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30 NURSERY MANAGEMENT TODAY May / June 2015 www.nmt-magazine.co.uk

We all want the slick,streamlined and efficientbusiness that maximises

profits, while still delivering goodvalue to our customers. After all,profit margins are a key indicator ofsuccess: if they’re not rising, thenyour business isn’t thriving, is it?

But the reality for all of us is that ittakes time to build a successfulbusiness, and it’s easy to get boggeddown in the processes along theway. Improving your bottom linedoesn’t have to mean increasingyour prices. Simply being organisedwill help you to achieve a betterprofit margin, without de-valuingyour brand.

False economiesThe best way to get the most valuefrom your money is to avoid thetemptation of buying cheap. We’veall been in a position where we’veseen an offer which is really toogood to miss; it may not be ourregular brand but surely the savingmakes up for any drop in quality,right? Wrong. One of the biggestmistakes you can make is tocompare the price of goods but notcompare, or consider, the quality.

‘Cheap’ can cost youTake heed of the saying, ‘buy cheap,buy twice’, and instead concentrateon making smarter buying choices.

If you buy better, an add-on benefitwill be that you will also save ontime: less time spent searching forthe cheapest option online; less timetraipsing around the localsupermarket on the hunt for theelusive bargain, as well as less timespent returning or replacing goodsthat are simply not fit for purpose.

Factor in your additional costssuch as petrol or delivery charges -not forgetting, of course, theinconvenience - and the savingsmade from buying ‘cheap’ aredwindling. Of course, I’m notadvocating a complete embargo onshopping around – there are somegenuinely good deals to be had –but by sticking with one supplier,you’ll find the benefits far outweighthe one-off bargain you might findoutside of a purchasing partner.

Smart buying choicesFinding a supplier whom you trustwill be invaluable to you as abusiness. A single-source supplier –or one-stop shop – will have ahigher level of purchasing powerthan smaller companies because ofthe sheer number and volume ofproducts they buy in bulk and theamount of stock they can hold.

As a customer, you will benefitdirectly from their economies ofscale through reduced pricingacross your range of resources andconsumables. Not only this, but youwill be in a far better position toagree further discounts as well asnegotiating a welcome rebate basedon your overall annual spend.

Two-way loyaltyBy using a single supplier you will

The bottom line

build, and benefit from, a customer-supplier relationship which is basedon your purchasing decisions. Forinstance, if you require a product orservice that falls outside of yourusual remit, a good supplier will beable to recommend a suitableproduct or service that is perfectlymatched to you as a business,saving you time wasted shoppingaround.

What it comes down to is that it’swell worth a supplier’s while tokeep a loyal customer happy. If youneed something in a hurry, makeyour regular supplier your firstpoint of call, because, nine times outof ten, they will go above andbeyond expectations to meet yourneeds. If they don’t, then shoparound, as there are other suppliersout there who will. And that’s thesupplier you want.

Once you’ve established a goodworking relationship, don’t begentle on them – let them do thehard work for you to helpstreamline your spend. In manycases, your supplier will be able tooffer cost-effectiverecommendations on how andwhere you can save money.

If your supplier is asking you tomove away from branded goods toan alternative product, don’t bescared to ask for a sample; you needto make certain that you will notpay the price of loss of quality -before you make your decisionrather than after.

Finally, you will undoubtedlybenefit from reducing thecomplexities of your supply chainthrough using one efficient supplier.

False economies are still very mucha part of everyday business, saysChris Marston. Here he discusseshow to maximise your profitswithout losing out on quality

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www.nmt-magazine.co.uk May / June 2015 NURSERY MANAGEMENT TODAY 31

You will have one point of contact,with one expected delivery and oneinvoice to consolidate, which meansthere will be more time for you toconcentrate on what is reallyimportant – your nurseryenvironment.

What to avoidBeing strong-willed and keeping atight hold of your expenditure is thekey to keeping your establishmentwithin budget. We all know howeasy it is to nip out for a must-haveitem, and, for ease of payment, putit on a credit card. If you regularlyuse a credit card throughout themonth it’s easy to lose sight of whatyou are spending – and if you can’tsee it, then you can’t measure it, andif you can’t measure it then youcan’t manage it.

This aspect of your monthlyspend could be costing you morethan you think. Moving your ad-hocspending over to a core supplierwho can deliver next day will workin your favour in a number of ways:

� you will reduce your monthlycredit card payments and yourever-increasing interest charges

� you will be increasing your yearlyspend and, in turn, your rebate

� you will be eligible for beneficialpayment terms which will bettersuit your business

� you will bring clarity to youroperation.

By opening an account with asupplier, dependent on yourbusiness’s credit rating, you willalso benefit immediately byreceiving interest-free credit. Manysuppliers also offer the option offree management tools – a realbusiness benefit - to help you keepcontrol and visibility of yourgroup’s spend across multiple sites.

Real financial managementPaying an invoice on time will:

� create a creditable history withyour supplier which will allowyou more ‘give’ if required

� lead to an improved externalcredit rating

� increase your chances of highercredit with a new supplier, andincreased credit with any existingsuppliers.

� Chris Marston is head of business development at The Consortium and specialisesin the early years sector.

E: chris.marston@theconsortium.com W: earlyyears.co.ukConnect with Chris on LinkedIn

‘We’ve all been in a position where we’ve seenan offer which is really too good to miss; it maynot be our regular brand but surely the savingmakes up for any drop in quality, right? Wrong’

Holding back an invoice for laterpayment will:

� restrict your relationship withyour supplier

� risk your account being placed onstop - and future orders bringput on hold

� improve your cash flow –but only in the short term.

A better wayBy using the above as abuying guide, I canguarantee you one thing – itwill improve your bottomline. You will be moreaware of where you spendyour budget, which will leadto a better way of controllingcosts. You will gain from alower total spend, withoutcomprising on quality. And

finally, you’ll gain effective controlover your business with the addedbenefit of streamlining processesalong the way. �