Cooperatives, Mutuals and Employee Ownership
A practical and people‑centred alternative to traditional business models.
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Cooperatives, mutuals and employee-owned businesses offer an alternative way to start, run or grow a business; one that puts people at the centre of ownership and decision-making, while remaining commercially robust.
Rather than being driven solely by external shareholders, these models are built around shared ownership, democratic control and long-term sustainability. They allow employees, customers, communities or members to have a genuine stake in how a business operates and how its success is shared.
This page brings together clear guidance and practical resources to help you explore cooperative, mutual and employee-owned models in more detail.
Whether you are at the ideas stage, considering a transition from an existing structure, or already running a cooperative, the downloadable factsheets on this page explain how these models work, their benefits, funding options and the support available. If you are unsure where to begin, browsing the guides is an excellent first step. And if you want any further assistance to explore what might work best for your situation, just get in touch with the East Sussex Growth Hub team.
Introduction to Cooperatives
A cooperative is a business owned and run by its members. Those members might be employees, customers, residents, suppliers or community groups. Each member has an equal say in how the organisation is run, usually following the principle of “one member, one vote”.
Rather than maximising profits for external shareholders, cooperatives exist to meet the shared needs of their members. Any surplus is typically reinvested into the business or used in ways members agree.
Across the UK, cooperatives and mutuals operate in almost every sector, from food and farming to creative industries, digital services, retail, housing and community energy. They are often born from everyday needs, such as freelancers seeking stability, communities protecting local assets or employees taking ownership of a business. Many are small or medium-sized enterprises (SMEs), while others are long-established organisations generating significant economic and social value.
Evidence consistently shows that cooperatives tend to be more resilient than traditional business models, with higher survival rates and stronger local roots.
These ownership models can be particularly relevant if you:
- Want to involve staff, customers or community members more closely in your business
- Are planning for succession or thinking about long-term ownership
- Value fairness, shared responsibility and inclusive decision-making
- Want to build a business that balances commercial success with social impact
Download factsheet: An introduction to cooperatives
Mutuals and Employee‑Owned Businesses
Mutual and employee‑owned businesses are designed around shared ownership and collective decision‑making. They allow people who use, work in or depend on a business to have a meaningful stake in its future.
Mutual businesses
Mutuals are owned and controlled by their members, who may be customers, residents, workers or community groups. Cooperatives are the most common form of mutual, but the wider mutual sector also includes credit unions, building societies and community benefit societies. These models help groups pool resources, share risk and keep services local.
Employee‑owned businesses
Employee‑owned businesses are companies where employees own a significant share, either directly or through an employee ownership trust. This model is often used when founders plan to step back and want to transfer ownership to the people who know the business best. Research shows employee‑owned businesses often experience higher productivity, better staff engagement and stronger long‑term stability.
Download factsheet: Mutual and employee ownership businesses
Benefits of Being a Cooperative
Cooperatives combine commercial activity with democratic ownership, offering advantages that appeal to many small businesses.
Key benefits include:
- Democratic decision‑making, giving members a real voice in how the business is run
- Stronger loyalty from members, customers and employees
- A long‑term outlook that prioritises stability over short‑term returns
- Access to specialist finance such as community shares and social investment
- Greater resilience, with cooperatives showing significantly higher five‑year survival rates than traditional businesses
Co‑operatives also reinvest more locally, creating social and economic value alongside financial returns.
Download factsheet: Benefits of Being a Cooperative
How to Set Up a Cooperative
Setting up a cooperative involves a series of practical steps to make sure the structure supports shared ownership and democratic control.
Typical stages include:
- Deciding whether the cooperative model is right for your idea or business
- Forming a small steering group to shape the direction
- Creating a business plan and financial model
- Choosing the most suitable legal structure
- Registering the organisation
- Putting governance arrangements in place
- Accessing funding and ongoing support
There are several legal structures available, including cooperative societies, companies limited by guarantee, companies limited by shares and community interest companies. The right choice depends on how you want ownership, voting and surplus to work in practice.
Download factsheet: How to Set Up a Cooperative
Funding Options for Cooperatives
Cooperatives can access a wide range of funding, although the options available often depend on size, trading history and legal structure.
Common funding routes include:
- Reinvesting existing profits
- Grants linked to social enterprise, community benefit or regional priorities
- Sponsorship and partnerships
- Crowdfunding for specific projects
- Loans, including specialist cooperative finance
- Investment through community shares or transferable shares
Community shares are a distinctive feature of cooperatives, allowing people to invest in organisations that matter to them while supporting long‑term commitment.
Download factsheet: Funding Options for Cooperatives
The Impact of Cooperative Businesses
Cooperatives make a significant contribution to the UK economy and play an important role in creating good jobs, resilient businesses and stronger communities.
Across the UK, cooperatives generate tens of billions of pounds in income each year and operate in sectors including agriculture, retail, digital, energy, arts and culture, housing and professional services.
They are more likely to pay fairly, promote equality and reinvest locally, helping to drive positive economic and social change.
Download factsheet: The Impact of Cooperatives
Support Available for Cooperatives
Starting or growing a cooperative comes with specific challenges, including governance, finance and member engagement. Specialist support can help you navigate these areas with confidence.
Support is available for:
- New cooperatives exploring ideas and legal structures
- Existing cooperatives looking to grow or strengthen governance
- Businesses considering a transition to shared ownership
Support can include one‑to‑one guidance, training, networking, governance advice and help accessing finance.
Download factsheet: Support Available for Cooperatives
Next Steps
If you are exploring cooperative, mutual or employee‑owned business models and would like guidance tailored to your situation, the East Sussex Growth Hub can help you understand your options and find the right support.
Browse the factsheets above or contact the Growth Hub team if you’re unsure where to start.