5 Cost-Saving Tips for SMB Merchants

 We’re in the mood for some spring cleaning. While dusting off retail shelves is important, cleaning up expenses and tidying up inefficiencies can be a powerful way for merchants to save money.  Here are five money-saving strategies for small businesses that can be implemented today:  

1. Improve your processes  

Unnecessary costs and inefficiencies can be hiding in small business processes. The best way to find them is to audit the work done on a daily, weekly and monthly basis, and ask yourself, “Is there a better, cheaper, faster way we can do this?”   

• Focus on your supply chain process, which encompasses every step of the operations from sourcing and manufacturing to shipping and logistics. Within that supply chain, savings can be found by limiting excess inventory and storage costs, or by consolidating spend under fewer suppliers for greater negotiating power and stronger relationships.  
• Embrace technology to speed up processes, increase efficiency, and save money. Accounting software, for example, can reduce manual data entry and other repetitive tasks for faster, more accurate invoicing, payroll and expense tracking.  
• Don’t be afraid to ask for help. Involve your employees and your customers to find creative solutions.  

2. Optimise your workforce  

As you look at your processes, you’ll likely find new tasks that need to be completed to make your business better. Rather than hiring new employees, small businesses can save money by cross-training existing team members to take on these roles. It’s a great way to make employees feel valued, while you build a flexible team that can adapt to the changing needs of your business.   

Cross-training also can help you avoid the costly expense of employee turnover in the future. According to NerdWallet UK, when an employee leaves your business, the average cost to recruit a new full-time office worker is nearly £7,000, plus an additional £1,500 to train the new employee.^*  

At the same time, if you are currently managing tasks in-house like HR, Finance, or IT that are not core to your organisation’s mission, you may consider outsourcing this work, which will save you money while still giving you access to the expert help that you need. 

3. Focus on Customer Retention 

The generally accepted guidance in business today is that it costs 5 times more to acquire a new customer than it does to keep an existing one, so focusing on customer retention can be an impactful way for merchants to save money while also growing revenue.  

In fact, ‘a 5% increase in customer retention results in a 25% to 95% increase in revenue,’ and ‘on average, 65% of a company’s revenue is from approximately 8% of their most loyal consumers and repeat customers,’ according to ThinkImpact, a source for education and career-related statistics, trends, and data. 

Customer retention efforts don’t have to be expensive. They can be as simple as: 

• Coaching your team to provide exceptional, frictionless customer experiences from the browsing phase through payments, delivery through returns 
• Offering loyalty programs like rewards incentives or special discount days for your frequent customers 
• Expressing your brand values, like “eco-friendly” or community-minded,” so your customers feel good about doing business with you and can recommend you to others 

4. Evaluate your advertising and marketing  

Traditional advertising like television, radio, or print ads can be expensive. Capitalise on community-driven and digital marketing to save costs with maximum reach:  

• Explore social media ads and/or build up a social community through a regular social media post schedule   
• Build up an email marketing list   
• Heed search engine optimisation (SEO) best-practices    
• Participate in tradeshows, public markets, or other events  
• Creating buzz for your brand through local media interviews  

5. Sit down with suppliers   

Of course, one of the best small business cost reduction strategies is to sit down with your suppliers and renegotiate your terms. If asking for discounts hasn’t worked in the past, consider other creative tactics, such as:   

• Research competitor pricing and ask your supplier to meet or beat that price  
• Ask for complimentary upgrades, better payment terms, or free product/services  
• Renegotiate for longer-term commitments in exchange for better pricing  
• Explore opportunities to buy the materials you need direct from the manufacturer  

 For more cost-saving ideas this spring, contact your Worldpay representative today or get in touch with us through the website.  

_{*NerdWallet UK: What is the Cost of Hiring Someone in the UK in 2024?, Oct. 31, 2024}