Family businesses can be found throughout the remodeling industry, whether it’s flooring, tiling, furniture, contracting or interior design. As is the case with many other industries, however, big box retailers and consolidation in the industry have taken a big piece of the market, making it anything but a fair fight for local or regional businesses.
There’s a lot at stake in this David versus Goliath struggle. For small business owners, it starts with a passion to own and grow a business, a desire to remain autonomous and control their own destiny, and a commitment to personalized and localized service to customers. The roots can easily be several generations deep.
What can be missing, however, is the knowledge and access to all the business tools that can help a business operate more efficiently and market itself more effectively. So, too, can the leverage of purchasing power and other economies of scale enjoyed by large national chains.
It is for these reasons that remodeling industry is ideally suited for the co-op model, which has become a dominant force already in areas such as flooring and lighting. With this approach, independent retailers, contractors and interior designers can effectively level the playing field and compete by leveraging purchasing power and resources, while still retaining individual control of their own enterprise.
The co-op model
When the terms “co-op” or “cooperative” are used, what can come to mind is an agricultural business in which farmers work together to market their products. While co-ops have certainly been successful historically in the farming sector, their presence in the U.S. economy is significantly broader. In fact, co-ops accounted for 4.4 billion in business in the United States in 2017.
At its root, a co-op is simply a business that is owned and operated by and for the benefit of its members. Co-ops can be found in the energy, financial, arts, health care, retail and non-profit sectors. They can be established to serve just about any type of consumer need. In fact, some of the brands people have grown up with that are actually co-ops include Ace Hardware, Organic Valley, Fairtrade, U.S. Central Credit Union and Land O’Lakes.
Because of its membership structure, co-ops empower its members to compete more effectively in a marketplace. This is because individual members benefit from the business tools and buying scale that would not be accessible to them on their own. Together, as a group, members enjoy a collective purchasing power and a la carte access to expertise, business resources and other tools to help them manage and grow their business.
A flooring business grows under co-op model
It is a way of doing business that resonates for John Taylor, a third-generation owner of a family flooring business in Ft. Myers, Fla. After 40 years as an independent business, Taylor joined a flooring co-op when introduced to the model by some of his flooring dealers. Now, 21 years later, Taylor’s flooring business has grown from a single store to four locations.
“Joining a co-op has been not only a way for me to protect my flooring business from the onslaught of the big box retailers, but it has been a platform for my business to grow,” says Taylor. “Within the co-op, I have access to best-in-class administrative tools, credit card processing rates, insurance policies, employee training and marketing tools.”
These types of co-ops identify the best services and tools, negotiate the best rates for its members, and then make them available with the training and education that is needed to implement them. Unlike the franchise model, co-op members are not forced to follow a highly prescriptive and standardized formula. Instead, they retain a high level of autonomy without having to pay stiff franchise fees.
“We have access to business tools that we never had before and I still have control over everything,” says Taylor. This autonomy extends to selecting from a range of resources they want to employ to manage their business. As members also own stock in the co-op itself, they are incentivized to help each other through sharing best practices, as profits from the co-op will ultimately flow back to them.
“I have learned so much from the other members. Looking back to the time before we joined the co-op, it felt like we had our heads in the sand. We are better with the co-op than without it every day of the week,” explains Taylor.
In addition to adding three additional stores, Taylor has also added a wholesale floor covering business with two locations.
More seemingly mundane examples of co-op assistance include negotiating insurance and credit card processing fee rates in addition to benefitting from the leverage and discounts in purchasing supplies
“For a family business that has to go out and purchase insurance from a local provider or negotiate credit card rates themselves, they may know they are not getting the best rate, but they often don’t know how far off they are,” says CCA Global chairman and CEO Howard Brodsky. CCA Global partners with entrepreneurial business people to create a cooperatives.
Operational, sales and management training are also key aspects of the co-op model. “It is tough for any business owner to be good at everything—some people are great marketers, some great buyers and some are great at operations,” says Brodsky. “So, we capture what people in the co-op do well and put it together in a ‘best practices’ module, so other owners can understand the ‘secrets’ of running a successful business in that industry.”
Marketing is an area in particular that many businesses can find overwhelming to manage on their own. Co-ops can provide assistance with models and templates of websites and e-commerce solutions that work well in an industry, as well as assisting with a range of social media options.
“Digital marketing and social media are very complex today and can be overwhelming to those that are less familiar with this type of marketing,” says Brodsky. “So, we offer experts in digital marketing and search engine optimization that can help quickly establish and promote over these important marketing channels.”
