Article Contributed by Donna Abernathy
Howard Brodsky set out to conquer the carpet world. Dan Bleier just wanted to save his family-owned business. But both cherished their independent status in a retail chain, “big box” business world. Now, each realizes success through a purchasing cooperative.
The pair spent almost eight months reviewing different business models, disqualifying one after another. Then they looked at cooperatives. Brodsky and Bleier are founders of two of the estimated 300 purchasing cooperatives in the United States—a sector which serves roughly 50,000 independent business owner-members.
“The co-op was the ultimate choice to bring (buying) scale to local ownership while honoring their differences and valuing their independence. It also allowed us to leverage our efforts to serve their best interests,” says Brodsky, chairman and co-CEO of CCA Global Partners. “By comparison, other business structures didn’t endure.”
Entrepreneurs across the American business landscape—from furniture dealers to funeral service providers—are using co-op power to level the playing field between family-owned enterprises and mega-retailers.
Purchasing co-op owner-members are joining together to increase the competitiveness of their independently owned businesses. By pooling their buying power to acquire inventory and services, they lower operating costs, better respond to competition, and improve their businesses’ overall performance.
Conquering the world
By virtually every business standard, CCA has more than endured. It has exploded. Starting with 13 members, the cooperative has grown to 650 owners who operate 3,600 independent stores around the world. The company reported sales exceeding $10 billion last year and has never experienced an unprofitable quarter in its 24 years of existence.
Sales have jumped 325 percent in the past eight years.
“If you give a smart entrepreneur the best tools, he can outplay the big guys. He needs to buy better, brand better, have the best training, best hiring and best marketing,” he adds. Today’s CCA members engage in the flooring, mortgage banking, lighting and bicycling industries. Considered together, CCA’s flooring affiliates represent the largest group of retailers in the world.
Competing effectively
Reading about the success of co-ops like CCA inspired Bleier, who needed to find a way for his family-owned Able Distributors to effectively compete with “the big boys like Home Depot.” He reversed the negative trend by becoming a founding member of Blue Hawk Cooperative in 2005, a Phoenix, Ariz.-based co-op with 200 members—mostly family-owned companies—that own 871 distribution locations in 50 states.
Like typical purchasing co-ops, Blue Hawk offers its members centralized, cost-saving buying plus warehousing, marketing, merchandising and financial reporting—services that give members like Bleier the ability to compete in the marketplace. But competing is not enough, says Lance Rantala, the co-op’s chief executive officer.
“Our plan is to have each Blue Hawk member-owner grow their combined market share by 10 percent,” he says, explaining how partnerships with manufacturers and contractors help build a healthy and profitable business environment for all participants.
Blue Hawk members like the control they enjoy as owners. The co-op business model provides a welcome contrast to buying groups—a common inventory procurement option for independent HVACR distributors—which the members neither own nor govern.
Furniture First’s membership is by invitation only. Prospective members of the Harrisburg, Pa. headquartered co-op undergo an intense evaluation process, complete a 16-page application that includes a detailed credit history. Hartman believes the rigorous process is necessary to determine which retailers will make the best members.
Beyond Buying
Though collective buying of goods and services is at the core of every
Purchasing cooperative, today’s member-owners want— and need—more to succeed. Their co-ops are obliging by offering industry-specific support to enhance almost every facet of business management.
From the beginning, CCA has provided its member-owners with “a better level” of services, marketing, training and merchandising. The co-op offers an extensive selection of online training courses for the employees of member stores. To date, employees have completed almost 300,000 courses.
Blue Hawk members benefit from “extras” such as improved marketing channels, public relations, lobbying efforts, educational and training programs, networking opportunities, sharing business best practices and technology support.
Across the purchasing co-op universe, many consider peer-to-peer networking a bonus of membership. Most co-ops hold membership conferences annually, giving members opportunities for face-to-face discussions, and provide online networking tools to help members share ideas and information.
Surviving Tough Times
Small business is risky business these days. A distressed national economy is not favorable for smaller enterprises, which account for about 99 percent of the country’s business. “It’s the worst I’ve ever seen it,” Furniture First’s Hartman says about the rising costs and shrinking profits for independent businesses.
Though they can’t deliver miracles, purchasing cooperatives can provide relief to beleaguered small businesses—sometimes in unexpected ways. For instance, a new movement that brings together retailers by common location rather than business sector is gaining steam.
Knowing firsthand the power of purchasing cooperatives, CCA’s Brodsky believes these independent business owners are learning one of the most important realities of co-op life: There is strength in numbers. “In troubled times, you don’t want to be alone. That’s the worst,” he says. “Join a co-op because it gives you all the support and tools to compete.”
Sidebar: How to Start a Purchasing Coop
Whether they sell homebuilding supplies or hamburgers, savvy independent business owners are finding that working cooperatively is the key to surviving and thriving. Rosemary Mahoney, chief executive officer and cooperative developer for Lovingston, Va.-based MainStreet Cooperative Group, offers these start-up tips to entrepreneurs interested in cooperative development:
1. Find friends. Every cooperative begins with a group of like-minded people. Determine if the perceived threat or opportunity you have identified is shared by other independents. Work to form a core of organizers who are respected by other independent business owners as well as vendors. Not getting the right members at the start is a mistake that can lead to failure.
2. Explore the options. Before making plans to organize your own purchasing cooperative, determine whether any other cooperatives are already serving your sector. If so, can you join that cooperative?
3. Crunch the numbers. Estimate the total amount of your sector’s business volume that is handled by independents. Is this amount of volume significant to your suppliers? Do your suppliers need independent businesses in the sector? The ability to convince vendors to support a start-up cooperative is essential to its success. You must be able to prove that your co-op can deliver a significant amount of volume and bring value to the vendor.
4. Do your homework. Find one or two cooperatives in similar industries and talk with their management and some members to learn more about how cooperatives work. You’ll be surprised at how many cooperators are willing to talk to those seeking more information.
5. Lay a strong foundation. If you decide to go forward in establishing a purchasing cooperative, be sure to work with an attorney who understands this business model. Also, raise enough capital to hire a chief executive officer who is both an industry expert and well respected by vendors and potential members. Trying to self-manage a co-op is a mistake. Most entrepreneurs are too busy running their own business to successfully and simultaneously manage the day-to-day operations of a co-op.
About the Author
Donna Abernathy writes for the National Cooperative Business Association (NCBA)
Category: Entrepreneurs
Article Contributed by Joshua Sim of Singapore Start-up Forum
If you talk to people in Singapore, and ask them about entrepreneurship, you get varied responses.
“Hm, the government is encouraging more people to start business. They are giving more grants and making the registration process easier I heard.”
“Good thing young people like you are starting businesses and reading books to help you. Even if you fail, you still can get back up and do it again.”
“Entrepreneurship is not for everyone. I’m too old for it anyway.”
Most Singaporeans will know what entrepreneurship is, however, few practise it. Apart from small food stall owners, most Singaporeans have a “regular” job. The number of entrepreneurs is estimated to be less than 2% of the whole population.
The good news is that this figure is growing. Thanks to the government’s encouragement, grants, and companies that help teach and promote entrepreneurship.
To these budding entrepreneurs however, a question lingers in their minds. “Where can I find business partners or even a mentor to aid me?”
It is at this point in choosing team members that budding entrepreneurs make an error. They ask their casual friends to be their business partners. The problem with this practice is that some of these friends are not very keen on being business people, and may not have the same goals and dreams as the team leader. These friends may not have the proper skills or business mindset, calling it quits after the first failure. These differences make team synergy impossible, and instead lead to arguments and break-up of the company and team.
Only like-minded people, those with the business mindset, skills, desire to earn, desire to add value to others, or at the very least the interest in creating a business, can and should band together to start an enterprise. Be they good friend or mere acquaintance, only with this interest in business will they make good business partners.
Finding business partners alone is only one problem budding entrepreneurs’ face. Even more challenging is to find business mentors, who are even rarer. Criteria for being a mentor, means having the winning mindset, the business sense, plus having “been there, done that”. Most mentors, who still own and run their own businesses, will not be time free to take care of a ‘disciple’.
As such, there have been cases where the disciple works for free, just to learn the ropes of the business. Much like the jewellery crafters of old. Many budding entrepreneurs may find this practice very unappealing as they may have a full time job to take up most of their time with, let alone start a business. The only few who can work for a mentor for free, are the youth. The students who can still depend on their parents, and work to learn from mentors.
Luckily, some entrepreneurs are trying to help their own kind. Entrepreneurs have build businesses, helping other entrepreneurs get on their feet and move onward. There are entrepreneurship “schools” such as the Entrepreneurs Action Programme by Executive Directions (www.exec-directions.com). Others provide “networking night” or other networking groups that can meet up as often as weekly to monthly.
All this goes to help budding entrepreneurs learn the ropes, and get connected to others to each other.
Here at our own online forum, Singapore Start-up Forum [SSuF], we aim to be the online platform for entrepreneurs to connect, communicate and network. We believe that entrepreneurs should stick together and learn from each other. That way, we all can grow at an even faster pace. This is also called “learning leverage”. Do visit SSuF at www.ssuf.biz and spread the word around. We want all the entrepreneurs and mentors of Singapore to gather at a hub to maximise the benefits of networking and learning from each other.
Hopefully with all these services available, entrepreneurs will have an easier time finding business partners and mentors. If not, entrepreneurs can all hope to find friends who have the same interest in business as them.
Good luck all you entrepreneurs out there, and happy business building!
Every time I turn on the news I feel like screaming. I am sick and tired of hearing about how bad the economy is. Unemployment is up and is only going to get worse. Banks are in trouble and going under. Real estate is a mess and there is no end in sight. Major corporations are going bankrupt – heck, even the big three automakers may go under.
I hear about how this is the next great depression. I hear about the collapse of the dollar, the collapse of the western world, and the end of society as we know it.
It Isn’t As Bad As It Sounds
The sad part is that it isn’t all that bad. Yes the economy stinks, but this is only when compared to the amazing boom we experienced in the last decade. Companies have been able to go after the low hanging fruit-heck, there was more lying on the ground than you could pick up!
Just because the ground isn’t littered with business anymore doesn’t mean that there isn’t business out there. You just have to work for it. And the past decade of easy business means that most companies have not made the connections and built relationships. Now they pay the price.
And at the end of the day, now is the time where entrepreneurs can really shine.
No, I’m not crazy. Think about what a true entrepreneur does.
- He connects with his customer
- identifies his needs and problems
- then creates products and services to fill those needs or problems
In other words, he gets paid to solve problems
Now more than ever companies are in trouble. Your customer desperately needs you. No, he isn’t spending indiscriminately. But if you solve his problem and help him survive (or thrive) in this downturn he will be your customer for life. And you solve your “slow business” problem at the same time. Only an entrepreneur can do this, and you finally have an advantage over larger companies.
Simple, but Hard to Do
This is a simple concept that is hard to do. I’ve written several articles that are aimed at this:
- Recessionproof your sales
- How to Thrive in a Recession
- How to Thrive in a Recession – Ignore the News
- How to Thrive in a Recession – It’s All About the Customer
- How to Thrive in a Recession – Working for Someone Else
Brandt Smith is a sales, marketing, public speaking, and professional development expert. Learn about achieving wealth and life balance through entrepreneurship at Wealth and Wisdom, where he is cofounder and senior editor. Their advice on wealth building, personal development, and life balance can help take you to the next level. You can also read more of his thoughts on his blog.
What do you need to start a successful business?
It’s a question almost all entrepreneurs have pondered. Do you need a business plan before you start, funding to fall back on, or a detailed strategy for how your company will grow? Nearly half of all small businesses fail within the first year of operation- what’s the difference between those that fail and those that succeed?
I recently had the opportunity to speak with Judi Sheppard Missett, founder of Jazzercise. Missett built Jazzercise from a one-woman operation into an international corporation with over 7500 franchises worldwide. Here’s what I learned from our conversation:
You don’t always need start-up capital. “I didn’t even get a business loan,” she told me- something virtually unheard of in many entrepreneurial circles. This should come as wonderful news for anyone trying to start a business on a lean budget or without the resources they think they need.
Evaluate your costs of doing business, and show smart for the resources you need to get started. For example, you can usually find a great website designer for a few thousand dollars if you shop around and compare quotes. Most of what you really need is accessible without a large nest of start-up money.
Provide what the customer finds valuable… Missett taught a jazz dance class in Chicago that eventually lead to the Jazzercise idea. At first, she instructed with an eye to technique and form –just like she had been taught while training to become a professional performer. When students stopped coming to class, she had that “lightbulb” moment- the students cared more about looking like professional dancers than dancing like them. From then on, Missett taught the kind of class her students wanted- fun, no mirrors, great music, and lots of movement.
Too many business owners come up with an idea and try to find a market. Missett proves that the other way around is usually more successful- listen to what customers want, and figure out a way to give it to them. Do research on customer patterns, find a way to track behavior by hiring an online marketing company or tracking marketing campaigns and sales strategically.
…And be willing to adapt and change to customer needs. Jazzercise has managed to grow in spite of the “fad” element most fitness trends seem to capitalize on, precisely because customers still get what they want- Jazzercise programs now incorporate strength moves, contemporary music, and other elements that customers began to want as the program became more popular.
Planning and development aren’t just for startups. If your customer base is growing or changing, you need to grow and change, too. Use email blasts to keep in touch with customers, and build relationships while your business is growing. Keep your offerings exciting and fun, but consistent with the product customers have grown to love.
Listen for opportunity knocking! As the saying goes, you should be ready to answer when opportunities come pounding on your door. When Missett began teaching in San Diego, many of her students were military spouses who moved to far away cities and wanted to continue the program.. Missett’s husband was familiar VHS video, then just a developing technology, so she videotaped routines for faraway teachers. This effort lead to the formation of what is now JM DigitalWorks, a video production company that is a division of Jazzercise.
Don’t wait to be in the right place at the right time- evaluate the resources you already have, and try to create opportunities for yourself . As Judi Sheppard Missett says, “We are all in the right place at the right time, we just need to be aware of it.”
One way to gain recognition for your community and build visibility for your business is by earning business awards. Many are self-nominated and fairly easy to apply for. Here’s a quick guide to a few of the best business awards for 2009:
Businesses that have helped jump start our economy by maintaining growth over the past three years are eligible for the Inc. Magazine 500/5000 award. Winners are invited to attend the nationally recognized Inc. 500/5000 conference, and are featured in future magazine and online stories. This award is a great chance to gain visibility for your company and to represent your community- past winners have included social mission companies, tech startups, and beauty product lines- companies in all industries with over $2m in sales for 2008 are encouraged to apply.
For those still working on breaking the $1m mark, the Make Mine a Million $ Business contest, sponsored by Count Me In, is a great way to gain the support you need to meet this benchmark. The contest operates as a “race” to the $1m sales mark, and most participants see sales increase at least 40% over the duration of the competition. The M3 race is open to women owned businesses in one of 15 categories.
Businesses already on the fast track to earn $1m- those with $500,000 or more in sales for 2008, are eligible to enter the Entrepreneur Magazine Small Business Contest. Similar to the 500/5000 conferenceInc. contest, businesses are featured in a future magazine issue or online story. Entrants are also featured on the contest website- a great way to increase visibility for your business even if you aren’t chosen as a winner.
The Ernst and Young Entrepreneur of the Year award is given annually by international accounting and consulting firm Ernst and Young. Award recipients may attend special conferences and are invited into a network of past winners and prestigious entrepreneurs. The award is internationally recognized as a great achievement- check out the website and contest rules for more details.
If you don’t have the time for a lengthy application, or don’t have the sales revenue to qualify for one of the larger contests, consider Business.com’s “What Works for Business” contest. Applicants write a quick essay about a challenge they’ve overcome. Any small business owner that has overhauled their website design implemented a new online marketing strategy knows that the small things can sometimes be the toughest to take on- here’s your chance to let other entrepreneurs learn from your success. Prizes for the top essay are awarded monthly.
Finally, Ideablob.com allows you to test out business ideas for the chance to win a $10,000 award. Award money goes toward the costs of implementing the idea- if you need to purchase inventory, equipment (such as a credit card terminal) or business software to get your business off the ground, here’s a great place to get started. Awards are given monthly, and are determined by votes from members of the site’s online community.
Whether you’re a brand-new business or a seasoned business owner, there’s a contest out there for you. Most of the above have spring deadlines, so get going- apply for the award you deserve. Good luck!