Big Ideas for Small Business

Small businesses should consider joining cooperatives in order to negotiate lower prices. Cost savings of 8% to 18% can be achieved when purchasing products through coops, estimates Howard Brodsky, co-founder and co-chief executive of CCA Global Partners, a firm that oversees about 14 different business coops. Moreover, it's not just paper supplies and related office goods; it can also cover such services as insurance and web-site construction.

Normally, business owners joining a coop will be asked to pay an upfront fee, which can be charged monthly or annually, and they must also agree to spend a certain amount of money through the coop each year to maintain their membership. In some cases, the coop is run by a business owner from within the coop; in other cases, it's run independently by someone who was specifically hired to negotiate prices and run the coop.

Cathy Buchanan, the showroom and sales manager at her family-owned Independent Carpet One Floor & Home store in Westland, Mich., joined a coop in 1997 and has been reaping rewards ever since. The coop developed her company's website and offered advertising and branding programs that helped market her store to new customers. Also, the coop allows her company to buy flooring supplies at discounts of 10% to 20%, and the coop's partnership with certain insurance companies sends new customers her way whenever a home is damaged by fire or flooding. "This is additional business that we would never have had," says Buchanan.