The $20,000 Challenge: A Story of Growth and Leadership

TeamWorks cleaning cooperative members Marissa, Cendy, Leticia, Elizabeth, and Adriana after presenting the story of their co-op's growth at the National Worker Cooperative Conference in Chicago (June, 2014).

TeamWorks cleaning cooperative members Marissa, Cendy, Leticia, Elizabeth, and Adriana after presenting the story of their co-op’s growth at the National Worker Cooperative Conference in Chicago (June, 2014).

TeamWorks Cleaning’s annual revenues grew by 38% in 2013, jumping from $452,000 to $626,000.  As a result, the co-op members’ filled their work schedules, made more money, and created two new member-track “jobs” while they were at it.

What is the story behind this growth?  How did it really happen?

What would you do with $20,000?  

TeamWorks 2013 success was rooted in a debate among members back in 2011: what to do with $20,000 of surplus cash? The money came from prior years’ profits and was just sitting in the bank waiting for investment.  (Great problem!)

I personally was interested in the idea of the cooperative buying a laundromat.  Turns out that even if the co-op could have secured a big loan it was going to take more than $20K for the down payment and other expenses to get into that industry.  As one member put it: “Twenty thousand is not really that much money when it comes to business”.

So together we came up with another plan:  invest in developing the management capacity of the cooperative so it could sustain a larger client base, and invest in building that capacity from among the co-op members as much as possible.

What was that going to mean in practice?  Up to that point, the majority of the marketing/sales, customer service, client and team scheduling, operations management, bookkeeping, training, and administration at TeamWorks Cleaning had been handled by one person –the General Manager (GM) (phew, exhausting list for one person!).  Through gradual growth, the co-op was approaching the limit of this arrangement… it would soon be simply too much work for one individual.

So the plan was to move to a management team model that would share these functions. But instead of taking the conventional route of hiring outside people with the needed skills, TeamWorks decided to invest in developing members who primarily do cleaning work to also play other roles in the office and in training new recruits.

The plan involved something scary:  committing to invest in people while they were learning their roles on this new team before the co-op had the larger client base that would justify its existence.  The co-op would deliberately run losses for six to twelve months.

Doubts

The members approved the plan and moved ahead. One new full-time and three new part-time positions were created (some had existed in an earlier form, but without a significant time/money commitment), members applied and were selected by a committee and the GM.  The full-time position required English fluency, and “dreamer” who had just graduated from college was hired for that spot (the GM at that time was also a dreamer who had immigrated to the U.S. as a young child).

But the three part-time roles were filled from within — they started to be paid one full day per week for their new administrative and training responsibilities while continuing to clean houses the other four days.  I began meeting with the new “management team” weekly as a group to work together on developing their individual and collective roles, in addition to more role-specific individual training that the GM and I provided.

Several months into the plan, we were not yet seeing the increase in revenue growth that we had projected.  Most of us began to wonder if we were just spending a lot of unnecessary money “investing” in people that wasn’t going to really convert into the ability to support more rapid growth and a larger scale of operations.  The team reviewed and refined its plan.  The assistant managers selflessly proposed to cut the number of hours they were guaranteed for their administrative work, but other than that change the team re-committed to the plan.

The co-op then worked with the US Federation of Worker Cooperatives to get on the Kiva Zip crowd funding platform so that it could borrow $10,000 that would supplement the 20K the co-op was putting into this plan.  It also took advantage an interest-free introductory credit-card offer to help manage cash flow while waiting for the Kiva loan to come through.

And then suddenly — finally! — all of the months of planning, training, and development started to yield results.  By January of 2013, the co-op could see that a solid trend of month-over-month revenue increases was taking hold.  That growth only accelerated, and eventually far surpassed projections.  Every members’ income increased as their work schedules were completely filled and then two new positions were created.

A Deepening Ownership Culture

It is of course great to see the co-op’s growth.  But to me the most exciting thing to come out of this journey is the deepening sense of ownership and engagement that members have embodied.  I think co-op members are gaining through direct experiences a growing confidence in their own leadership.  This isn’t something that people learn primarily through workshops or training — it has to be lived.  Members are now talking about when they can hit the $1 million a year threshold and debating other possible options and goals for the co-op.  A new cycle of organic development is beginning.

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Cooperatives: Poverty Prevention for All of Us?

Enrique is a skilled carpenter.  For many years, he was a union member, worked hard, and made good money.  But the recession left him unemployed for more than a year and a half. That is a really long time to be without any steady income.  He’s picked up the occasional odd job but he is very grateful for the services like food and clothing that he has received from a longstanding community organization in San Jose, Sacred Heart Community Service.

For the last six months, Enrique has also invested over 150 hours of unpaid time in the process of starting a worker-owned cooperative business along with three other unemployed guys and me.  It’s a green business — TeamWorks Sustainable Landscape Maintenance — that does what you’d think of as standard yard maintenance but with a twist:  we use organic methods and electric equipment.  After many months of research and planning, the new cooperative has just opened!

Enrique (in red) and (continuing clockwise) Agustin, Daniel, and Juan celebrate the first payment received from a client!

Enrique learned about cooperative development from the same organization — Sacred Heart — where he has gone for food and other services.  The agency’s leadership is thinking seriously about what its long-term vision of “a community united to ensure that every child and adult is free from poverty” really requires. And that reflection has led to experimenting with a number of creative projects that seek to build healthier and more socially-just relationships in the community.

Why are cooperatives — which are businesses owned by their workers — one part of this exploration?  For me, it comes out of a growing recognition that creating jobs may not be enough.  In the traditional arrangement, a job means the renting of labor.  When it’s no longer needed, as in Enrique’s experience, the rental can suddenly end and the person is on their own. The underlying relationship is an economic transaction. It can be dehumanizing and, frankly, terrifying if you suspect that it isn’t stable.

In a cooperative, on the other hand, the fundamental relationship is a community of human beings who have come together for the common purpose advancing their individual and shared well being.  It is a genuine partnership. One of the many implications of this shift is that cooperatives tend to respond to recessions very differently than traditional companies.

To weather tough times, cooperatives often approve steps like across the board pay cuts to share the pain as they work on the top priority:  keeping all of their members engaged and connected to their cooperative community. Continuing health care benefits is often a high priority as well.  Other steps are usually taken as well, such as exploring ways the business can adapt to changing conditions, perhaps by researching new products or services and ways to harness new technologies.

When the recession really hit hard in the winter 2008-09, the TeamWorks cleaning cooperative saw its monthly revenues drop by more than 15%.  No one knew how far it would keep dropping.  But the cooperative never even consider laying off its members.  Everyone’s pay went down, but they kept the group together (and their health insurance). On a much bigger scale, the cooperatives in the Mondragon network in Spain (with 85,000 workers) and many other cooperatives around the world have taken similar steps in the face of downturns.

These qualities suggest that cooperatives offer a strategy not only for improving the lot of the working poor or unemployed, but also for all kinds of folks.  Many middle class people and professionals are now facing economic insecurity that they never expected to experience personally.  Community food pantries around the country have reported stories of once prosperous people coming for services and confiding quietly that they never in a million years thought they would be needing this kind of help. Many of these people worked as rented labor that could suddenly be let go just as Enrique was, sometimes despite decades of involvement with and commitment to a workplace.

I’m excited that cooperative development is increasingly being recognized as a compelling economic development strategy for addressing poverty and unemployment.  But this can become a narrow view that misses the larger promise of cooperatives: that they offer a meaningful path forward for all people who know that genuine security is rooted in committed human relationships and a community that can adapt, change, and grow together over time.

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