Black Star Co-op Financial Condition FAQ
1. Why did I not know sooner about our financial condition?
The Board has communicated regularly to the membership through our annual reports, membership newsletters, and member assemblies regarding our financial condition as well as actions being taken to address the issue. At the last annual members meeting held on October 30, 2016, we discussed our declining sales, challenges facing the co-op, our ends policies and the 2015 annual report, which stated:
“Monthly net losses through the second half of the year strained the Co-op’s cash position, making it challenging to pay our obligations and employees on time.”
Our financial condition has also been a point of considerable discussion at our board meetings, which are open to all members.
2. Why was the letter sent out by the Worker’s Assembly (WA)?
As of Sunday, December 4th board meeting, cash projections combined with November sales data, and a robust plan of events for December projected a similar financial situation relative to the last two years. While deemed not acceptable long term, our forecasts provided enough time for the board and WA to continue laying the groundwork required to propose changes to our ends at the next member assembly meeting. However, on Wednesday, December 28th, during a regularly scheduled meeting, the Board Staff Liaison (BSL) informed the board president that December sales had come in considerably under forecast. The WA was asked to evaluate the situation at their next leadership meeting and determine next steps. On Monday, January 2nd, the WA developed new cash projections based on December’s revenue numbers, which indicated an inability to continue functioning within the next couple of months if trends continued. On Thursday, January 5th, the WA informed the President that January sales had continued to fall under revised forecasts, and the WA sent out the letter to members informing them of our current financial condition.
3. What has been done to address our financial condition?
In an attempt to address this issue and with growing concern by the Board, the WA has implemented several initiatives over the past couple of years to increase revenue including the addition of lunch service, no longer including tax on food pricing, raising overall prices, successful events like the crawfish boil, a larger social media presence, removing the dart area to increase functional space for customers, and adding an outside awning to make the patio more comfortable during the summer. In addition, to keep expenses in check the WA implemented a wage freeze, a 5% pay cut, an increase in out of pocket health care expenses by employees and numerous optimizations to controllable costs.
4. Why hasn’t more been done to correct the situation?
The WA is charged with the daily operations (beer, food, pricing, furniture, location, etc.) for the co-op and have implemented numerous initiatives to address our financial condition. The Board has continued to provide guidance to the WA as defined by our role. However, we are obligated to operate within the guidelines of our ends. While it has become clear that potentially significant changes to our ends will be required to allow for our business to evolve, the process of proposing and changing our ends requires time to develop and support from our membership.
5. How will we prevent this from happening in the future?
The Board is in the process of evaluating our options to maintain profitability in a continually changing and competitive market. Thanks to a significant increase in patronage over the last few weeks, we have the runaway to finalize a new business plan and operating structure within the next 3 months, which will likely require the membership to vote on changes to our ends.
6. Why don’t we hire a GM to develop and maintain the business?
Blackstar’s End Policy A.4 states that “Black Star Co-op will provide an empowering environment for all workers through worker self-management.” A change to this Ends Policy would require approval by the Co-op’s membership. Currently, the Workers Assembly is divided into four teams: the Beer Team, the Kitchen Team, the Pub Team, and the Business Team. These four teams are self-managed. However, hiring a general manager is an option that the Board and the Workers Assembly will continue to discuss.
7. How can I help?
One competitive advantage that the Co-op has over other similar businesses are its members, and the skills and experience they have. The Board has used the talents of its members on a variety of projects including participation on the Annual Report Review and Bylaws Committee as well as discussions at our Member Assembly meetings. If you would like to serve on a committee, please contact the Board via email at firstname.lastname@example.org, and if you are interested in serving on the Board, please contact the leadership development committee at email@example.com. However, the most direct way for members to support the Co-op is to visit it and recommend it to your friends.
8. Why can’t I see our financials and business plan?
It’s important for any business to keep its financial records such as daily cash flow, detailed business plans and strategy, contracts, profit and loss statements and balance sheets confidential. With the exception of the annual report, this information is not shared with the membership at large. This information is compiled by the Workers Assembly (WA) and shared with the Co-op Board of Directors (Board) on a regular basis.
9. What will happen if we close?
The Co-op, like all other businesses, is subject to closing whether permanently or temporarily based on sales and profitability. The Board plans to form a Sunset Committee at their next official meeting to examine the definition of closing, what triggers a decision to close, and the sequential processes for closing. This group will report their findings at the next annual Member meeting. Members are welcome to join this committee.