2.

2 RISK 2: INSUFFICIENT CAPITAL TO SET UP THE COOPERATIVE Since setting up of cooperative is new for Singapore secondary schools, it might not be included in the current school budget allocation. Furthermore, due to the high costs for purchasing of commodities and logistics, insufficient capital is a potential risk. To resolve the risk and make our project feasible, effective means to obtain sufficient capital is required. The following is some of the strategies.

2.2.1 STRATEGY: COOPERATE SHARES AND LOANS

I. Sale of cooperate shares (Not sure whether this matches what we discussed on Thursday, so did not edit a lot )

Due to the large sum of money needed, more people would be needed to contribute to the fund. We would explore the feasibility of having only members to invest in the cooperative. In order to acquire funds at low cost, member investment in the form of share purchasing would be adopted since there is no need for costly interest repayment back to the students as they would have their remuneration in the form of membership discounts and returns. Therefore, one effective method to involve more people is the introduction of cooperate shares. Each unit of cooperate share costs $100. Interested

students will pay the money and they will receive their remuneration from the profits at the end of the year. Students investing in the cooperate shares would sign the cooperate share contract, acknowledging that the investment might be risky, as they might not receive the 100 dollars back if the cooperate does not function well. The cooperate-share contract identifies the student as a cooperate shareholder, and the contract is used to 'claim' the money invested when the student graduates. However, since 100 dollars is a large amount of money for secondary school students, their parents should be informed as well. To make this possible, the teacher advisers will have to convince the parents in coming up with the $100 investment through a dialogue session, during which parents can express any concerns regarding their childs involvement in the cooperative and their investment.

The following benefits of investing into the cooperative would be provided to the parents through an information sheet and also reinforced during the dialogue session: Help instill in students the spirit of entrepreneurship, one important quality that students today should possess to achieve economic success.

Shareholders will enjoy the goods sold at a discounted rate, and this will last until they redeem the shares.

The 100-dollar share will be returned to the shareholders before graduation.

Some remuneration will be given to the shareholders.

The parents will also be given a detailed overview of the clubs regular operation, so that they know what their child is doing as part of the enterprise. If possible, the principal would also be invited to conduct a short speech during the session to add more credit and authority to the information.

ii. Request from the principal for an interest free loan

The school principal will be informed of the project and asked for an interest free loan as start-up fund, repayable over 5 years. A concise proposal of the cooperative will be sent so as to gain the schools approval of the loan. The proposal will include: justification behind the amount of money requested rationale of start up the cooperative brief introduction of the effort put in to gather capital beforehand a promise that the loan will be repaid within 5 years the sustainability of the cooperative ,i.e. the means of ensuring that the cooperative continues to operate in the long run

Additionally, to further convince the principal to provide us with the loan, the principal will also be informed that: The establishment of the cooperate is economically beneficial for the welfare of majority of the school students as we provide them generally cheaper goods due to lower prime cost. Besides providing the experience of managing business to the members of the club , the running of the cooperative in the school will also expose the rest of the school students to the entrepreneurial spirit. Through their daily observations on the business operated by their schoolmates and their interactions with the club members, students will more likely be able to generate a basic understanding of entrepreneurship, which will differentiate them from students of other schools in terms of economic competitiveness and sense of entrepreneurship in the future.

An interview with the principal regarding his opinions on setting up of the cooperative will be conducted, and necessary adjustments concerning the operations of the cooperative (e.g. cut down some of the budgets, volunteer assistance in promoting school spirits) will be made based on the principals comments. However, if the principal still refuses to approve the proposal,

some compromises could be made, for example, lowering the loan sum or promise on the low-interest loan instead.

iii. Approach external organizations for funding Some external organizations, including Spring Singapore, would also be approached to provide start-up capital to the cooperative. Spring Singapore is an enterprise development agency responsible for helping Singapore enterprises grow. It has Young Entrepreneurs Scheme for Start-ups (YES! Start-ups)1, which provide funding support of up to SGD 50,000 for youths to set up their innovative startup. Satisfying the criteria of application, we would be applying for the grants as part of start-up capital through their official website. Since this scheme provides cooperatives with funds at no cost, it would be another effective way to acquire capital. As a supporting document to show our potential of success, a detailed plan on strategies of setting-up and sustaining the cooperative will be sent to the organization. Since it is stated that the scheme values innovation, learning points, and feasibility of programs, the following information would be emphasized in our plan, so as to increase the chance of being approved. The uniqueness and significance of setting up cooperatives in secondary schools in singapore Detailed plans on the regular cooperative management(to be elaborated
1

http://www.spring.gov.sg/entrepreneurship/fs/fs/pages/young-entrepreneursscheme-start-ups.aspx

in section 2.3) The potential problems that might be faced, and the corresponding strategies we came up with. Running a business by students themselves, especially in a long-term plan, is the best way to learn entrepreneurship skills and spirits, and it is much more effective than other programmes as students are experiencing the process on their owns.