If the word co-operative makes you think of woolly jumpers and even woollier meetings, then think again.The past few years have seen a surge in the number of co-operatives formed by small firms and sole traders with the aim of improving their performance — by cutting overheads, boosting purchasing power and strengthening their hand in negotiating contracts.

Known as co-operative consortia, they work in the same egalitarian way as other co-ops, such as housing and community groups, with all members sharing the benefits, but the emphasis is squarely on the bottom line.

There are now almost 1,000 co-operative consortia in the UK in all sectors — from manufacturing to website design and from farmers to consultants.

In return for a £50-£100 annual fee, members of the Forest of Avon Products co-operative benefit from a website and promotional activities such as stands at trade fairs. The Bristol-based co-op also has a woodyard with eight workshops that it rents at below the market rate to the 45 members, which include furniture-makers, playground equipment manufacturers and charcoal suppliers. Skills and equipment are shared, as is work, with the larger members often passing additional work on to the smaller sole traders.

Duncan Bonner, a director, said: “Some of our members have got large vehicles that other members can use for 40p a mile, so they don’t have to buy a van. The benefits are enormous and being able to reduce costs in this way means that small businesses, especially sole traders, are more likely to survive the recession.”

The Open Space co-operative in Manchester was set up by six individuals wanting a better deal on renting offices. Since early last year the members, including a web designer, an online marketing company and a political cartoonist, have been renting a former workshop in Hulme and each paying only £100 a month for a desk with a telephone and internet access. The group, which has grown to 12 people, has also discovered the benefits of sharing skills.

Finn Lewis, one of the founders, who runs a web design firm, said: “The great thing about being a co-operative is that we are our own landlords but over the past 18 months all sorts of other benefits that we weren’t expecting have come to light. The marketing guy advises us and we advise other people about their websites. The amount of knowledge in there is incredible.”

Helen Seymour, head of projects and development at Co-operatives UK (www.cooperatives-uk.coop), a trade association, said consortia were among the fastest growing types of co-op. “It could be for marketing or for sales, or for joint procurement,” she said. “Some small businesses have bought a building together so they can use it as a showcase for their work.

“There are other benefits. Sole traders are often quite lonely and isolated and coming together in a co-operative can give them a bit of mutual support.”

Seymour said that before joining or setting up a co-op, owners of small businesses should think hard about what it entails. “You have got to give up a little bit of independence and that may not suit some businesses. If you don’t like the colour of the website but other people do, you just have to bite your tongue.”

In North York Moors National Park, seven hill farmers have joined forces to gain greater negotiating power when selling their traditionally reared lamb to Asda. The co-op — called, naturally enough, Seven Hill Farmers — began supplying 300 lambs a week to 32 Asda stores last month.

Andrew Loftus, an adviser from English Food and Farming Partnerships who helped to broker the Asda deal for the co-op, said that teaming up had enabled the farmers to create a brand. That meant they could command a premium for their product and establish a loyalty from customers, who would know exactly where the meat came from.

Loftus said that creating the co-op also helped the farmers to maintain a consistent supply. “Lamb is a natural product, so individual farmers could not supply the consistency or the volumes that Asda required,” he said. “By pooling resources they can aggregate their supply and ensure that 300 lambs a week go to Asda. It means that they can get a better price.”

Jason Collison, a director of Renaissance, a business adviser, agreed that joining a co-op helped small businesses to increase their muscle power. “It is one way in this economy that small firms can level the playing field between themselves and large businesses,” he said. “If a small firm can shelter under a stronger financial umbrella, it increases its bargaining power and competitive edge.”

He said, however, that joining a co-op was not right for all firms. “We know of certain businesses that have negotiated wonderful deals even though they are not buying a huge amount of goods and services. It is simply that they are better negotiators.”

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