Community Shares to retain member interest
A question was asked at the recent Community Shop Network meeting about whether having member shares increases customer loyalty and interest in the community shop. The following points were raised in response.
- most community shops issue shares to members, and it is possible to use the share issue as a way of retaining engagement and interest from those shareholders. You can remind shareholders for example, at the AGM that this is their opportunity to have a say about the running of the shop and its future direction. You can also remind shareholders that as part owners of the business, they have more of an interest in seeing that the business survives.
- sale of shares typically take place when the shop is in the starting up phase as a mechanism to raise finance and interest from the community - however, you can continue selling shares after the shop has opened for trading. It is a good idea to send a welcome pack and an invitation to invest to all new residents moving into a village, and to contiunally promote shares for sale through your website and in the shop premises. This will continually remind customers that the shop is owned by the community and is always welcome to new investment and new members.
- Some legal structures enable community shops to pay a dividend to customers based on the amount they spend within the shop. This will ultimately encourage repeat custom and loyalty to the shop, and support the shop to be able to compete on price with other retailers.
- Some legal structures enable community shops to offer investment shares of which the shop can pay interest to investors. This will also encourage investors to recognise the importance of supporting the shop and ensuring its future viability. See http://www.communityshares.org.uk/ for further information
James
Many thanks for posting this on the site. Our shop is just about to get stuck in to a campaign to promote wider membership. Our initial share offer was focussed on raising the finance we needed to get the business up and running, but now that we are a year old and trading successfully, we want to substantially increase our membership base from its current 147. We have around 5500 people living locally, and we know we also have customers travelling in from some way away because they like the shop so much, so I am sure there is scope to grow our membership base to something over 1000 over time.
While this will bring important new share capital into the business, in our view it is as important - if not more important - that we have as wide an ownership as we can achieve, as this will further strengthen our ties with the local community, and ensure we stay firmly rooted.
Our current rules enable us to pay a dividend to members base don their investment. We are interested in looking at how we can things so we pay interest to members in relation to their shareholding, and a dividend based on their level of trade with the shop. I would welcome any input from any shop that has done this.
Also, critically important, I want to learn about any cost effective systems that any shop has implemented that makes it easy to log member transactions and thereby work out the dividend. Bearing in mind we currently have about 1000 transactions per week going through the till. How do you do it in such a way as to avoid lengthy delays at the till with lots of paperwork, and at the same time avoid costly technical solutions?