A Fine Balance – Thoughtful Financial Planning

A Fine Balance – Thoughtful Financial Planning

I have had the honor of serving as the Middlebury Natural Food Co-op (Co-op) Board Treasurer for the past six years. For me, this time of year always includes working with the General Manager and Finance Manager to develop the annual budget for the next fiscal year. The Co-op is no longer a buying club nor a mom & pop operation. It is a robust and thriving food cooperative that employs 100+ staff members and serves 6,000 member-owners. I mention this because our Co-op has grown and evolved in the past 40+ years into a complex organization.

Building an annual budget is a bit like putting a puzzle together. In the case of the Co-op, the process starts with projecting annual sales for the next fiscal year. Think of annual sales as the frame, or border, of the puzzle and the interior of the frame as all the competing needs and priorities that must be taken into consideration. Believe it or not, there is an art to building a realistic and financially sustainable budget!  It requires looking at past performance, current trends, and imagining a desired future state. The pandemic has made this annual process especially challenging.

            The Co-op’s annual budget process is guided and informed by our Mission and End Statements:

Mission Statement:

The Middlebury Natural Foods Cooperative is a democratic, member-owned cooperative committed to providing healthy, competitively priced foods; encouraging ecologically sound and healthful patterns of production and consumption; and responding to members’ needs accordingly.

 Ends Statement:

Our cooperative exists so that MNFC member-owners, customers, and the community benefit from:

  • Healthy Foods
  • Vibrant Local Economy
  • Environmentally Sustainable and Energy Efficient Practices
  • Co-operative Democratic Ownership
  • Learning About These Values

The “Ends” guide day-to-day operations, inform decision-making and serve as a constant reminder of the purpose of our cooperative. The Ends represent our cooperative values. As you can imagine, there are many competing priorities to consider and balance as we create a budget that aligns with our mission and values and is financially sustainable.

The Co-op strives to provide the fairest possible prices to customers and at the same time provide fair compensation to employees and fair prices to farmers/producers. It is important to note that the development of the annual budget is primarily focused on people, not profits.

Glenn often shares this graphic at the annual meeting.

Imagine $1 in sales and how it is sliced up by big expense categories. As you can see, 64.3 cents of every dollar go toward paying fair prices to farmers/ producers and 22 cents provides fair compensation (wages & benefits) to employees. The remaining 11.9 cents cover other operating expenses (including administration, physical plant, promotions, governance, taxes, loan interest, Patronage dividend) leaving a small net profit (1.8 cents of each dollar). The net profit is saved for reinvesting in the future and safeguarding our treasured community co-op.

Managing and operating within a financially sustainable budget during a pandemic is a bit like walking a tight rope on a windy day. It requires focus, foresight, and commitment to balancing all the demands, known and unknown, of running a business while embracing our Co-op mission and values.  

Lynn Dunton is a Middlebury Natural Foods Co-op Board member.





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