I need to acknowledge that bowls clubs and golf clubs often started out when land was relatively cheaper and unused, and having a freehold property is an enormous advantage. Scout clubs typically have no rent to pay, and YHA hostels are often buildings that were bequeathed. If we are to use this as an example of a customer-owned business, we must find a way of making premises more obtainable.
I frequent a bowling club, which happens to be the oldest in Australia and is in a trendy, beachside suburb. I don’t bowl much, but I am there to socialise. It is uniquely a hip bowls club – the members are typically men over 50, but they are quite rock and roll, and not sandwiches and tea.
A club is essentially a customer owned business. The finances of the club are the responsibility of the members, whether that comes from operating revenue or fundraising activities. Because, by definition, members enjoy being in the club, they help it financially.
The Bowlo (Aussie for bowls club) has a different vibe to other bars I frequent.
- The bar staff are employed by the members. It is a nice change of dynamic being the owner
- If we don’t like something, we have the power, and right, to push for changes
- It is substantially more social. Everyone knows everyone
Other bars have a higher ratio of strangers being served. People who only pop in occasionally, or visitors to the area. I can visit the Bowlo any night of the week and know 5-10-20 people who are there.
Being a place where people know each other more has a positive feedback effect – it enables weekly prize draws, pool comps and footy tipping – all of which makes the place more social again.
Clubs are non-profit, because there is nobody to give the profit to. Typically that means that prices for what they receive are lower than a comparable for-profit business. A community gym is cheaper than a for-profit gym.
Because members decide on what they want the club to provide, as long as it exists the members will be, on average, happy with it. A club that winds up will typically not be due to any failures in providing the service, but rather a disinterest in the service itself.
Club organisations, for example auto clubs or RSLs in Australia (ex-soldier clubs), offer reciprocal benefits – if you belong to one club, you can access the benefits of any of the clubs.
There is no reason why bars, restaurants and nightclubs cannot be customer owned, cannot be clubs.
For a club to come into existence, there needs to be enough people wanting it to exist.
Scenario #1. Kathleen loves baking and socialising, and has always dreamed of owning a cafe. When the kids left home, she and her husband borrowed $100K, secured a 5 year lease, and built a very beautiful, inviting cafe. They priced their products a little bit higher than the competition, because they felt the quality and decor were superior.
After 3 months of less than anticipated business, and losing money, they started offering discount Tuesdays and a loyalty card. The response was tepid. After 6 months they had to close down because it was cheaper than staying open. They still owed the bank. They still paid the rent until a new tenant was found. They were now broke and embarrassed.
They only found out later that the main reasons for their failure were:
- People were content with the cafe they already frequented
- The coffee wasn’t hot enough
- They didn’t like Kathleen’s personality
Scenario #2. Kathleen is hanging out with friends at a cafe, and she says you know what, I think we could make a nicer cafe ourselves. And cheaper.
Friends mention this to friends and before you know it, 100 people are thinking this is a good idea, and form a club.
One of the members owns suitable (vacant) premises, and says they can use it for 2 years, rent free, as they establish themselves. It isn’t in a prime location, but that shouldn’t matter.
After 2 years, 75% of the typical rent will be fine – because she knows this could likely be a very long-term tenant.
Even though it was Kathleen’s idea, and in her head a personal dream, the club decided that no club members should be employees. It would muddle things and feel odd.
When the coffee wasn’t hot enough, members spoke up, and it was rectified.
The lower rent and vibrant patronage meant that it was the cheapest cafe in town – more people joined the club.
The two examples are essentially the same business, just approached from a different form of ownership.
So let’s turn the existing model of small business ownership upside down. Instead of a new business being based on a dream or deluded expectations (I went to a business school of sorts, and every business plan I saw was based on rose-tinted expectations), how about it can only happen if enough people pledge to support it, and buy into it as owners?