Advantages and Disadvantages of Cooperatives that Members Need to Know, Understand the Types

Kapanlagi.com - Cooperatives come from the word co-operation, which means collaboration. Cooperatives are business entities based on the principle of kinship. Cooperatives are managed by their members who have joined with the aim of mutual benefit and welfare of the members. The advantages and disadvantages of cooperatives need to be known, especially before deciding to become a member of a cooperative.

Anyone can become a member of a cooperative, even establish a cooperative with specific goals, especially in the economic field. According to Law Number 17 of 2012 concerning Cooperatives, it is stated that a cooperative is a legal entity established by individuals or cooperative legal entities with the separation of the wealth of its members as capital to run a business, which fulfills the aspirations and common needs in the economic, social, and cultural fields in accordance with the values and principles of cooperatives.

There are several types of cooperatives that are grouped based on the type of business, membership status, level, or function. When becoming a part of a cooperative, there are specific benefits that can be felt by each member. This is what needs to be known, the advantages and disadvantages of cooperatives as considerations for becoming a member.

To understand the advantages and disadvantages of cooperatives, you can read some reviews below. Here are the advantages and disadvantages of cooperatives summarized by kapanlagi.com from various sources.

1. Advantages of Cooperatives for Members

Advantages of cooperatives (credit: freepik.com)

Just like other types of businesses, cooperatives also have advantages and disadvantages that need to be understood. Especially if you are interested in joining as a cooperative member, it is necessary to know some of the advantages and disadvantages of this business entity. The advantages of cooperatives are as follows, as quoted from liputan6.com:

1. Members have the right to receive the surplus of business results (SHU) adjusted to the capital invested and the profit obtained.

2. Easier capital borrowing with lower interest rates. This can also affect the SHU to be received.

3. Cooperative members receive business training and wider relations.

4. Purchasing goods at cooperatives can save expenses with more affordable prices and benefit the cooperative itself.

5. Prioritizing common interests and member welfare.

6. Members play a role as producers and consumers who function to facilitate cooperative activities such as savings and loans.

7. Becoming a cooperative member based on voluntary and open principles, without coercion.

8. The principle of cooperative management is to collect profits and common interests of each member. Therefore, the surplus of business results will be distributed equally and fairly.

9. Cooperative members can come from various backgrounds in society with low or middle income.

2. Advantages of Cooperatives for Members

Advantages of cooperatives (credit: freepik.com)

Still related to the advantages of cooperatives for members, here are some things to consider.

10. Each member has an equal voting right without discrimination and adjusted to the capital owned by the members.

11. Based on the principles of family and mutual cooperation that are suitable for Indonesian society.

12. Cooperatives facilitate members in obtaining business capital, which can also support the cooperative business to run and earn profits.

13. The amount of mandatory savings or primary savings tends not to burden members and is adjusted to the financial capabilities of each member.

14. The welfare of members is a common goal, not a place to seek profits.

3. Advantages of Cooperatives Based on Capital

Advantages of cooperatives (credit: freepik.com)

After knowing some of the advantages of cooperatives for members, it is also important to understand the advantages of cooperatives based on their capital. The advantages of cooperatives based on their capital are as follows:

15. The process of borrowing capital tends to be easier.

16. The process of borrowing capital through cooperatives tends to be processed quickly with simple conditions.

17. Capital borrowing usually does not require collateral, making the borrowing process easier.

18. The interest rate is lower, so it does not burden the members too much.

4. Disadvantages of Cooperatives

Shortage of cooperatives (credit: freepik.com)

Having a number of advantages that can benefit each member of the cooperative, this collectively managed business also has its disadvantages. This is what makes one of the weaknesses of cooperatives. The disadvantages of cooperatives are as follows:

1. Member awareness tends to be low in implementing cooperative principles and activities.

2. Cooperative competitiveness is still weak compared to other businesses.

3. Cooperative capital is limited and tends to face difficulties in obtaining large capital.

4. Lack of more competent human resources in managing cooperative operations. Therefore, the absence of professional human resources may hinder the progress of cooperatives.

5. The public's interest in becoming cooperative members is still low due to high competitiveness.

6. Most cooperatives are seen as economically unprofitable.

5. Types of Cooperatives

Types of cooperatives (credit: freepik.com)

Several types of cooperatives as mentioned in these reviews can also be known. The following are the types of cooperatives based on Law Number 17 of 2012:

Consumer cooperatives: this type of cooperative is intended for consumers of goods and services. So generally, this cooperative sells various types of basic necessities such as staple food, groceries, and stationery.

Producer cooperatives: this type of cooperative is intended for producers of goods and services who usually sell the products of the members. Generally, producer cooperatives will benefit each producer in obtaining cheap raw materials and selling their products.

Savings and loan cooperatives: this type of cooperative is intended to provide savings and loan services to members. So members can borrow capital in the short term. Through this cooperative with certain conditions and lower interest rates.

Multi-purpose cooperatives: this type of cooperative provides several services at once, such as selling consumer goods, savings and loans, and other services.

Those are the shortcomings and advantages of cooperatives that members need to know along with several types. So by knowing the shortcomings and advantages of cooperatives, it can be a consideration for you to join as a member.

(kpl/nlw)