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Cora Wiens couldn’t have done it alone.

The founder of Eadha, an all-sourdough bakery in Winnipeg, wanted the private business to become a co-operative. In her twenties, Wiens worked at a well-known co-op café and activist hotspot called Mondragon; a collective that gave her a voice in business decisions and the confidence to found an explicitly anti-oppressive, LGBTQ+-led business of her own in 2018.

But Wiens wanted to go farther. She wanted to transform the bakery into a co-operative and give her employees the same agency over business decisions that had inspired her years earlier.

She also wanted to shore up the bakery’s finances. The business had weathered the first year of the pandemic, but 2021 brought slower sales and burnout for Wiens. Eadha had always been a community establishment ⁠— donations from the community helped them purchase a new refrigerator that spring — and Wiens hoped a co-op model would build on that support and cement customer loyalty.

Many veterans of the co-op sector say the best part of the co-op business model is its emphasis on delivering value to a community, rather than profits to owners and shareholders. It’s a model that provides an alternative to capitalism — and an opportunity for social impact — but transitioning an existing business to a co-operative model can be time-consuming and expensive. The process requires specialized knowledge, new governance bylaws and employee training.

Eadha Bakery became a co-operative this June with the support of SEED Winnipeg, a non-profit supporting entrepreneurs working to alleviate poverty. A GoFundMe campaign, along with grants from the Canadian Worker Co-op Federation and the Manitoba Co-op Association, allowed Wiens and her colleagues to pay the hefty costs associated with reincorporation, such as legal fees.

The federal government’s investment readiness program for small businesses and the Canadian Women’s Foundation is covering the cost of co-op governance training, as well as more general business skill development, like marketing. “We would have had to learn all of these things, regardless of funding,” Wiens said at a conference for co-op sector leaders in Ottawa this spring. “The funding means we get to hire professionals to train us and we get paid to learn.”

Successful transitions from private businesses to co-ops are aided by support from existing co-ops, either formally through an incubator or grant scheme or informally by sharing advice and tips, says longtime co-op researcher Dr. Fiona Duguid. She is a co-lead of the CoopConvert research project studying how businesses transition to co-ops across Canada. 

According to 2020 Statistics Canada data, 98 per cent of all Canadian businesses are small businesses with fewer than 100 employees. Converting to a co-operative is one way to keep a business alive when its original owners retire, Duguid says, as well as a valuable way to grow the sector. One study estimates co-ops employed 174,000 Canadians and contributed 2.5 per cent of the country’s gross domestic product in 2019.

But owners and workers will face challenges when converting businesses into co-ops, Duguid says, including a general lack of awareness about the co-op model. She and her team regularly receive requests for case studies on particular co-ops or research assistance. “This is resonating with folks and we see more conversions happening,” she says.

Duguid and her team have looked at 304 business-to-co-op conversions, most of which occurred when owners wanted to retire or sell off their business. A minority of co-op conversions were worker-instigated attempts to bring a business in line with proposed values or improve sustainability, like Eadha. In many cases, the businesses were purchased by customers or workers because the community valued them, like the only grocery store in a northern Ontario town or a women-only gym. “I think there’s a tremendous opportunity in keeping things local,” Duguid says. 

The majority of conversions were also in Quebec. Forty-five per cent of all co-ops are in that province, which creates ideal conditions for a helpful support network. “When you have success, that breeds more success, which then breeds more success,” Duguid says. 

The funeral industry is a good example of this effect, she adds. The Federation of Funeral Cooperatives of Québec has 20 constituent co-op members, in part because co-ops have been proactively advising businesses on how to transition. “It’s not running around and just trumpeting, ‘Yay co-ops,’ but more, ‘Hey community, what are some of your issues?’”

But even if co-ops in other provinces want to help new members, they face a general ignorance of their business model. Even people with credit union accounts may not fully understand how their union differs from a private bank, Duguid says. 

For transitions, a lack of awareness from financiers and external professional service providers can be even more costly. “For example, many accountants don’t really know anything about co-ops and how they actually work. And yet the accountant is one of the main people that small business owners trust and rely on,” Duguid adds.

Newly formed co-ops may face the same difficulties acquiring capital as private businesses, but a conversion can also signal to potential customers that a business stands by its values and is worth supporting.

Joel Gilbert Anderson sees this firsthand as a member of the People Design Cooperatie, a sustainable architecture collective based in Toronto. Prior to forming People Design, he was part of a private architecture firm. Their sustainability focus led them to becoming a B corporation, a designation from the organization B Lab Global for businesses prioritizing social impact.

“We were really trying to foster a culture of democratic decision making ⁠— but from a corporate perspective, in a private corporation, that’s simply not there,” Anderson says. So in 2020 they began the conversion process and incorporated as a co-op the next year. 

People Design works with many other housing co-ops and nonprofits, who choose the firm because its co-op’s status signals dedication to sustainability, Anderson says. 

Despite its success, professional services like People Design make up just 2 per cent of the co-op sector. Key to supporting growth is building a strong support network so people know who to approach with questions, Anderson says, especially as this cooperation only furthers the sector’s vision.

“The biggest thing,” he says. “Is looking for ways we can shift power from a few single individuals to the power who are really doing the work, showing up every day and really integral to success.”

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