Please find below a list of frequently asked questions which we felt might be useful:
What is a Community shop?
A Community shop is owned and run democratically by members of the community.
It will trade primarily for community benefit and will be managed by the community. Community shops have open and voluntary membership, members are part owners of the business and all members have an equal say in how the business is run, regardless of their level of investment.
The shop would have paid management and staff supported by volunteers.
What is the benefit of the village taking on the shop?
Through this opportunity, the village can secure, in trust, a shop, which they have control of, for future generations.
As well as providing vital goods and services to those living and visiting the village, the shop will support the local economy by building on the partnerships with local producers and suppliers, and employing local people
As a community shop it will continue to develop into more than a shop, by being an information point, a hub and outlet for local groups and businesses to promote or selland can continue to be at the very heart of the village as a meeting place.
Any profits from the shop will be used for developing the shop further or will be gifted for other charitable or community purposes.
Is it a good business proposition?
Nationally the Community Shop model has proved itself to be very robust. Out of the 335 + shops that have opened 95% are still trading compared to 46% of small shops
With an estimated 300-500 village shops closing every year, community ownership is helping to preserve vital outlets and services for communities
Specifically, a small group of volunteers have taken advice from professionals, spoken to David and Margaret, believe the shop is a viable business and have drafted a Business Plan to buy the freehold property of the shop, flat and goodwill for the business.
How will this happen?
As the shop will trade, employ staff, manage volunteers and enter into contracts and financial arrangements, a suitable legal entity is required. This protects the individuals running the business by giving them limited liability, and also ensures compliance with legal necessities such as tax, insurance, trading standards and employment rights.
The shop will be run as a Community Benefit Society (CBS) because it can issue community shares, and this also provides:
· Open and voluntary membership
· One member, one vote
· The interests of the shop to be linked into community control, disallowing any one member from having greater control than others.
· No profit distribution to members based on investment (other than payment of interest).
Who will run the Community Shop and Society?
The shop will be run by a paid manager and paid staff, supported by volunteers. The Community Benefit Society will be run by a management committee, which is re-elected (for a maximum term of 3 years) by the shareholders each year.
What will it cost?
The business plan assumes that the community shares subscriptions will form one of the main income streams along with grants, loans and donations.
In order to achieve the overall sum to purchase the freehold of the property we are looking to raise £300,000 from the Community Share Subscriptions as part of this.
Will the business be profitable?
Based on a conservative turnover, margin projections and using the actual income, expenditure and key-operating ratios of other like establishments in comparable locations as a yardstick, the answer is yes.
The business plan shows a small net profit with improving returns in years two and three.
Why should I invest?
By investing you will not only own a share of the Village Shop but your investment will allow its development into something we will all be proud of as a community and which will provide a wide range of benefits and services that you will have helped create.
This is a ‘feel good’ investment for you, individually, as well as the village as a whole.
Will I make a significant amount of money?
In short no - this is a long term investment for the benefit of the community. It is NOT the same as the more familiar investment in a “for profit” enterprise where the investor seeks to share in profits through dividends and make capital gains from an increase in the value of shares held which are freely marketable.
A CBS structure does not allow anything but modest interest payments (community shops appear to average 1-2%) when proposed by the Board and these are not guaranteed on any regular basis.
How will my shareholding count amongst others?
Based upon the principle of one member – one vote, everyone has an equal stake in the venture; whether you invest the minimum (£100) or the maximum (£20,000) everyone will have an equal voice as members of the Society.
If I invest in shares, what is my liability should the business not succeed?
Your liability is limited to the value of your shares.
Can anyone buy shares?
There will be a lower age limit who are eligible to buy shares (this has yet to be agreed).
You don’t have to live in Houghton and Wyton to buy shares, however a proportion (to be determined) of shareholders will live in the village.
Is there a minimum term shares to be held?
It is likely that initially the management committee will state that shares have to be held for a period of time, as this allows the venture to get up and running.
Can I sell my shares on? How do I get my money back if and when I need it?
These shares cannot be sold on. They are a special type of share known as a Community Share. Investors can get their money back and do not have to find a buyer to ‘transfer’ their shares to, thus addressing the problem of liquidity that investors would otherwise face. This exit route depends on the performance of the society and the provisions it makes for withdrawals of capital.
The withdrawal share mechanism also effectively protects societies from speculators, because shares cannot be traded and cannot increase in value.
Is it legal?
The share scheme will be registered under the Financial Conduct Authority (used to be known as the FSA)
A prospectus giving all the legal information will be issued to all those who have pledged.
Are there any tax benefits?
We are currently investigating the possibility of the Scheme being eligible for tax relief through the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and the Social Investment Tax Relief (SITR). This could be as much as 50% for investors wishing to invest large amounts of money.