Pros and Cons of Community Businesses


Warrior House News | By Shannon Sanford
Posted: 02/06/2015 03:06GMT | Updated: 6 years ago

Community businesses are operated and owned by the local community.  They differ from traditional businesses in that they are motivated by the purpose of helping the community as opposed to being primarily focused on profit.  The founders of these types of businesses breathe new life into forming businesses by providing capital to fund innovative ideas that the market has overlooked or deemed to be high-risk.1

There are four main types of community-owned businesses:

  1. Cooperative.  This is a business that is managed and
    owned by a community to benefit its members.
  2. Community-Owned Corporation.  This is a for-profit
    corporation that combines the principles of social
    enterprise.
  3. Small Ownership Group.  This is a small investor group
    that operates a business as a tight-knit corporation or
    partnership.
  4. Investment Fund.  This is a fund that is
    community-based and invests equity or debt in local
    business projects.2

 

Pros and Cons of Community Businesses


 The following is a list of pros and cons regarding opening a Community-Owned Business:

Pros:

1.  Community Connection.  Local businesses build strong communities by supporting local causes and connecting neighbors in economic and social relationships.3


2.  Community Welfare.
All of the important decisions are made by people who live in the community and will be directly impacted by the decisions. 

3.  Community Jobs.   More jobs are created locally and, in some cases, better benefits and wages are provided.

4.  Community-Protected Environment.  Energy and resources are conserved due to less packaging and fuel-related costs.  In addition, there is less water and air pollution when compared to large corporations.

5.  Community-Saved Tax Dollars.  When you shop locally, the sales taxes on purchases are reinvested in the community.4

 

Cons:
1.  Fewer Tax Breaks. 
Community-Businesses do not get the nationwide regulatory and tax breaks that are provided to large corporations.

2.  Financing Problems.  Locally-owned business owners have a more difficult time in finding available financing to open and operate their businesses.

3. Competition.  Local businesses have to compete with the political propaganda regarding job promises and revenue from national chains.5

4.  Personal Liability.  A locally owned business may be subject to lawsuits or creditor claims.  If the business does not have enough income to cover its responsibilities, then the difference must be paid.6

5.  Advertising Hurdles.  As a community-based business that is trying to earn a good reputation, you have to ensure that you have the money to promote the business and that you are able to deliver the items and prices that are advertised.  Otherwise, you will have a difficult time in earning consumer trust due to a bad company image.7

The Plunkett Foundation:  The Plunkett Foundation is a national organization that encourages the development of UK community shops.  This foundation offers help from community advisors, experts, and mentors via email, telephone, and online in order to assist with opening a new community shop or with support programs for helping with existing ones.  In addition, you can go to the website to access a directory that is up-to-date regarding all UK community shops, a collaborative forum, and other resources.8

To find out more about membership, along with assistance for obtaining savings and other services that you would otherwise be unable to access, you may visit the membership page, send an email to info@plunkett.co.uk, or call 01993 810730.9

________________________

1 http://www.preservationnation.org/main-street/main-street-now/2010/marchapril-/community-owned-businesses.html

2 http://communitybusinesses.blogspot.com/

3  http://ilsr.org/why-support-locally-owned-businesses/

4 http://www.independentwestand.org/what-happens-when-you-shop-local/

5 http://reclaimdemocracy.org/local_business_benefits/

6 http://smallbusiness.chron.com/advantages-disadvantages-being-privately-owned-76877.html

7 http://smallbusiness.chron.com/problems-smallbusiness-advertising-56601.html

8 http://www.communityshops.coop

9 http://www.plunkett.co.uk/whatwedo/rcs/ ruralcommunityshops .cfm

________________________

Shannon Sanford

Shannon Sanford

With over thirty years of writing experience, a MBA, and a BS in Psychology, Shannon has written on a variety of topics including: Business, Health, Science, History, Human Resources, Psychology, etc.
Shannon Sanford

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