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BUSINESS ADMINISTRATION UNDERGRADUATE PROJECT TOPICS

SOURCES AND USES OF FUNDS IN CO-OPERATIVE BUSINESS ENTERPRISES

SOURCES AND USES OF FUNDS IN CO-OPERATIVE BUSINESS ENTERPRISES

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SOURCES AND USES OF FUNDS IN CO-OPERATIVE BUSINESS ENTERPRISES

Chapter one

INTRODUCTION

Background of the study
A cooperative society is a voluntary organisation in which individuals, business owners, and traders who share a common interest pool their resources to promote their members’ economic and welfare objectives.

Cooperative business ventures are autonomous associations founded and democratically governed by individuals who band together to address economic, social, and cultural demands (Adeyeye, 1995). Cooperatives are governed by the people who use their services, known as members, and are based on the participatory governance idea.

The history of the cooperative movement cannot be complete without including Robert Owen (1771-1858). He formed the first cooperative organisation in New Lonark, England.

However, the success of retail cooperative organisations can be traced back to 1844, when the Rochdale Pioneers founded one. The history of cooperatives in Nigeria cannot be traced without reference to traditional cooperatives, which resulted in the 1935 cooperative society law, which paved the way for the founding of cooperative societies of all forms.

The cooperative model is as adaptable as any other organisational structure and can be linked to the social services sector, utilised to build common infrastructure, and pursue business endeavours (Brown, 2006).

Common cooperative types include wholesale cooperatives, retail co-operatives, producer cooperatives, credit unions, consumer cooperatives, housing cooperatives, and so on.

A wholesale cooperative is founded by small-scale wholesalers that buy goods in bulk from manufacturers at a reasonable price and sell them in small quantities to retail cooperatives, the members of which are frequently the establishment’s own customers.

They buy cooperative shares in order to receive dividends. Producer cooperatives are formed by producers of similar products who organise cooperative production and undertake joint marketing of the products on wholesale or retail basis;

credit unions, whose members similarly invest in shares in the organisation; consumer cooperatives, which are owned and operated by a group of ultimate consumers who pool their resources together to purchase goods and services in large quantities and distribute them primarily to its members; and housing.

Cooperative business businesses require “funds” to run well. Fund in this usage refers to cash or credit used to finance commercial ventures. Because goods and services are expressed in monetary terms, i.e. funds, you cannot do any other transaction without them. It could take the shape of bank credit, trade credit, or a discount (Anugwom, 2007).

Funds could also take the shape of tangible cash, such as Naira, dollars, or pounds sterling. Perhaps one of the most important questions that prospective co-operative entrepreneurs have is how the firm will be supported.

Funding is the foundation of all business enterprises. Until co-operative business founders figure out how to raise finances for the new venture or to keep the present business running, their intentions may be best defined as wishful thinking or a dream (Nwachukwu, 2005).

The most critical component that can make or fail a company venture is money. It refers to the amount of money accessible for business expenses. Cash must be available from the minute an entrepreneur comes up with a business idea.

As the company grows, there will undoubtedly be a bigger demand for additional money to fund expansion. The day-to-day operations of cooperative commercial enterprises require funding not only to get started

but also to grow, expand, and meet competition, changing consumer and member needs and tastes. Obtaining funding to launch a cooperative business enterprise in Nigeria has never been easy (Nwachukwu, 2005).

Business enterprises, including cooperative societies, have access to a variety of funding sources. The sources from which they collect funding will be heavily influenced by the intended use of the funds.

Businesses often confront three types of financial needs: starting capital, working capital (while the company is in operation), and cash for expansion. Working capital is defined as the difference between current assets and current liabilities.

Working capital determines the liquidity position of a cooperative enterprise. It is often referred to as “circulating capital” or “revolving capital” since funds invested in such assets are continuously recovered through cash realisation and reinvested in current assets (Pandey, 2003). Capital is also required for expansion as the company grows. During this stage, the company requires more capacity and new technologies to reduce unit costs and compete with competitors.

Furthermore, the more funds/capital retained by cooperatives, the greater their potential to purchase more efficient technology, engage in member training and education, and make other improvements to corporate operations.

According to Bell (2004), cash for the operation and improvement of cooperative business operations can be obtained from three major sources:

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