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Saving in Numbers

A purchasing co-op can help your business save by teaming up to buy in bulk.
September 20, 2010
URL: http://www.entrepreneur.com/article/217317

Small-business owners may now be able to do what their larger competitors can do: save money by buying in bulk.

Regionally based purchasing co-ops are a fledgling trend, says Adam Schwartz, spokesman for the National Cooperative Business Association, a trade organization for co-ops. Organizations like GoLocal of Sonoma County, Calif., and Our Milwaukee can yield savings of 10 percent to 40 percent on purchases, Schwartz says.

Is joining a co-op right for your business? Here are some considerations:

Are you open to new brands? Co-op members may need to agree to purchase certain brands to achieve savings. If your business depends on specific ingredients or products, you may have to buy them outside the co-op, Schwartz says. But you also can try introducing your preferred brand to the group, he says.

Are you flexible about delivery? Some purchasing co-ops take possession of inventory, so members may need to arrange for delivery from a central location. In other cases, products are shipped directly to members, Schwartz says. Be sure to understand which method of delivery applies to you, because arranging for transportation may add to your costs.

Does a co-op exist near you? It may be challenging to find a local co-op because they're relatively new. Contact Schwartz's group to find out which co-ops may be right for you. He says the association also provides assistance and resources for those who'd like to start their own co-op with as few as 20 like-minded business owners.