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Small Business

Local Businesses Find Strength in Numbers

Independent business alliances are helping small and midsize companies build markets, cut costs and boost profits.

Does your firm belong to a local business alliance? If not, maybe it should. A growing number of such associations, which focus exclusively on the needs of independent firms, offer members an array of services to help sustain their businesses.

Among the benefits companies gain by joining local business groups:

Shared buying. A group of farmers from Washington state, for example, worked together to increase direct-to-consumer selling by 20% over five years. A few years ago, café owners in Boulder, Colo., made bulk purchases of disposable cups emblazoned with their logos to help them compete when a popular national chain moved into town. The cups offered both a cost savings for the individual businesses and helped spread the word about patronizing them. Alliances also often buy blocks of advertising in local publications and split up the space -- and costs -- over time. In addition, alliances can provide the opportunity for member businesses to buy health care coverage at group rates, usually a big savings.

Cooperative marketing. A Minneapolis-St. Paul alliance runs programs to entice locals to shop at member businesses. This past summer, for example, the Minnesota group ran a contest in which a shopper who visited local retailers won hundreds of dollars in gift cards issued by association members. Not only did the promotion drive traffic in an otherwise slow time of year, but it also created a lot of buzz about the retailers, says Mary Hamel, the executive director of the Minneapolis-St. Paul metro area association. “We could talk to media during that time and educate the public the importance of shopping locally,” she says.

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Similarly, the Tampa Independent Business Alliance started Friends of TIBA, a longer-term loyalty program to reward consumers who shop at member firms. In fact, alliances’ focus on supporting local businesses dovetails nicely with the growing consumer trend toward localization. The addition of a few new customers can make members’ dues payments -- which run the gamut from about $150 a year to ten times that, depending on services -- worth it.

Marketing assistance. A 78-year-old independent business alliance in Wichita, Kan., has embraced modern media, conducting member workshops on the use of Facebook and other social media to help firms boost sales. The Minneapolis-St. Paul alliance spreads the word about its members on Twitter.

The chance to learn from one another. Newer, more technologically savvy members of a Topeka, Kan., group help fellow business owners build Web sites and market themselves online. According to Alissa Barron, the network services director for the national Business Alliance for Local Living Economies (BALLE) -- an umbrella group for local business coalitions -- member businesses, as well as nearby community groups that work together, learn from each others’ “skinned knees” and grow faster as a result.

Plus an advocate for business-friendly government policies at state and local offices. Some of the groups even invite speakers from the state and federal government to help business owners stay in touch with elected officials.

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In these challenging economic times, more independent businesses are turning to alliances to help them stay afloat. For example, the number of business members in BALLE, which focuses on socially responsible business practices, has ballooned from 16,000 three years ago to 25,000 this year. The American Independent Business Alliance also attracted 18 new member groups in 2009, and gains are on pace to reach the same number in 2010.