Building co-op leader showing the way
Builder and entrepreneur Carl Taylor is Co-operative Leader of the Year.
The award from Co-operative Business New Zealand is for an individual who has shown significant co-operative leadership.
Carl is co-founder of building supplies start-up, Combined Building Supplies Co-operative (CBS). Celebrating its first anniversary, CBS has brought together more than 160 small-to-medium-sized businesses so that their combined spending means bigger discounts for the co-op’s members.
The benefits include discounts and annual rebates from building materials suppliers.
CBS makes it possible to build entire houses with the same discounts as the bigger players, all for a one-off cost of $1000 which could be recovered through the savings to be gained on the purchase of a single garage door.
CBS chief executive Ian Lamb says the co-op wants to help the end boom-bust cycle for smaller builders and sub trades in residential construction.
“We’re looking to put more good deals into the little guys. These guys build three quarters of all houses in New Zealand. That’s our market.”
The co-op is happy to pit itself against larger group home builders on competitive pricing.
CBS pricing, negotiated with suppliers, is group home-building rates or better, Lamb says.
Because shareholders own CBS, any profit after expenses is distributed based on the value of business transacted with CBS suppliers.
The CBS rebate depends on two factors one which merchants the shareholder uses as merchants have different rebates and the shareholder total spends.
The co-op funds its operating expenses from supplier rebates. This covers the variable management expenses plus fixed external costs of accounting, audit and legal. There is a time lag involved in the rebate distribution: suppliers only pay rebates after members have paid them and most members joined for only part of the year.
The profit share varies relative to spend as supplier rebates vary significantly and some only pay the full rebate if accounts are paid on time. The smallest member rebate is $275 and the highest $2,400.
In future, as the co-op membership grows and members use more suppliers, the transaction level at which profit is distributed will reduce below $50,000 as more shareholder transactions cover fixed expenses.