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10 ways to cut costs (not jobs) in your merchant business

Rising costs are affecting everyone and every business at the moment, so it makes sense to find ways to reduce overheads. But how can merchants do that without cutting jobs?

Demand is high in the merchanting sector and everyone is rushed off their feet; customers still expect great service, and no-one wants to reduce their workforce or cut pay.

Do also bear in mind that lots of regions offer grants and loans to help businesses out, so make sure to look into what’s available in your area. Check out apprenticeship schemes too, as there is a lot of government assistance available to help with those costs.

We’ve got 10 great ways merchants can cut costs without cutting headcount.

1. Transport Planning

Transport planning

The cost of fuel is astronomical right now so even small improvements in logistics efficiency can save significant amounts of money.

Plan loads to get the greatest efficiency from each vehicle; plan routes so drop-offs are grouped as much as possible; and discuss timings with customers so you can meet their actual expectations, not your interpretations of them. Many customers are happy to either wait a couple of days if it means paying less, or might be prepared to pay more for faster turnarounds, so have the conversation if it’s costing you a lot.

2. Automation

Your ERP system can be a huge help in driving efficiencies. Automating repetitive, time-consuming tasks like emailing invoices, delivery notifications or reminders can free up a lot of time which could be spent more valuably on other areas like sales, merchandising or stock management.

Automation can go way beyond simple emailing though, with automatic tracking and alerting across most business areas – such as:

3. Track & respond to market pricing

If you’re not monitoring and reacting to the rapidly fluctuating cost price of materials, chances are you’re losing money. Use the technology tools you have to actively monitor changes in cost prices, and be prepared to change your pricing quickly. Again, your ERP system is a really valuable tool in helping with jobs like this as you can set the monitoring up automatically.

4. Stop closing for stocktakes

If you are still having to close your business down to conduct a manual stock take, you are losing revenue, pure and simple. Upgrading your stock management software to a system that facilitates simpler perpetual inventory and highlights potential gaps and issues ahead of time will let you continue trading with greater accuracy and efficiency, and save your workforce time in the process.

5. Use advanced stock management tools

When you can see at a glance how different stock lines are moving through the business, it becomes quick and easy to identify what products are performing, and which are a drain on the bottom line. KPIs like Stock Turn show exactly (and clearly) how well each product is performing so you can make better decisions about merchandising, replenishment, promotional activity or even re-processing into different length or pack configurations.

6. Protect your margins

Setting limits for margin protection in your ERP system is a great way to ensure you are always trading profitably, no matter what offers are on the table.

7. Stop duplicating effort

This is such a drain on time and efficiency and costs businesses a huge amount every year. Inputting information multiple times (for example, having to copy across manual delivery notes or stock information into the system) wastes time and also creates more margin for error as the information in the system isn’t always up to date. Using a real-time, digital ERP system which can have information uploaded from anywhere will save vast amounts of time and effort, and reduce error along the way

8. Understand your customers' value

Knowing which customers are good for your business and which actually cost you more to serve than they make is a really powerful thing in any business. Credit controls within the system can help you to manage risk up front, and analytics tools let you see at a glance which customers are worth your time and resources, and which should perhaps be bumped down the priority list.

9. Reduce waste

This is an obvious one but you might be surprised at how many ways there are to do this across the average merchant business. From including instructions on sales and production orders for dealing with leftover stock, improving stock storage options to reduce damage and loss and actively managing stock to ensure optimised churn and reduced loss, there is huge capacity to reduce waste.

Also consider what efficiencies you can introduce for heating, lighting and water on-site and in-branch, as small differences can really add up.

10. Know your financials


This goes beyond using a great financials package for your business management and commercial transactions. It’s also about understanding the terms your bank offers, the credit terms and credit insurance rates you can negotiate, currency exchange rates, your vehicle fleet management arrangements, insurance, employee perk schemes and yes, your energy and fuel providers. There are lots of costs involved in running a business so don’t fall into the expensive trap of ignoring the fundamental overheads. Beware false economies of course, and always look at the long-term cost implications of any agreement you enter into.

It's also worth making sure you’re only paying for what you actually need. Take your ERP system, for example – if every user from driver to MD is paying the same for their system access, chances are someone will be paying over the odds for functionality they simply don’t need. Be prepared to negotiate, and look for flexibility so you only pay for the features and functions you really need.

Be ready for future change

One final point is around the rate of change itself. The last few years have taught us that agility is vital, that often in business we must react and respond to external circumstances and be able to pivot fast. Choose the systems for your business that allow you to do that, like cloud-based software that can adapt and evolve alongside your own shifting path. That way you are ready to move with the times, rather than having to start from scratch every time.

What are you top tips for cost cutting? We'd love to hear from you!


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