Independent builders merchants are better placed than their larger competitors to exploit new opportunities says Chris Hayward, managing director of National Merchant Buying Group.
These are dramatic times for all of us and one of the key roles for any business leader is to keep cool in times of crisis. Our teams need our support, motivation and most of all clear direction on what is important, which includes effective management of cash, driving down costs and keeping a sharp focus on customers and careful protection of sales margins,” he says.
“Having spent a lot of time over the last six months visiting our independent members, I have heard many positive stories of how small and medium-sized merchants are exploiting opportunities and make themselves competitively stronger, not weaker.
“Big previously meant power and success, driven by perceived economies of scale, which has led to large distribution centres, centralised buying and prestigious head offices. Big companies were considered poorly managed if they were not highly geared and seeking to grow their profits and turnover with the ready supply of cheap and easy money.
“Today, small is the new big, as independents are more likely to be less highly geared and therefore less likely to draw the attention of credit insurers and concerns from their banks on their loans to asset values.
“Independents have the advantage that the founder and owner is close to the decisions that matter and can make them quickly. Many are ahead of the curve when making redundancies and making cost cuts that matter, rather than the blanket redundancies and stock reductions of their larger counterparts.
“Being independent means having the flexibility to change your business model when your competition changes theirs and more importantly when they cannot make the changes quick enough.
“Independents are succeeding not because they are smaller but because they are good at what they do and that they can respond positively to their customers. How many big company directors respond to emails from their customers, talk with them at the trade counter and pick up the phone and make sure their customers are happy with the service provided.
“NMBS Members still want to grow their businesses, despite the poor economic conditions and are actively taking steps to put themselves in the strongest position possible for when the economic cycle turns.
“Successful independents are concentrating on their own core competencies and harnessing all their skills in terms of responsiveness and innovation, so they can retain existing customers and win new ones in a cost-effective manner. They have recognised that whilst making redundancies is often necessary to keep overhead costs comparable to turnover, they also see the importance of keeping their remaining staff motivated and focused on delivery excellent customer service.
“Looking forward to 2009 I strongly believe that independents will come out of the recession stronger than their larger competitors and that suppliers should recognise this and ensure that they are placing their faith in the right place for when the upturn begins, hopefully by the end of next year.
“The next twelve months are going to be hard, however the real stimulus for these exceptional times will not be government backed but driven by how independents play their part in leading the market and economy out of the coming difficult period.
“It’s too easy to blame the economy and market conditions when firms are under pressure, however as they say “its not how hard you are hit that counts, its how you pick yourself back up afterwards that matters” and in my experience the independents are already leading the fight back to better days.
“Times of crisis demand need new ideas and strong leadership from entrepreneurial independent lead companies. There are many such companies within the membership of NMBS and the ability of them to work together and turn those ideas into effective action is part of what NMBS is designed to deliver, by the active involvement of our members in everything we do.
“At NMBS we are committed to supporting independents and in the coming year we will continue to add value to our members and suppliers wherever possible, by continuing to offer the very best in purchasing, administrative and business support, including our ever growing commitment to embracing electronic trading and driving costs out of the supply chain.
“To quote a previous chairman, “The Future is bright, the future is independent”.