Umbrella organisations: the business benefits for SMEs

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‘Many smaller companies are realising the benefits of joining together with other businesses under umbrella organisations and network schemes.’

Forming small business networks can improve infrastructure and allow small firms to compete with the big players

If you started a new business in the last six years, chances are you spent some time saying the words, “Of course, if we were bigger we’d be able to…”. Like celebrities getting more free stuff than everyone else, it seems the larger the company, the bigger the breaks.

This is why many smaller companies are realising the benefits of joining together with other businesses under umbrella organisations and network schemes to increase buying power and broker better deals.

Sally Atkins runs Mototech Auto Services Ltd in Coventry, which she founded in 1998. Like any small business, Mototech found itself at the peril of constant industry changes, especially in matters of technology and workshop processes. “The only way we could keep up was by joining a network like Approved Garages,” she says.

Approved Garages offers training courses, help with marketing and social media, and point-of-sale issues. All this, says Atkins, “really helps us to compete with the franchised main dealers. It is a complete network for garage support.”

Atkins joined the Approved Garages network in April 2013 when it launched, following an inspection from the RAC. Participating garages join up to the Trading Standards-approved Motor Codes Motor Industry Code of Practice. “Joining the scheme was quite simple,” says Atkins, “but we do have peace of mind that Approved Garages are selective about which garages they appoint and quality is a definite priority.”

Membership of the group is limited to garages that service and repair cars, and the garages have to use original equipment or matched quality parts. Customers can have their car serviced with Mototech Auto Services Ltd or any other garage in the network without affecting the car manufacturers’ warranty, Atkins adds.

Atkins reports a definite increase in profits since joining the scheme: “The recession changed a lot of things and what we were starting to find was that customers notice the point of sale materials, for example, and this ups our prestige as an independent garage. This, in turn, gives the garage a really positive image to the customer, while they still benefit from the great prices we can offer as an independent garage.”
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Phil Seymour is the Approved Garages network manager. He says: “Because we are supported by the leading parts manufacturers in the UK, we are able to utilise a £1m annual marketing budget, both online and offline, and all of the marketing we do is designed to drive people to our website, and ultimately to the garages.” This means, he says, that garages in the network average between four and five new leads each month through the website.

Once they’re there, says Seymour, it’s down to the garages to “turn them into customers for life”. Seymour works hard to constantly improve the network. “Every garage customer is given the opportunity to leave customer reviews,” he says, “and we are very proud to have an average 99% customer satisfaction rating through Motor Codes, significantly higher than that of franchised main dealers.” There are currently 496 garages in the network, with a plan to expand to 1,000 in the next few years.

The National Independents Supermarket Association (Nisa) was formed in 1977 (as the Northern Independents Supermarket Association) by grocery entrepreneurs Dudley Ramsden and Peter Garvin, in order to protect the interests of independent shops against the increasing power of national supermarket chains. Now Nisa members operate around 4,000 retail stores in the UK.

Nisa members own their own business but pay an annual subscription or weekly payment in return for benefits such as access to a sophisticated IT ordering system, an extensive own-label range, a comprehensive support package covering retail store development, and consumer marketing campaigns (which includes distribution of five million personalised consumer leaflets door-to-door every three weeks throughout the UK).

Jempson’s supermarket in East Sussex has been a member of Nisa since 1982 and recently expanded into a modern, 3,250sq m superstore. The company also owns a number of cafes in the surrounding area. It’s been a family-owned and independent shop since 1935 and is now run by Stephen Jempson.

Jempson says he joined Nisa for the better prices and better deals on purchasing goods and services. “We are a large member,” he says, “but nothing compared with how some of the players in the market are. We can get prices that compare with some of the smaller group multiples. We would never be able to take the quantities that most suppliers require. And, as we believe very much that we are retailers, it’s great to let Nisa do the wholesaling for us.”

Jempson says the store’s independence is vital to them. “We paddle our own canoe,” he says, “but we’d be lost without Nisa.”

Anglia Freight Ltd, based in Eye, Suffolk, makes its deliveries via the Palletline palletised distribution network. It’s a privately-owned company, founded more than 20 years ago and has been a Palletline member since 1995.

Palletline operates as a hub-and-spoke palletised distribution system, via six hubs in Birmingham, Manchester, North London, Leicester, Rugby and Glasgow. Each regional hub handles consignments for delivery in their area. Palletline members collect freight from their customers and identify any freight for delivery outside of their local area. They then scan each pallet and take all of their network freight to a Palletline hub. There each pallet is quality-checked, scanned, unloaded and sorted into delivery areas.

The members then collect the freight for delivery in their local area (effectively swapping freight). Among Anglia Freight’s contracts is St Peter’s Brewery in Suffolk, for whom it transports cask-conditioned ales and bottled beers across the country.

Geoff Moulton, Anglia Freight’s managing director, says: “Joining Palletline transformed our business, giving us the ability to offer our customers total flexibility irrespective of the size of the consignment, or the location of the consignment.”

He adds: “It’s also brought some major IT initiatives to the membership and we have benefited enormously from that; digital signature capture, online booking for our customers – the sort of things that are now taken for granted.”

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