In this article Chris Maityard, Founder of Moorgate Management, sets out some of the common signs that indicate merchant business owners could benefit from asking for help.
With May’s BMBI and PHMI figures showing like-for-like sales at -9.7% and -6.6% respectively, the trading environment for merchants and suppliers is undoubtedly difficult.
Added to these difficult trading conditions, we have seen a number of well-known businesses enter administration such as Blenheim House, Hitchcock and King and CTD tiles. Not only does this mean more competition for less sales volume, putting pressure on margins, but it also places significant pressure on cashflow, coupled with the impact these have had on things like availability of credit insurance.
That said, we are also seeing a few green shoots, with some merchants and suppliers recently opening new branches as well as acquiring businesses, suggesting there is confidence in the sector that future growth will come, most likely in early 2025.
Familiar challenges
Whether you need to adapt or turn your business around to meet these current market conditions, or you are looking to grow your business by investing in new branches or opportunistic acquisitions, there are some familiar challenges or ‘tells’ that we often see in merchant owners who could benefit from some additional support.
Are you spending more time working ‘in’ your business rather than on it?
Probably the most common issue for merchants, and undoubtedly the most frustrating, centres around not having the right structure, processes and controls in place to empower the great team that you have assembled. Merchant owners in these situations often lack the ‘transparency’ you want as an owner to know how your business is running, making you feel like you have to get involved ‘in’ the business to find that out.
By creating a solid plan, and putting the right structure, processes and controls in place, as well as additional training where necessary, this can quickly change.
Have your sales, margins or profits dropped? Do you want to increase your profits, but are unsure where to start?
With the current negative sales conditions, this is often a very obvious sign. You may also be finding that while your business is profitable, it is not making as much profit as it should, especially if there are parts of your business (perhaps e-commerce, key accounts or product areas), where profit margins are not what they should be. Some businesses do not have sufficient visibility for the owners and senior management to fully understand what profits you are making.
By shining a light on these areas and understanding your business profitability, and monitoring it on a regular basis, you can quickly change this situation and improve your overall bottom line.
Are your operations running smoothly? Is your cost to serve too high?
A key element for any business is its operations, and ensuring that health and safety, transport, warehousing and procurement is running smoothly. This not only allows you to deliver the “stock and service” you are known for, but also to ensure a safe, efficient and profitable operation.
All too often, even where operations are running smoothly, there can still be margin erosion, caused by stock shrinkage, lack of availability or excessive transport costs – usually caused by how the vehicles are utilised.
Understanding the processes and having visibility of the actual costs involved and what drives them, can make a material difference to your profitability.
Is cashflow or making payments becoming a challenge?
For any business, especially considering the current market conditions, the ‘cash is king’ adage could not be more relevant. Even if you are making the sales, ensuring that your profits are enough to pay both your suppliers and your overheads, collecting the cash from your customers becomes critically important. With many suppliers using credit insurance to underwrite their business, not being able to pay to terms or going onto payment plans could materially impact not only your supply of materials, but also your credit rating when they are required to report late payment.
Understanding your cashflows, what drives them, and being able to look ahead and see what your likely future cashflow will be, using tools like 13-week cashflows, will transform how your business manages its cash.
Would you like to expand your business? Unsure whether to acquire and integrate or open new branches? Do you have all the skills you need in house?
Like most businesses, following your customers and where they are operating will often raise the question of how you can continue to serve them when they are outside of your existing branch network.
Whether you look to open a new branch or acquire a competitor and integrate them into your existing network, you will have to set out a solid plan before you start. Which is the better option? How will you go about it? How do you make sure the expansion succeeds?
Ensuring you have a clear strategy of where you want your business to grow in the next 3-5 years, having the experience within your team, and the right processes, such as 100-day plans, can help you answer these questions.
If any of these challenges sound familiar, it could be a sign that you could benefit from some support.
Where to go to ask for help
When faced with one of these challenges, it may feel difficult to reach out and ask for help. We know how that feels. Having built your business, it can feel like you have to have all the answers, but sometimes, if you do not have the experience yet in a certain area, or would like to grow or adapt at a faster pace than before, asking for help from someone outside of your business, who has a different perspective and experiences, can really make a difference.
Your BMF Regional Managers have been there to support you with your business every step of the way and should always be your first port of call. They not only understand your business but have earned your trust and respect and also know each of the BMF Service Members, like Moorgate Management, and how we can help.
What does that help look like?
At Moorgate Management we have experience of successfully owning, leading, growing, and turning around independent timber, light side and heavy side businesses. That’s why we are well placed to share that experience with you to help you and your business succeed.
We take the time to listen and understand exactly what you want to achieve and will then give you practical help and advice to identify the right strategic and operational solutions to solve these challenges. Importantly, we will work as part of your team, as much or as little as you require.
For more information or to contact Moorgate Management, call Chris Maityard on 07767 291 379.
This article was originally published in the Autumn 2024 edition of the Builders’ Merchants Federation One Voice publication.