9 ways in which working collaboratively can help your business.
Businesses that work together grow together.
In difficult conditions businesses need to look at ways in which they can address the issues that challenge their potential for growth. Following the launch of our publication ‘Co-operative Consortia: A Model for Growth in a Challenging Economy’ this week, we felt it might be useful to look at some of the common challenges to growth and some examples of how they can be addressed.
1. Access to Procurement Opportunities
In Wales £5bn is spent every year by public sector procurers and it is estimated that Local Government spends 44% of that total (source: Barriers to Procurement Opportunity Research, Welsh Assembly Government – Value Wales. 2009). Most SME’s trying to access this work do not have the economies of scale available to them to service the bids efficiently. A consortia approach can allow smaller companies to bid together to service contracts. As the South East Construction Consortium in England puts it, consortium working ‘open[s] doors that would otherwise be closed’.
a. Secure Wales
The Secure Wales consortium is a collaboration between six providers of security and fire protection services. The consortium can supply solutions for any aspects of security from CCTV, dog protection and street furniture to online and data security. Secure Wales is run as a marketing consortium designed to promote each individual company’s services and to offer a comprehensive, tailored range of solutions to clients security needs. The consortium is able to promote itself to a wider market than the individual companies could and are also in a position to bid for bigger contracts as a consortium supplier.
2. Joint Marketing
Small businesses operating in competitive environments can often feel that their marketing is ineffective against the sheer weight of their competitors offers. In tourism however, consortia working has long been established as a means of pooling marketing resources across similar geographical or themed areas to achieve more with a limited marketing budget.
a. Clwydian Tourism Range Group
The Clwydian Tourism Range Group was founded as a response to the foot and mouth crisis in 2001. It has approximately 100 members comprising of small tourist based businesses across the Clwydian Range, which is a designated Area of Natural Beauty. The consortia aims to provide support, advice and networking opportunities to members, and to work in partnership with Denbighshire and Flintshire County Councils to promote the Clwydian Range as a major tourist destination.
b. Green Events
Green Events was originally created by a group of businesses in Llanwrtyd Wells who got together to devise methods of bringing tourism trade to the town as the pony trekking industry declined. The organisation has created a number of distinctive events which has bought Llanwrtyd Wells to a wide audience. From stone skimming championships, walks and mountain biking championships as well as the well-known Man vs Horse Marathon and World Bog Snorkelling Championships. Green Events has created a strong identity for this small spa town in mid Wales, supporting and sustaining the tourism industry in the area. Nowadays, a mixture of businesses and local volunteers run the events and the town has a worldwide profile as a result of this work.
3. Shared Risk
New contracts, innovation and product development are necessary processes but by their very nature they incur risk. Sharing development approaches, costs and even personnel could mitigate some of those risks and help the companies involved deliver better products to the market than they could by themselves. Shared risk in new ventures also allows the businesses to share expertise and offset each others weaknesses.
a. SMart Wind
SMart Wind is a supply chain led consortium developing the 4GW Hornsea wind farm off the Yorkshire Coast. The consortium consists of Mainstream Renewable Power and Siemens Project Ventures GmbH who formed the venture in 2009. SMart Wind combines the development expertise of Mainstream Renewable Power with the financial strength of Siemens Project Ventures GmbH as well as the expertise of various Siemens companies. The aim is to reduce project risk by bringing together experienced partners to manage the risk. Both parties also bring to the consortium key relationships with leading supply chain companies that will be necessary to ensure the cost effective design, construction and long-term operation of the offshore wind farms.
4. Joint Purchasing
By working together to purchase commodities in bulk, companies are often able to access economies of scale they couldn’t get by themselves. In retail, NISA today acts as a buying and marketing consortium for independent retailers, allowing them to purchase grocery stock at prices that allows them to better compete with the larger grocery chains.
a. Independent Buyers Ltd
The Independent Buyers Consortium’s membership consists of several hundred small and medium sized businesses with a stated total buying power of £1bn. The consortium, which advertises itself as the UK’s largest private-sector purchasing consortium has negotiated over 100 competitive discount agreements for a varied range of common purchase categories such as energy, components and car hire. Member businesses benefit from reduced prices and a savings guarantee.
5. Defining Quality Standards
Where a group of companies sell a similar or complimentary product it is possible to work together to define quality standards to ensure the overall quality of the products and services offered. These quality levels can then become a selling point for each of the businesses involved and the consortia can then be used as a quality branding tool for each of the member businesses.
Cilydd is a co-operative consortium of independent tea houses and cafés in North Wales. The members share a common commitment to an independent ethos and use the consortium to examine ways in which they could work together to improve their marketing, buying, training and quality standards – whilst retaining their own individual identities. Cilydd intends to create a tea and coffee culture in Wales which is a market leader in the UK by utilising its branding effectively, establishing a co-operative roastery and investing in training and quality standards throughout their establishments.
6. Localised Improvements
Small businesses linked by a geographic location can join together to address issues within their physical location. These can include litter, street furniture, commercial signage or floral displays. Consortia can also be used to promote their unique selling points in the face of competition from out of town retailers or large supermarket developments. Consortia can also be used to develop events that can give an area a unique sense of place (see Green Events above).
a. Swansea BID
A Business Improvement District (BID) delivers projects above and beyond that of the local authority and works with partners including the business community and the local authority to develop projects and services that will benefit the trading environment within the boundary of a clearly defined commercial area. Swansea BID is the first and only Business Improvement District in Wales at present. The BID provides a platform for businesses to work together to improve the City Centre of Swansea. The BID is operated as a not for profit company limited by guarantee with its own board of a directors made up of city centre businesses. It focusses on five objectives: Car Parking & Transportation; Safety and Security; Marketing and Events; Cleansing; and Supporting and Attracting Business. The company’s aim is to improve the overall trading and shopping environment in Swansea making the City Centre a better place to visit, shop, stay, live, work and do business. Swansea BID has proven to be a great success and in 2011 City Centre Businesses voted for the BID to continue into a second term.
7. Mutual Support
Running a small business, or operating as a sole trader, can be an isolating experience. With few (or no) colleagues to support a business owner, working within a consortium can offer more than just marketing or efficiency benefits. Very often the consortium can provide a supportive environment that provides opportunities for discussing ideas, comparing experience and supporting each other.
a. Oren Actors’ Management
Oren Actors’ Management is the longest running actors agency in Wales. It is a co-operative consortium of actors and actresses and is based in the Chapter Arts Centre in Cardiff. The consortium acts as an agency, with each member of the organisation taking responsibility for finding acting work for each of its members. The actors pay a membership fee, which gives the consortium the resources required to deliver its services to members. Each actor is expected to participate fully in the running of the organisation.
b. Craft in the Bay
Craft in the Bay (the Makers Guild in Wales) is a highly successful retail gallery situated in Cardiff Bay. It has been running as a co-operative business since 1997. The gallery was established by the Makers Guild in Wales to bring together and promote Welsh talent in the craft sector. All 70 plus members of the co-operative display their work within the gallery and spend an agreed number of hours working there each year to reduce running costs. Although the Makers Guild is now a registered charity it still runs as a membership consortium with a membership selection process and it continues to adhere to the co-operative ethos.
8. Response to competitive environment
All businesses work within a competitive environment. It is necessary to be aware of changes in the sector the business is operating in and to be aware of any localised threats. In retail, shop owners can form consortia to promote their independent offer in the face of competition from out of town developments or the construction of new supermarkets.
a. Quality Solicitors
QualitySolicitors is a group of law firms providing legal services in over 350 locations across the United Kingdom. Each firm is an independent law firm authorised and regulated by the Solicitors Regulation Authority. The member firms aim to provide a standardised level of customer service under a recognisable brand that is heavily promoted online and on television. The organisation has created a strong, marketable brand as a response to the specific threats and opportunities created by the ‘alternative business structures’ included within the Legal Service Act (2007) – which partially deregulated the legal profession and allowed bigger retailers to enter the legal services market. Quality Solicitors is now a recognised brand with a range of accessible locations and a UK wide reach – well placed to compete within a quickly changing legal services retail environment.
9. Shared Facilities
In some situations it is possible to create consortia for sharing specific facilities. These could be specific machinery, logistics channels, back office functions or online sales mechanisms. In wine growing countries it is common for growers to form wine production co-operatives which share the processing, production, bottling and logistics.
a. Calon Wen
Calon Wen brings together Welsh organic dairy farmers to supply organic milk products throughout Wales and the UK. It enables the farmers to share dairy and processing facilities as well as logistics, marketing and a strong brand identity. The co-operative was born out of a desire to ensure that as much Welsh organic milk is processed in Wales as possible. Since its formation, it has developed innovative partnerships with suppliers and customers. It has a close supplier relationship with Rachel’s Dairy, and supplies products to Tesco, Morrisons, Sainsbury and Waitrose as well as other key customers across the UK. Calon Wen is developing environmentally friendly packaging and piloted the Soil Association’s ‘Ethical Trade’ system.
At the Wales Co-operative Centre we have thirty years experience in working with businesses to facilitate co-operation and achieve business efficiencies through collaboration. Through its specialist consortia development team, the Centre can advise groups of businesses on the most appropriate consortia structure to help them achieve their goals.
To contact them team for a discussion on the merits of using a consortia approach for your business, contact them via the website www.walescooperative.org, by phone 0300 111 5050 or by twitter @WalesCoOpCentre