---
authors:
- Aya.elfadil
categories:
- Community
- Business
contributors:
- Aya.elfadil
date: 2022-03-14 00:00:00
summary: Community businesses are locally owned and operated enterprises that are
  accountable to and beneficial for their communities, reinvesting profits locally
  and aiming to improve the local economy and quality of life.
tags:
- community businesses
- local commerce
title: Community Business
---

## Community Business

The term refers to situations in which communities form community
companies to address difficulties they encounter jointly. There are
numerous forms of **community businesses** in which trade products and
services. Locally owned and operated businesses such as grocery stores,
transportation hubs, farms, pubs, gardens, and community centers can all
be considered community businesses. Businesses are increasingly being
used by local communities to regain control over their circumstances.
*They* are all accountable to their community, and the revenues they
make have a positive effect on the local economy.

Community businesses are committed to improving society positively
through sustainable commerce. All profits from a community-owned
business are reinvested in the local community. Moreover, they are
intended to help a particular local geographic region. Community
businesses assist in improving places. Starting with the preservation of
local shops and the creation of leisure facilities, to providing
training opportunities for local people and aiding in the construction
of affordable housing, they have taken a wide range of actions to
improve the quality of life in the communities they serves.

Similarities exist between community businesses and place-based
charitable trusts that manage assets. However, a community business is
held accountable to the community it serves, which could mean that local
residents are involved in official participation or even legal
ownership.

There are many different kinds of community businesses. Locally
entrenched entities that are accountable to the community, trade for
community gain, and have a broad community influence are particularly
influential in enabling citizens to improve their local communities.

### Characteristics of Community Business

- **Local origins**: A business founded by locals that will assist the
  surrounding community.
- **Accountability to the local**: The community has a genuine influence
  in the operation of the business.
- **Benefit to the local**: Local businesses supply goods and services
  in and around their community.
- **Broad impact on the community**: Community businesses interact with
  a number of different organizations in their community and respond to
  a variety of community needs. They may have a particular focus on a
  disadvantaged population or provide broader community support.

The concept of **community business** is associated with the concept of
**community ownership** and, more generally, *co-operative ownership
structures*.

## Community Ownership

The term refers to the act or degree of ownership and responsibility
adopted by the community in relation to any initiatives or activities
conducted in the community. It is also the act of controlling and being
accountable for any projects or programs that would ultimately empower
the community.

Traditionally, community ownership has been portrayed as a mechanism for
achieving a variety of high-level government goals, including social
justice, social cohesion, and community empowerment. There are arguments
that community ownership of infrastructure projects, such as dams and
irrigation, increases the community's response to its requirements and
increases the community's appreciation of the initiatives.

Community ownership can generate radical change because it alters the
mindset of individuals. For instance, this gives the chance for
residents to shop at their own store, as they are no longer required to
choose between leaving town to visit a large store or purchasing
locally.

### Advantages of Community Ownership

- It promotes accountability and responsibility among community members.
- It encourages cooperation, coordination, and collaboration among
  stakeholders and community members.
- It enhances community leadership and empowerment.
- It encourages new ideas and strategies by employing a bottom-up
  strategy.
- It adapts to the demands of diverse populations.
- It fosters community engagement.

## Community-Owned Businesses

**Community-Owned Businesses** are *community-managed* assets or
organizations that are owned and governed through certain
representational processes that allow a community to influence their
operation or use and reap the advantages resulting from such
involvement. A COB is a business that is owned and operated by local
residents. There are limits on the number of shares each person can buy
in order to prevent someone from wielding too much power. Moreover,
community-owned stores have the added advantage of favoring the purchase
of local goods (and can include such preferences into their mission
statements), which redistributes funds to other local businesses and
improves the local economy.

Community-owned businesses (COBs) encompass a variety of business forms
and structures that are funded and held exclusively by local residents.
Locally significant unmet needs that are unlikely to be supplied
successfully by a single entrepreneur are frequently the impetus for the
development of such organizations.

COBs offer a good prospect for urban neighborhoods, yet, they have begun
most commonly in rural regions where giant chain supermarkets or
"superstores" have driven out small-town grocers or merchants, leaving
locals with nowhere to purchase essentials. Unsurprisingly, the majority
of these stores have arisen in states where winter storms can isolate
inhabitants, cause dangerous shortages, and force dangerous road travel.

## Structures of COBs

According to
[Bloom](https://www.thelakotagroup.com/our-people/josh-bloom/), there
are four major structures of COBs:

1.  **Cooperative:** a business owned and operated collectively for the
    benefit of its members.
2.  **Community-owned corporation:** a for-profit organization
    incorporating social entrepreneurial ideals.
3.  **Small ownership group:** small, ad hoc investors that form a
    partnership or closely-held corporation to finance and/or run a
    business.
4.  **Investment fund:** a community-based fund that invests in local
    businesses through debt or equity.

### Cooperatives

A cooperative is an independent association of people who come together
to achieve their basic economic, social, and cultural needs and
ambitions through a democratically owned and controlled enterprise. It
is common for cooperatives to be incorporated as non-profit businesses,
but they frequently pay surplus funds to its members in the form of
"patronage dividends." Each member of a cooperative has an equal voice
in the decision-making process.

- An example for a *cooperative* is the [International Cooperative
  Alliance](https://www.ica.coop/en/); an organization that promotes and
  supports the global cooperative movement.
- An example of a *cooperative business* is [The
  Coop](https://store.thecoop.com/) created by Harvard students in 1882,
  to sell textbooks.

### Community-Owned Corporations

Community-owned corporations are not cooperatives, but rather
community-owned for-profit businesses. Anyone may purchase shares in the
corporation, and individuals may hold varied numbers of shares.

- An example is Family Matters (Malta, MT), a community-owned family
  clothing store.

### Small Owner Groups

These forms of COB whether partnerships or closely held corporations are
the most flexible and adaptive. They are capable of acting rapidly and
with minimal effort. Small-group investing reduces the risk for each
individual investor, making it acceptable to them. A company can raise
capital reasonably fast if the members of the group contribute money as
one of their primary resources. Additionally, due to the absolute
control provided by a small ownership group and owners' interest in the
business, they are likely to be involved in, and support, day-to-day
operational decisions, which helps avoid "owner-agent" issues.

- Examples of businesses managed and capitalized by a small group
  include restaurants.

### Investment Funds

The majority of community-owned businesses are funded through the sale
of shares, such as in a cooperative (where all shares are equal and each
member owns one) or a community-owned corporation (where individuals may
hold several shares).

An **investment fund** gives venture funds (equity) or loans (debt) to
an entrepreneur. Contrasting typical venture capital,
community-development investment funds are less concerned with large
profits and more concerned with inspiring new firms – particularly
innovative business concepts that cannot obtain finance (or sufficient
funds) through standard methods. Instead of directly owning and
operating a business, this mechanism enables a community to invest in
one or more enterprises – and, possibly, to reinvest the capital over
time in further new businesses. Community-based enterprises can also use
crowdlending platforms (e.g., VirginMoney) to obtain debt funding from
friends, family, and other non-bank investors.

- An example is [Clean Yield Asset
  Management](https://www.cleanyield.com/) located in Greensboro,
  Vermont, assists local private investors in making equity investments
  in Vermont-based local startups.

## Sources:

- <https://en.wikipedia.org/wiki/Community_business>
- <https://en.wikipedia.org/wiki/Community_ownership>
- <https://www.powertochange.org.uk/community-business/what-is-community-business/>
- <https://spokaneindependent.org/community-owned-business-how-citizens-are-filling-local-needs-through-shared-vision-and-investment/>
- <https://www.publichealthnotes.com/community-ownership/>
- <https://communitybusinesses.blogspot.com/>
- <https://communitybusinesses.blogspot.com/p/cooperatives.html>
- <https://communitybusinesses.blogspot.com/p/community-owned-corporations.html>
- <https://communitybusinesses.blogspot.com/p/small-ownership-groups.html>
- <https://communitybusinesses.blogspot.com/p/financing-tools.html>


## See also

- [Cooperative](cooperative.md)
- [Worker Cooperatives](worker-cooperatives.md)
- [Economic Democracy](economic-democracy.md)
- [Workplace Democracy](workplace-democracy.md)
- [Co-operative Bonds](../organisations/cooperative-bonds.md)
- [888 Causeway Cooperative](../organisations/888-cooperative-causeway.md)
