Small Businesses Come Together and Save Through Group Purchasing

What is Group Purchasing? How Do Small Businesses Use It?
Group purchasing is the collective participation of multiple participants who buy a product or service at a discounted, or group rate. It allows small businesses to purchase goods or services that they would otherwise be unable to - because of cost or inconvenience - by pooling their resources and bargaining power with other small businesses interested in purchasing the same good or service.

What Goods and Services Can My Business Buy Through Group Purchasing?
If there is enough interest, small businesses can group purchase almost anything, but some of the most common group purchase agreements for small businesses fall within the categories of office supplies, IT services, and employee benefits.

Small businesses can access group purchasing collectives through several channels; by joining national trade or industry associations, by purchasing from select non-profit and for-profit businesses, and by teaming up with local trade organizations or advocacy groups.

• Industry associations such as the Printing and Imaging Association of MidAmerica* offer members buying programs that feature high-quality goods and services that meet the industr-s business needs, including 401K administration, workers compensation insurance, credit card processing, and office supplies.

• Trade organizations, such as the Michigan Business and Professional Association,* often team up with private companies to provide discounts for identity theft prevention services, offices supplies, debt collection services, and travel needs.

• National retailers and non-profit organizations periodically offer group-purchasing initiatives to promote specific energy-efficient products and services, to commercialize new-to-market products, and to assist in improving the energy efficiency of specific building sectors. They partner with a private sector firm, such as a manufacturer or distributor, to market a product to the public at volume prices. For ENERGY STAR E-Updates on group purchasing opportunities call 1-888-STAR-YES (1-888-782-7937) or visit www.energystar.gov/smallbiz.

• Healthcare cooperatives, like the Farmer- Health Cooperative of Wisconsin* help small employers control healthcare costs and insurance premiums that they typically would not have the time or resources to manage on their own.

Alternative to Group Purchasing

If you do't want to commit to group purchasing co-ops or membership-based associations, you can still apply the principles of collective buying by bartering with other businesses. Through a bartering agreement, your business can offer its products and services at a discount, or in exchange for, the goods or services offered by another local business. For example, if you own a daycare, you could owner enroll the child of a local web designer at a discount, and in exchange the web designer could re-vamp your business website at a reduced rate. I's important to remember that even when money doesn't change hands, the fair-market value of bartered income is taxable, so consult a small business accountant or the IRS to ensure that you are reporting correctly.

Related Resources

• Business.gov's Manage a Business Guide

Once your business is successfully up and running, you will need to continuously monitor and manage operations to ensure that everything is running smoothly. These guides provide detailed information on how to manage your business operations, on everything from taxes to marketing.

• Bootstrapping Your Business - Is it Right for You?

To help save on operational costs, bootstrappers often exchange services with other local business on a barter system and find other ways to save money by getting creative.

• 8 Tips to Save Big Money on Technology

Tips for small businesses trying to save money on technology purchases, or by using technology in their businesses, from guest blogger Anita Campbell

• Surviving the Recession and Planning for a Rebound - How Small Businesses Are Doing It!

Insights and tips (drawn from across the Business.gov Community of experts and small business owners) on how small businesses are fighting back against rough economic conditions.

*hyperlink points to a non-government websites