Forming Co-operatives is a Smart Business Decision

The right kind of Co-op is a boost in spending power, product and inventory management for the small Entrepreneur. Wikipedia defines a Co-op as “an autonomous association of people who voluntarily cooperate for their mutual social, economic, and cultural benefit.”    The operative word is cooperative. Further, it means that a group of individuals has decided to band together because it makes them stronger in some manner than trying to go it alone.

Back in the day, my wife and I was the owner-manager of a Gift and Record Shop. We got lucky enough to be located next door to a pizza restaurant. During one of the hot and muggy summer weekends, say like…Thursday nights through Sunday night, my eyes were opened. After the bars had closed, the parking lot filled up with a lot of couples, or people stopping to get food before turning in for the evening. I extended my hours to accommodate this crowd. Now I was getting the spinoff from that jolly and enthusiastic crowd who’d had a few drinks and noticed that we were still open too. After eating or ordering a pizza to go, they would stop in buy a record or some pretty little gift to impress their date and head off into the night, smiling from ear to ear. Oh, don’t be coy…you know what would come next between those couples.

That particular summer saw a big threat to the mom and pop record stores. They were being chased out of business by the large record store chains. Now that I had a good customer base, I thought I would try to talk to some of the other small shop owners into forming a co-op of sorts to buy records directly from the large record labels.

Five of us met in the shop of another record store after business hours. We will call him Jim for this article. I presented my plan to the group. It fell flat on its face. There was no debate; the plan was no good, according to Jim, the oldest shop owner in the group. Even though we all were currently getting our records from the same downtown wholesaler (let’s call him Bossman), paying the same price regardless of the quantity, we could not strike up a deal.

I’d already spoke to a large chain out of Chicago that was willing to sell us records at an average savings of fifty to seventy-five cent less than we were currently paying Boss man. And, depending upon the size of the record (45 single or 33.3 LP), artist, and label, some purchases were returnable if we didn’t sell them over a certain period of time. It was a sweetheart of an offer, but we had to buy in certain quantiles to get the deal. It was an ideal reason for forming a co-op.

The co-op deal fell through not because it didn’t make sense, but because of the old “who died and made you the big chief” syndrome. It was quickly noted that I was the youngest of the group. Jim, approaching his tenth year of business, did not see any value in the proposal. He and one other guy, who I later learned was a friend of his, didn’t want to anger Boss man. I never could find a way to validate Jim’s wholesale price. I suspect he had a different kind of deal. His shop was smaller in size, as opposed to others, only sold records. Although he said, we all were paying the same price. I’d already been told that every business owner paid the same prices by Bossman. He also gave me a printed wholesale price sheet.

The Bossman supplied almost all of Milwaukee Record stores, white, black, Hispanic or whoever bought records wholesale. He even shipped to the suburbs. The biggest problem I and others had was that Bossman would put his LP’s & 45 on sale for the same price he sold them wholesale. He was not trying to help you out in any shape of form. If you bought 4, 5 or ten copies of a record, no matter the format, you owned it. No returns unless it was discovered the records was scratched. So you either had to sell the record at some price, usually at a loss if it was old or eat the cost and get rid of it any way you wanted. Either way, Bossman had been paid his price and was also selling the new release at the same sale price he asked us for at wholesale. Now day’s people are savvier about their industry than we were at the time.

Today allows for a much more level playing field. There still may not be much profit margin between wholesale prices versus a retail price, especially for small stores. Product cost is always going to be the number one concern of the consumer, thus the retailer. Yet, now I believe an invaluable difference is how you market your product, the quality of the same and your shops customer care and service. You hear certain entrepreneurs talk about it all the time. After you have settled on a competitive price for your goods and product, you have got to produce an environment in which to offer the same.

As people, we always remember how we are treated, was it a pleasant experienced at say…a dentist office? I have a local dentist I’ve used since moving to Pittsburg in 1996. He was recommended to us by my wife’s co-worker. I was nervous on my first visit to his small office. Normally I am one of those people who warn (which I did) the dentist before I sat down. “Don’t start anything and there won’t be nothing.  Doc, I cannot stand pain so…watch it.” He just smiled, while reassuring me that I was in good hands.

First of all, you sit in his dentist chair, serenaded by soft jazz music. The pain you ask, I don’t remember. I do remember the precision he showed as he went about his work.  He shook my jaw and gave me a shot to numb the area he needed to drill and fill. I never lost consciousness as he carried on a conversation with me trying to contribute with my mouth wide open. My ears were also fixed on the sounds emitting from his office speakers. Suddenly it was over; he was telling me he will see me in six months. I got in the car and could not wait to tell my wife what a wonderful experience I had at this dentist office.

I know, this might be an extreme example, but you can equate this experience with any profession. Look at today’s restaurants, displays in the mall windows, on the department store’s floor. They don’t only make attractive displays for holidays. You walk in one of the malls quaint shops or a high-end jewelry store, the temperature’s just right and they have impeccable display lighting. The product is laying there as if it’s saying “Hi there, take me home with you.” Not trying to shock your system while you daydream but now think of WalMart. Do you see the difference?

As a small entrepreneur, there are many subtle changes you can make to create atmosphere.  And there is no doubt you can and should create it, especially if you want staying power. That goes for websites, as well as brick and mortar stores.

Use your business associates to help you improve, buy in quantity or bounce ideas off them while networking. If you do not remember anything else about this article, remember this…pick those business associates, and people who you interact with on a daily basis very carefully. The one mantra one continually hears when attending “Success” seminars in any field, including personal growth, is to choose your associates and friends wisely. The difference between me back in the day and now, is I do not waste time interacting with people who have no plan or in the extreme case really have no clue. I am not mean or anti-social. I love people, but I know some type of people is not good for my state of well-being. So I just avoid them as much as possible. It’s for personal and business reasons.  I can now report that I have a great group of people that I interact with on a continuous basis. They all bring something to the table as I hope I do the same for them. People who have your type of goals and aspirations are not hard to find these days. You just have to reach out and network with all kind of people. This attitude is also the reason I love communicating that fact to all of you via my articles and books.

No matter what anyone says, there is still room in the retail and even services marketplace for creativity and cooperation. Don’t, believe me, sat down in a quite area and turn on your laptop or tablet. Disregard the news headlines on the portals; listen to your electronic friend talking to you. It’s saying, “Where we going today Boss? What is it you want to know? What can I do for you?”  Let your creativity flow and you will find the answers to your questions are not that far away after all.

Peace, make it a day in which Jesus Christ would be proud of you,

Codis Hampton II

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