Business Energy Buying Group — 5 Reasons To Join

From the very begin­nings of evo­lu­tion itself, and through the pas­sage of the ages ever since, two basic fun­da­men­tals have held true.  Num­ber one: The big fish get to eat the lit­tle fish.  Num­ber two: The big fish get big­ger.  Charles Dar­win knew this… even if he was less sure as to how to keep his beard trim.

So the bot­tom line is that we are bet­ter, from an evo­lu­tion­ary stand­point, when we are big­ger.  This is also true from a mil­i­tary point of view… and also an eco­nomic.  Peo­ple… SMEs… even cor­po­ra­tions… have always pulled together, to pool resources and work towards com­mon goals; fig­ur­ing they are stronger when together.  It is also true from the stand­point of nations, for instance with the “Bet­ter Together” cam­paign for a “no” vote in this year’s Scot­tish referendum.

business energy buying groupThis the­ory remains true for employ­ees, in terms of con­sumer soci­eties such as the Co-Op, and trade unions.  How­ever, it is also true for the employ­ers, who increas­ingly pull together in terms of buy­outs and part­ner­ships, as they increas­ingly look for greater and greater return on their own spend.  Yes, you can feel com­forted that in today’s frag­ile econ­omy, busi­nesses are also feel­ing the pinch; find­ing they need to achieve more, with less resources, just as we are as con­sumers.  This process of ratio­nal­i­sa­tion can lead to com­pa­nies stream­lin­ing their oper­a­tions, per­haps by shar­ing resources and doing what they can to become leaner, and work smarter.

What we are really talk­ing about here is the con­cept of “Group Pur­chas­ing”, or strate­gi­cally group­ing together to improve your pur­chas­ing posi­tion.  Group Pur­chas­ing touches all aspects of com­merce.  Of course at one end, com­pa­nies like Tesco — with their thou­sands of out­lets — can offer sub­stan­tial national busi­ness to any sup­plier.  Good for the sup­plier, yes, but it also puts Tesco in a posi­tion where they can effec­tively nego­ti­ate for an extremely com­pet­i­tive price for those goods.  The same holds true for com­pa­nies like Hertz, who will look to buy whole fleets of cars, or Toys R Us, who will be able to retail prod­ucts across a range of out­lets, internationally.

Group Pur­chas­ing has been in exis­tence for quite a while, espe­cially in cer­tain indus­tries such as edu­ca­tion and health care, where coun­cils and the NHS are able to nego­ti­ate on price, based on the quan­tity to orders they can guar­an­tee.  How­ever, the process has now been adopted by many dif­fer­ent indus­tries.  Notably, exactly the same process holds true for the busi­ness gas energy mar­ket.  As one con­sumer of energy, you have lit­tle bar­gain­ing power with your provider.  How­ever, if you were to form a “Buy­ing Group” with other com­pa­nies, you would imme­di­ately improve your nego­ti­at­ing posi­tion, strate­gi­cally plac­ing your­self in a much stronger position.

So, what might be the ben­e­fits to you, as a busi­ness gas cus­tomer, if you’re con­sid­er­ing form­ing a Buy­ing Group?  Let’s con­sider a few of these in turn

  1. Put sim­ply, once a mem­ber of a Buy­ing Group you are, as dis­cussed ear­lier, in a much stronger posi­tion to nego­ti­ate with your energy sup­plier, and drive prices down.  In eco­nomic terms, this is known as Econ­omy of Scale.
  2. You may also be able to re-negotiate the actual con­tract itself, strik­ing a bet­ter deal for you (and the other mem­ber busi­nesses) mov­ing forwards.
  3. Equally, you might be able to buy your energy on more amenable terms.  In other words… your terms.   For instance you might be able to buy gas dur­ing the sum­mer, when prices are cheap­est.  This isn’t cheat­ing… this is exactly what big­ger cor­po­ra­tions do them­selves.  Why should they have unique access to all the best moves?
  4. Aside from sav­ings, you might also find other ben­e­fits from join­ing in with other busi­nesses… even if they are com­peti­tors.  Start­ing by shar­ing the bills, you might also move on share knowl­edge… intel­li­gence… infor­ma­tion.  You will find each mem­ber com­pany has its own area of inter­est in energy acqui­si­tion, and shar­ing this infor­ma­tion will help every mem­ber com­pany with improve­ments in their own energy effi­ciency and technology.
  5. Stream­lin­ing.  Putting your energy require­ments through one shared resource will also help stream­line the process itself; for instance pool­ing admin­is­tra­tive and pur­chas­ing processes, decreas­ing the indi­vid­ual drain of that func­tion within the business.

To sur­mise: you are richer together, and poorer apart.  Using these prin­ci­ples of Group Pur­chas­ing, and form­ing a Buy­ing Group, will help you max­imise poten­tial sav­ings, mak­ing your busi­ness more com­pet­i­tive and giv­ing you a sharper edge over the com­pe­ti­tion, in what is likely to be a com­pet­i­tive mar­ket­place.   What is more, with sit­u­a­tions like that tak­ing place in the Ukraine, and the com­men­su­rate threat by big boys like Rus­sia over energy sup­plies, it is more impor­tant than ever for you your­self to stand as tall, and as big, as possible.

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