BusinessEntrepreneurship

SME Savings

Michael Reid’s background is in senior management, having worked for radio, materials handling, and building supplies companies. Leveraging that experience, Michael has launched a buying group for small businesses called SME Savings, which brokers discounts with suppliers like Officeworks, Commonwealth Bank, and BP.

How did the idea for SME savings come about?

The idea came about when I was informed by a supplier of the substantial pricing gap that existed between a medium-size business, which I was a director of, and big businesses. I was appalled when I learned that some suppliers inflated prices by up to 11% for small-to-medium enterprises (SMEs) to make up for the discounts that big companies received. This gap is far too substantial, so I decided that there is a place for a common-use goods and services buying group that was only for SMEs.

That was 2001. And now it’s a reality with a life of its own, with over 400 members and $25 million worth of buying power.

What has been the most successful form of advertising for your business?

Word of mouth referrals has been by far the most successful advertising for the business. The fact that we don’t charge any of our members, and provide substantial savings, makes it easier for people to recommend us to their small business friends and associates. Then once a business hears about SME Savings, we have found that all our existing clients make great case studies for those who are unsure or want to check if the service is too good to be true.

How did you sign on big-name suppliers like Officeworks, Commonwealth Bank, and BP?

A lot of hard work. I pitched the model to Officeworks first, as I believed their product group was a key supplier to attract because of its importance to small businesses. In turn, we were able to help Officeworks tap into a greater proportion of Australian businesses (95.6% of which are actually small) and offer them genuine discounted offers.

After that, Commonwealth Bank really liked the model we have and it also fitted perfectly with their business model, so a great relationship was born. These big-name suppliers then made it easier to attract other big businesses.

When businesses join up and use one of the discounted rates, are they under any form of contract or obligation?

Small businesses are under absolutely no obligation or contract at all. The only criteria we have is that they are a small business. For us, the service was never about greed. There are no membership fees and referral fees are distributed back to members. Only a small percentage of sales are received from some suppliers and none from others.

How helpful has the hiring of a public relations (PR) agency been for your business?

We have found that not all PR agencies are created equal. A good PR agency will not only get you the exposure you need, but as your partner in business, they will also assist in providing you direction, guidance, and are a vital part of your business plan. We are very lucky to have the PR agency we have.

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