The Natural Food Store is a successful business that developed into a pivotal part of the community in Headingley, Leeds. Customers were therefore dismayed when they learned, in 2007, that Chris and Sue Sharratt, who had run the shop for over 20 years, were thinking of retiring.
So, under the leadership of Headingley Development Trust, a membership-based community enterprise, customers began to explore the feasibility of a community buy-out.
Following expressions of interest and two public meetings for prospective investors it was obvious that the community and customers were not only supportive but willing to become members and invest in the proposed share issue in order to raise the necessary capital.
Four members of the HDT Board took on the lead role in the buy-out and began to promote the plan to the community through HDT, the store and public meetings. They then developed the business plan with support from a co-operative development body, Co-operative and Mutual Solutions, and a share issue was launched in June 2007.
The response was very fast and it took just five months to raise the necessary capital. The business was registered as an Industrial and Provident Society, bona fide co-operative. The rules specify a (limited) interest payment on surpluses.
The members of the new co-operative each invested a minimum of £100 each, some considerably more. £103,000 was raised, £80,000 to purchase the assets and the remainder for costs and working capital. This, in addition to a small business loan from Co-operative and Community Finance, provided all the capital needed for the buy-out.
Pro bono legal work was given from local solicitors firm Eversheds to complete the purchase and the buy-out went through in October 2007.
This cooperative now has over 230 investing members who are all eligible to stand for and elect a board of directors. Although the new co-operative is now wholly independent there are strong personal and constitutional links with HDT. For example HDT will be able to nominate two of the eight directors at the first AGM. The store manager will also be able to be on the committee. And once the business is able to declare interest for its members it will also be able to pay a community dividend to help other initiatives under the leadership of HDT.
The four directors who led the buy-out are clear that a number of factors were essential to its success: willing and co-operative vendors; the vision of those who committed time and money to the business; HDT providing time and resources and a small loan to help finance the buy-out process; a dedicated buy-out team of volunteers; specialist business support; pro-bono support from Eversheds solicitors and a local valuer/accountant.