by Ann Hoyt, Board Member
Last month Willy Street Co-op released our Fiscal Year 2020 (ended 6/28/2020) Annual Report which highlights the challenges we faced, the successes we had, and the financial losses we experienced. Compared to Fiscal Year 2019, when losses were 0.35% of sales and 42% less than budgeted, Fiscal Year 2020 losses of $1,149,688 were 1.98% of sales and 91% greater than budgeted. Given the impact of the coronavirus, both on reduced sales and the expenses related to changes in operations, the losses should not be surprising. They are, however, of deep concern to your Board of Directors. As we navigate the ongoing challenges the Board faces not only for the remainder of the 2021 fiscal year and for years to come, it is wise to step back for a moment and ask who is impacted by the decisions we make.
Responsibilities
The easy answer is that our primary legal responsibility is to our Owners who have invested in the Co-op. For them we must ensure the security of their investment. Beyond that, through the Co-op’s bylaws, Owners have directed us to operate on a sound financial basis to “provide for the long-term benefit of the Owners and the community.” The bylaws discuss our responsibility to ensure that employees have a humane work environment and participate in decision-making; that we serve the needs of the broader community with particular focus on the underserved; and that we support local businesses. In other words, we are specifically charged to consider the needs of a variety of people who have a stake in the success of our cooperative even if they are not Owners of the business. These are our stakeholders.
Balancing challenges
This brings us to the challenges we face when balancing our need for financial success against the often- competing needs of the Cooperative’s stakeholders. Primary stakeholders in Willy Street Co-op include Owners, customers, employees, suppliers, the community, the government, and the employee Union. All are dependent in some way on our Co-op’s continuing financial success. From the FY2020 Annual Report you can see how financial resources were allocated to some of these stakeholders during the fiscal year. In order of magnitude, these stakeholders received the following amounts: suppliers: $37,666,136 of which $1,384,688 went to local suppliers; employees: $15,698,663; the community through donations: $468,767; governments (i.e. taxes): $316,000; creditors (including Owner Bond-holders): $214,004. All of this was supported by sales to customers (primarily Owners) of $58,48,708. Note that support for the employee Union comes from dues paid directly by employees. Also note that your staff successfully applied for and received a Personal Paycheck Protection (PPP) loan from the Small Business Administration. Paige Wickline, Finance Director, expects “a significant portion of that loan to be forgiven which will reduce the anticipated losses for the current year.”
The challenge to the Board and management is to determine how to increase sales to cover losses or which expenditures to cut to achieve at least breakeven. Finding opportunities to cut costs given our Owners’ mandate to support our stakeholders is a significant challenge. Fortunately, your Board is aware of the wide variety of Owners’ opinions and stakeholders’ expectations. We are balancing your needs and wants as best we can and appreciate everyone’s input to help guide our decision-making.