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Business models: democratic versus autocratic

Published by Gener8 Dave in the blog Tips & Tricks for SMEs. Views: 406

No matter how liberal you may consider yourself to be, if you run your own business then most decisions will more than likely be okayed by you and you alone. That is, however, unless you’re a member of a co-operative. Unlike the entrepreneur-led majority of contemporary businesses, co-operatives are comprised of a group of like-minded individuals or institutions who all have a say in the everyday dealings of the business. So, how do the two models stack up? At Gener8 Finance, we decided to compile a useful guide to help you find out.

Two heads are better than one
By analysing your options and their potential outcomes as a group, you could argue that mistakes are more likely to be spotted and rash decisions less likely to be taken thanks to a co-operative model.

Who knows best?

Did you ever hear the phrase that a camel is a horse designed by a committee? Sometimes, an individual needs to be in charge because they know and understand the business better than anyone else. Much like too many cooks spoiling the broth, co-operatives can run the risk of having their priorities pulled in too many different directions.

Staff motivation
Co-operatives usually employ a profit share scheme that entitles all employees to a share of the company’s profits. This can help to motivate staff, increase productivity and reduce excessive wastage.

Risk and consequence
It is sometimes necessary to take a few risks in the business world if you wish to be successful. Potentially lucrative, higher-risk strategies are unlikely to be okayed by the fellow directors of a co-operative...

While selfless entrepreneurs can be very philanthropic once their ship has come in, co-operatives have philanthropy sewn into their very makeup, meaning they can help people right from the get-go.

The downside of democracy
The directors of a co-operative are democratically elected thanks to a voting process. However, as we often seen in the world of politics, sometimes the best candidate doesn’t get elected, and at other times, it can feel as though there are no adequate leaders to choose from at all.

Whatever your preferred choice of business model, ensuring your company’s success will often come down to effective cash flow management. Whether you’re looking to expand or are faced with long payment terms, financial assistance needn’t come with a high price tag or an impersonal service. Why not take a look at our invoice financing and credit management services and see how we could help your business?
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