2 August 2010
Smaller businesses typically pay well over the odds on a host of common purchases. And, worse still, many know that they could cut their bills, but simply never take action. Stop your procrastinating – by the end of this hot tip, you could be well on the way to slashing 35% off your current spending.
The majority of smaller businesses do not employ a specialist to negotiate the best deals on all their purchases. Buying decisions tend to be made by owner-managers who took on the role in the early years of their business. As the company grows, they don't have the time to get the best deals, yet are still too small to justify employing a specialist.
Many businesses also do not place the same emphasis on buying as they do on selling, so all energies are put into one part of the business at the expense of another. The Daily Telegraph ran an article that said 90% of owner-managers feel they could make savings, while a quarter of businesses have no specific targets in place for cutting costs.
In short, many businesses are wasting money, yet are doing nothing to address the situation.
Perhaps the most obvious solution is to negotiate new contracts individually. However, this approach would be time-consuming and the individual savings may not be enough to justify the time spent negotiating the deals.
The answer is to treat buying in the same way as any other non-core element of the business and that can mean outsourcing.
For smaller businesses, that can mean joining a buying consortium which can negotiate on far more than just price. A buying consortium can negotiate better payment terms, delivery frequencies and discounts.
By joining a consortium, smaller companies effectively join up to create a body large enough to take advantage of some serious discounts. And the hard work is also done for them, the consortium negotiates the deals, all the members have to do is take advantage of the reduced rates.
"Any business over a certain size has to budget for services and consumables. It all adds up", says David Molian of the Cranfield School of Management, who have carried out extensive research into the buying habits of smaller businesses.
"Smaller businesses are inherently disadvantaged in terms of their buying power, and if they don't challenge the status quo, they are condemned to live with it."
A special offer
Given that buying consortiums save smaller businesses money, it is only fair to expect to pay a membership fee. However, members of the Forum can join our partner organisation the Buying Support Agency completely free of charge – an instant saving of £495. What's more, members are also free to leave at any time with no charge.
If you are interested in saving up to 35% on stationery and office supplies, print and packaging, office furniture, cleaning and catering supplies and much more, contact the Forum on 0845 130 1722.