The less a business pays for goods and services the more profit that business generates. How does a small business with limited purchasing power get access to lower cost goods and services? The answer is simple. Pool the purchasing power of many small businesses to increase the purchasing power of each individual business. The implementation of forming a buying group can take lots of time, money and resources. Most small business owners have little of these buying group ingredients.
The concept of many small to mid-size businesses joining together to form buying groups has been around for a very long time. The implementation of the concept has only been available for a few years. Just about all of the national buying groups that have started operations in the past five years are no longer in business. I will tell you why many of these buying groups were not successful later in the article. Some of the few surviving buying groups have formed an alliance that offers their members access to greatly discounted pricing with a total of 37 national vendors. The Hospitality Buying Group was the first national buying group to offer a FREE lifetime membership to any business in any industry. This group recently started the Hospitality Buying Group Alliance which offers free lifetime memberships to all the national buying groups in the alliance. The only investment the business members make is the time to compare the prices of the alliance vendors against what they are currently paying.
By now you are thinking that all of this sounds too good to be true. If the Hospitality Buying Group Alliance gives away lifetime memberships then how do they make any money? If the members are not a revenue stream then the only other revenue source must be the vendors. The vendors pay the buying groups commissions on all purchases made by their members. There is no risk for the vendors because they only pay the commission after they have been paid by the buying group members. The commissions are very low so the maximum discounts can be offered to the business members.
Some credit card companies, like American Express, offers a small savings or a percent cash back reward to their customers for using vendors in their network. While saving 2 ? 5 percent with credit cards is good, a 10 ? 50 percent savings with buying groups is much better. Buying group members will only be contacted by the alliance vendors they select. As the buying groups get more established more vendors are interested in offering their services to group members.
If the concept of the buying group is so good then why do most buying groups fail? Most of the failed buying groups spent a few hundred thousand to over a million dollars just to get the buying group started. To make matters worse they have large operational expenses. This is going on at the beginning of the buying group's existence while the group has few vendors to offer potential members. To keep the group functioning they need to charge members $500.00 - $10,000.00 annually to join the group. With few vendors the members can only expect to save a few thousand dollars annually. Many small business owners are not willing to take the risk of purchasing a membership in a buying group that may not generate significant savings. This results in few buying group memberships sold. The buying group can't pay their operational expenses resulting in reducing the sales force. This results in decreased revenues and finally the buying group ceases to exist.
The successful national buying groups that make up the Hospitality Buying Group Alliance were all started with an initial investment of just a few thousand dollars and thousands of labor hours by just one or two individuals. Their operational expenses in the beginning were just a few hundred dollars a month plus lots of labor hours by the owners. As the buying groups grew the revenues were reinvested back into the buying group. The use of technology reduces the operational cost of the buying group. This approach results in a successful buying group with a positive cash flow. This information should put potential members at ease because they know the buying group will be around for a long time.
This is a very special time in the history of buying groups because this is the first time an alliance of buying groups has ever been formed. With the free lifetime membership, total freedom to select one or many alliance vendors and a growing alliance of buying groups makes this the best time to participate in the buying group alliance. You can which national vendors the Hospitality Buying Group Alliance offers by going to: http://www.hospitality-buying-group.com/.
Paul Buisson has been involved with buying groups for over 12 years. He has consulted with several buying groups to make them successful. He can be reached at 985-727-2992 for free advice.
Culver prom limo ..Providing high quality customer service is a must for any... Read More
If you want to start a business in 2005, and... Read More
A suggestion box is a really good idea for your... Read More
The choice of financing is an important determinant of whether... Read More
A tongue-in-cheek look at the skills required to operate a... Read More
I only have to point to the 555 plus failed... Read More
One thing I have noticed in my travels to different... Read More
A few years ago, I visited Beijing for the first... Read More
Since you own a business you probably have liability insurance... Read More
This is the tale of two business plans with very... Read More
Before you read any further in this article, I'd like... Read More
Sacred cows take a long time to die. We get... Read More
1. Look Over Your Shoulder ? Of course, Punxsutawney Phil... Read More
Your business is only as good as the number of... Read More
Work smarter, not harderWhat is one of the best ways... Read More
Q: I have outgrown my home office and need to... Read More
In the book Women and Small Business author gives all... Read More
How do marine type businesses start? Have you ever thought... Read More
I love lists. I make them for everything. And I'm... Read More
Everyday, customers and business owners are bombarded with billboards, logos,... Read More
Most new small businesses won't be in business this time... Read More
Often smart entrepreneurs look for out of the way businesses,... Read More
How far away is the person you need to meet?We... Read More
The Boston suburbs seem to be rich with possible locations... Read More
What is in an information plan?Before you even meet with... Read More
Wood Dale limo ..Franchising has made the world look really small. The well... Read More
CONSIDERATIONS FOR YOUR INTERN: Specify the number of hours the... Read More
You'd like to go into business for yourself, and believe... Read More
In today's fast paced marketplace it is easy to neglect... Read More
$elling $elling $ellingWhat makes a great sales person? Well, the... Read More
A few years ago, I visited Beijing for the first... Read More
Everyone wants to succeed in life. Most people want to... Read More
Many smaller businesses choose niche markets for various reasons and... Read More
We all know that competition is an ugly word but... Read More
It seems so long ago that I started my first... Read More
Continuing from the second article:6. About the aground mathematical model,... Read More
No matter what kind of small business you have, you... Read More
It is an American dream to own a business. But... Read More
The reason we Franchisors call it an exclusive territory is... Read More
I'll be the first to admit that I went a... Read More
Why are Chambers a good launching pad?Chambers provide you with... Read More
Whether you operate a chain of restaurants, a mom-and-pop convenience... Read More
You make the decision to go into business and for... Read More
Completion not Perfection Five Keys To Doubling Your Productivity and... Read More
Many government department heads are on the take. Oh they'll... Read More
Over the years I heard the best way to learn... Read More
Not sure how to start a small business? This guide... Read More
Do you sometimes find yourself just going "through the motions"... Read More
Franchising companies often use Business Broker to help attain sales... Read More
SBIR Corner: FFP vs. CPFF contracts:In the SBIR/STTR world, the... Read More
Small Business |