Yo Mamas Catering Cooperative and the Third Coast Workers for Cooperation were featured in the Austin Business Journal's ABJ Entrepreneur.

Jeanette Monsalve and three friends — all but one mothers — started making empanadas to raise money for a project. And when orders for their pastries kept coming in after their fundraising stopped, they knew they had the makings of a business.  They also knew they didn’t want the typical business model, so they decided to create their catering company as a worker cooperative — aptly named Yo Mamas Catering Cooperative…

Yo Mamas’ founders had good timing in that they benefited from the efforts of an upstart nonprofit with a new program focused on helping people start worker co-ops.  Third Coast Workers for Cooperation is aimed at developing, promoting and supporting worker co-ops through educational and outreach programs, including its Cooperative Business Institute, said Carlos Perez de Alejo, community outreach coordinator for Third Coast. The Cooperative Business Institute is a 16-week program that takes participants through the nuts and bolts of starting all types of worker cooperatives, everything from writing a business plan to decision making.

Org teaches how to create, run coops

by Sandra Zaragoza

August 12, 2010

Jeanette Monsalve and three friends — all but one mothers — started making empanadas to raise money for a project. And when orders for their pastries kept coming in after their fundraising stopped, they knew they had the makings of a business.

They also knew they didn’t want the typical business model, so they decided to create their catering company as a worker cooperative — aptly named Yo Mamas Catering Cooperative.

In such a business model, workers own and control the business jointly. Typically, each worker will invest with a buy-in when he or she begins working. Afterward, each is paid from the business’s revenue while decisions are made democratically, such as by consensus or an elected board.

Yo Mamas’ founders had good timing in that they benefited from the efforts of an upstart nonprofit with a new program focused on helping people start worker co-ops.

Third Coast Workers for Cooperation is aimed at developing, promoting and supporting worker co-ops through educational and outreach programs, including its Cooperative Business Institute, said Carlos Perez de Alejo, community outreach coordinator for Third Coast. The Cooperative Business Institute is a 16-week program that takes participants through the nuts and bolts of starting all types of worker cooperatives, everything from writing a business plan to decision making.

Meanwhile, Third Coast hopes the worker co-ops that the institute spins out will become dues-paying members.

Third Coast is largely a bootstrapped effort, but eventually its founders hope to generate income through educational programs and fundraising. The institute will remain low-cost or free to participants who are underserved.

Yo Mamas represents the first group of students to go through the program, and the institute is already seeing strong interest.

“We haven’t been able to accommodate the amount of demand we’ve seen since we’ve launched as an organization,” Perez de Alejo said. “We are still small, and we’re fundraising, so we honestly haven’t been able to meet the demand.”

So far, people have contacted Third Coast with interest in opening a bakery, a grocery store and a technology company. The organization plans to partner with the Workers Defense Project in January to set up a construction co-op. Perez de Alejo said he recently tailored the curriculum to provide a weekend course for a group in Houston that plans to open a food cart co-op.

That interest isn’t surprising, given that tough economic climates tend to give birth to more cooperatives, one expert said.

“In times when there is economic stress, we tend to see a spike in interest in cooperatives because there are more people that have needs that are not being met,” said Adam Schwartz, spokesperson for the National Cooperative Business Association.

There are nearly 30,000 U.S. cooperatives operating 73,000 business across all sectors in the U.S. economy, according to the University of Wisconsin Center for Cooperatives. These cooperative generate $500 billion in revenue and $25 billion in wages.

Austin has some well-known co-ops, including grocer Wheatsville Food Co-op and affordable housing co-op ICC Austin. Black Star Co-op, a microbrewery, is proving there is continued interest in such businesses. Black Star, which is raising capital through the sale of preferred stock called member-investor shares, has less than $200,000 to raise, according to its website.

Until now, there hasn’t been a dedicated cooperative business development center in this area. Perez de Alejo believes the Cooperative Business Institute may be the first of its kind in the state.

“Where you see a concentration in workers’ co-ops is generally in the Northeast or West Coast,” Perez de Alejo said. “In the South, it’s really lacking.”

Austin’s history of supporting local and cooperative businesses bodes well for the next generation of worker cooperatives, Perez de Alejo said.

“It’s a tradition that we hope to build upon,” he said, adding that Third Coast is reaching out to existing cooperatives to identify ways they can collaborate.

Additionally, Third Coast plans to reach out to lenders, lawyers and others who can help such businesses get off the ground.

Worker cooperatives run the same risks that any business does, Perez de Alejo said, but the payoff is the “triple bottom line,” which goes beyond profits and measures the well-being of the worker-owner and the business’s contribution to the community.

Schwartz said the decision-making process can be one of the more challenging aspects of running a worker co-op because the worker-owners must agree before certain actions can be taken.

The worker co-op structure appealed to Monsalve because of the flat leadership structure.

“It’s great to feel like you have more control and affect every aspect of the business,” Monsalve said. “It’s challenging, but in a good way. We don’t have this hierarchy of a typical business, so we do have to figure out how to negotiate with people who all have a say. We want to move forward quickly, but we want to respect the democratic process.”

She credits Third Coast for helping accelerate the creation of Yo Mamas, which they hope to launch this fall.

“They thought of every possible need … every detail that could come up and covered it. It was very thoughtful and well-planned,” she said.

Also, the nonprofit provided childcare for the four mothers so they wouldn’t have to miss the once-weekly class.

“I would have done a [worker co-op] regardless, but I don’t think we would have done it so quickly,” she said.

Monsalve said she’s eager to see where Yo Mamas can go.

“This could work as a way for us to actually sustain ourselves and our families. Most of us are working-class women. We’re just excited that it’s an opportunity to supplement our day jobs,” Monsalve said.