (for when things go wrong and for when things go right)
Core members are responsible for taking part in making Yalla business decisions including business development and project scoping
Core members are responsible for delivery (even if it means working overtime)
Core members commit to a minimum of time per month / year
Core members receive higher remuneration (on rates, but also in the form of bonuses if Yalla has a particularly good year)
Core members get first dibs on work before it is offered to non-core members
Core members get voting rights
Both core and non-core members should be responsible for responding back to requests / questions within a reasonable period (48h?)
Both core and non-core members need to be clear on when they are available to work
Both core and non-core members commit to work the time they have been assigned to during project scope

Areas of conflict

None!

Areas for discussion

For core members, equipment expenses should be covered. Non-core members do not get perks such as paid desk space.
Core members are shareholders? This was a question for many but we don't know what it would look like in terms of structure.
As the division of responsibilities cannot be equal for geographical reasons how do the core-member responsibilities get divided up equally?

Vacation benefits

People were generally unsure about this and seemed to think that it was probably more applicable to Yalla if the members moved onto a salary based model with paid holiday.

Overall, it was important to everyone that they could take days off when they wanted but people were fine with these days being unpaid. The amount of notice individuals suggested varied from 1 to 4 weeks.

Areas for discussion

One important complication is that it is easier for some members to take time off without projects stopping than others. How should that be dealt with?
In terms of scheduling, it's important that not too many people are away at once. What should be the minimum number of core members available?
What are the expectations for a working week? 4 days, 5 days? How can scheduling be fair but flexible to meet everyone individual needs?

Exit plan

Areas of commonality (or, at least no expressed dissent)

Core members must give notice
Core members must return any Yalla equipment and remove themselves from all Yalla channels (Slack, Github etc)

Areas of conflict

How much notice an individual must provide - some say 1 month, some say that all scheduled commitments must be completed, some say at the end of that given sprint

Areas for discussion

Should core members get financial shares and / or remuneration when leaving?

New core members

Here there were lots of different ideas for how a new core member should be instated. None of them really contradict each other , so a mix of the methodologies is totally possible.

Find out what they specialise in. Whoever is best equipped from the core members to judge the specialisation will vet the potential member and then there will be a discussion amongst core members.
A core member sponsor will invite a new member and provide a proposal of that new member to the team who will vote on the new member.
Simply, talk to the potential member and introduce them to the team.
Have a trial phase for potential member, check expectations to performance, sign a contract.

dupreesi commented 4 years ago

THANKS @teenie-quaggard! That is superb and gives lots of insight.

jema28 commented 4 years ago

Just getting to this @teenie-quaggard, thanks so much for putting this together! Really well done and got some more to think about 😸

yalla-coop / MASTER-REFERENCE