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Co-Operative Approach for Small Businesses04-03-19 | News

Co-Operative Approach for Small Businesses
Focused on Leveling the Playing Field

Family businesses can be found throughout the landscaping industry. As is the case with many other industries, however, consolidation within the industry have taken a big piece of the market, making it anything but a fair fight for local or regional businesses.

There's a lot at stake in this David versus Goliath struggle. For small business owners it starts with a passion to own and grow a business, a desire to remain autonomous and control their own destiny, and a commitment to personalized and localized service to customers. The roots can easily be several generations deep.

What can be missing, however, is the knowledge and access to all the business tools that can help a business to operate more efficiently and market itself more effectively. So, too, can the leverage of purchasing power and other economies of scale enjoyed by large national chains.

The co-op model
While co-ops have certainly been successful historically in the farming sector, their presence in the U.S. economy is significantly broader. In fact, in 2017 co-ops accounted for $214.4 billion in business in the United States.

At its root, a co-op is simply a business that is owned and operated by and for the benefit of its members. Co-ops can be found in the energy, financial, arts, healthcare, retail, and non-profit sectors. They can be established to serve just about any type of consumer need. In fact, some of the brands people have grown up with that are actually co-ops include Ace Hardware, Organic Valley, Fairtrade, U.S. Central Credit Union and Land O'Lakes.

Because of its membership structure, co-ops empower its members to compete more effectively in a marketplace. This is because individual members benefit from the business tools and buying scale that would not be accessible to them on their own. Together, as a group, members enjoy a collective purchasing power and a la carte access to expertise, business resources and other tools to help them manage and grow their business.

A flooring business grows under co-op model
It is a way of doing business that resonates for John Taylor, a third-generation owner of a family flooring business in Ft. Myers, Florida. After 40 years as an independent business, Taylor joined Carpet One, a flooring co-op run by CCA Global Partners, after being introduced to the model by some of his flooring dealers. Now 21 years later, Taylor's flooring business has grown from a single store to four locations.

"Joining a co-op has been not only a way for me to protect my flooring business from the onslaught of the big box retailers, but it has been a platform for my business to grow," says Taylor. "Within the co-op, I have access to best-in-class administrative tools, credit card processing rates, insurance policies, employee training, and marketing tools."

The work of co-ops like Carpet One is to identify the best of these services and tools, negotiate the best rates for its members, and then make them available with the training and education that is needed to implement them. Unlike the franchise model, co-op members are not forced to follow a highly prescriptive and standardized formula. Instead they retain a high level of autonomy without having to pay stiff franchise fees.

This autonomy extends to selecting from a range of resources they want to employ to manage their business. As members also own stock in the co-op itself, they are incentivized to help each other through sharing of best practices, as profits from the co-op will ultimately flow back to them.

CCA Global is a unique entity itself - and also a co-op. The company was co-founded by current chairman and CEO Howard Brodsky, who began as a flooring business owner. Witnessing the trend of large corporations causing independent family-owned flooring stores to go out of business, he felt there was an opportunity to introduce the co-op model to this sector.

After the flooring co-op grew to include several thousand members, Brodsky decided to establish CCA Global as a means to bring the co-op model to other home related products and services including lighting retailers and contractors.

Today, the co-op has expanded to include 14 divisions and more than 3,000 locations in North America. Illustrating that the model works well in just about any retail or service sector, the co-op model is now utilized for sporting goods retailers, bicycle shops, childcare facilities and even non-profit organizations.

"Virtually any market that is served by a number of family-owned businesses can benefit from forming a co-op," says Brodsky. "The core principles of how to run a business are similar even if there are some market-specific dynamics. It comes down to equipping independent owners with the services to sustain and grow their business and to do that at a scale where they can compete with large national companies."

In addition to benefitting from the leverage and discounts in purchasing supplies, more seemingly mundane examples of co-op assistance include negotiating insurance and credit card processing fee rates. CCA Global has experts in these areas that understand how to attain the best possible market rates, including discounts for the group.
"For a family business that has to go out and purchase insurance from a local provider or negotiate credit card rates themselves, they may know they are not getting the best rate, but they often don't know how far off they are," says Brodsky.

Operational, sales and management training are also key aspects of the CCA Global co-op model. Training is both in-person or online, and all content is based on proven, established tenants of the industry. This includes a best practices module with input from other members.

"Family businesses are the foundation of the U.S. economy and we can invigorate these businesses and local communities by finding ways to level the playing field," explains Brodsky. "When local businesses do well, it's not just a win for the owner. With a co-operative approach, the vitality and viability of the entire industry can be raised and it can even impact the overall economy," adds Brodsky.