The iron or steel wholesale business is purely based on
supply and demand. The Wholesaler buys his products directly from steel
manufacturers and sells to retailers.
The retailers then sell to every other person like
contractors, artisans and private individuals. The general purpose of iron wholesalers
is the sales of steel ware to retail outfits.
Wholesale steel business demands more capital investment
than Aluminum or
steel fabrication business. The most capital intensive is steel manufacturing.
Steel
manufacturing plants costs an insane amount of money compared to wholesale
steel business. To get started in iron wholesale business you need to
understand what the business entails.
The financial implications cover purchasing the product,
space, shop, staff and storage facility. Steel is heavy and you need
specialized equipment or labor to move them around.
You also need to secure your store from unwanted guests.
Let us look at what you need to start your wholesale steel business.
The Product
The iron wholesaler is only as good as the product he
sells. Make sure you select top quality products for your customers. Find
reputable companies that provide good grade steel.
You don’t have to buy all your steel from one company but
spread your options. Steel wholesalers deal in different grams of steel, bolts,
nuts and roofing sheets.
The type of product you choose to sell depends on your
business plan. Get a contract deal from the manufacturers for supply of the
goods. A good manufacturer will assist wholesalers with retail pricing and
general promotion of the product.
The Equipment
You need iron shelves to store your iron rods. The
shelves are made out of steel, narrow, long and open at both ends.
Wholesalers find this design convenient in stacking a
huge amount of same sized steel together. Other equipment's you need are
cutters, benders, and tape measure.
Steel products generally sold by steel wholesalers are
Stainless steel, steel plates, tubes, pipes, galvanized sheets. Others are cut
to size metals and hardware like metal cutting saw blades and metal shearing
equipment.
You might need an industrial weight, a mini forklift
including a delivery truck. You also need a large warehouse to store your major
stock.
Write a
Business Plan
The purpose of a business plan is to raise capital for
your iron business. The plan should highlight sales projections and
distribution methods.
It also showcases expected operational and financial
provisions. Others are the company profile, location and the services you will
render.
The business plan should state if the company is
providing both wholesale and distribution services. Include marketing
strategies, business location and goals.
Other things that are of importance are budget and growth
forecast. The company ownership structure and future projections will make a
more robust plan.
Banks take all these parameters into consideration during
a loan assessment.
Provide Adequate Storage
Wholesalers deal with huge quantities of steel products
that need warehousing. Get a large secure storage space at the back of your
store or close to your location. The size of the store and storage depends
entirely on your inventory.
To maximize storage space, wholesalers build long iron
shelves in multiple rows. The shelves effectively display the iron while
separating them according to sizes.
Storage space is an essential requirement for iron
business.
What
are your Services?
What services are you going to offer your customers? Your
primary source of income centers on margins per purchase of goods. The more
goods your customers buy the greater your margin.
Any purchase made by retailers and contractors is your
primary source of income. Other secondary earning is made through auxiliary
distribution of products to construction sites and retailers. The cost of
transportation is added to the purchase order.
That being said you need to own a lorry to provide delivery
service through your supply chain. The fees charged for delivery and supplies quickly
adds up to a substantial amount.
Get a
Business License.
Wholesalers of iron rods need to get a business license
before they operate. Different countries have different requirements for certification.
The license attracts some fees and certain conditions.
There are also several steel associations both local and
federal. Find the one closest to your location that deals with wholesale steel
operators.
Financing
the business
To start a wholesale steel business you need a start-up
capital of about $100,000. The business plan you made earlier will help in
securing a loan. The bank loan might need collateral in form of landed property
or other valuable assets.
Try to secure a long loan spanning several years with a
low fixed interest rate. The reason is because you need time to build inventory
and collate profit and loss reports.
If you pay the bank according to terms of your agreement
you will be fine. The major reasons for securing the loan include development
of a company office and purchase of goods.
Other benefits of the loan are license fees, vehicular
purchase and time extension.
Register
your Company
Getting a license to operate is different than
registering your company. Register your company as a wholesaler of steel and
aluminum products. Make the company a limited liability company to limit the
liability to the company alone.
If you make it an enterprise then any liability will
extend to your personal savings and assets. While we are on the issue of
liability don’t forget tax related matters.
Find
Retailers in your Locality
Retailers will buy from your store if you offer them a
sweet deal. Don’t over extend credit or you will run out of inventory and have
little money to restock.
Offer discounts to trusted and regular customers and
contractors. Apply simple marketing techniques like having a large signboard
and business cards.
Treat your customers fairly and keep an eye on the
difficult customers. Stock only the more popular steel and a few other
products.
Offer added services like shipment or transportation of
the goods for a fee. Local or international delivery service will bring
additional income.
Management
Team
You might need a management team with wholesale
experience in the metal industry. This will insure quick profitability in the
shortest period of time.
You need to start making profit to pay off the bank loan.
It is possible to start seeing a good profit margin within one year of
operation.
Sales
Forecast
Why are you going into business if not to make money? You
can forecast a strong growth rate based on sales records and demand.
Write an all inclusive sales and operating cost including
profit and loss. Hire an economist to look through your books for a proper
assessment
Expansion
Plan
There is no point in starting a business if you don’t
have growth and expansion plan. The bigger your organization gets the more
growth and expansion.
The best way to secure your business future is through
high quality products and aggressive marketing. Every business needs marketing
irrespective of the size or scope of operations.
Marketing
Considerations
Effective marketing will bring customers to your store.
The best methods are through newspaper advertisements and television adverts.
You need to watch your advertising budget carefully so
you don’t over spend. Send sales marketers to construction sites in your
locality with brochures showcasing your services.
Your main target are building contractor, iron benders and
retailers.
Build
a Website
Despite the fact that your business is location bound
having an online presence is a good idea. The website is built to showcase your
products and service including contact information and something about your
company.
A website is a 24hr marketing tool you can’t
ignore
Starting
a Wholesale Steel Business
A recap of what you need to establish an iron wholesale
business
1 Buy the steel product form reputable manufacturers
2 equip your outfit appropriately
3 write a business plan
4 get ample storage facility for your products
5 define the type of service you want to render
6 Your business needs both registration and a license to
operate
7 Seek loans from financial institutions like banks or
cooperative societies
8 get a business name
9 find retailers interested in buying your stock
10 you need a good management team
11 do some sales forecast
12 have an expansion plan
13 do effective marketing to build your business
14 start a business today
Wholesale steel business is a lucrative venture that needs moderate capital investment and minimal technical skill.
The business owner needs to establish contractual
agreement with steel manufacturers. If possible get a line of credit form the
manufacturers.
A small scale wholesale business needs only a few staff
numbering between two and four. Don’t forget to market your business through
billboards, posters, handbills and complimentary cards. Other methods of
marketing are multimedia channels and online resources.
If you like iron wholesale business you may also like Aluminum roofing manufacturing business ideas.
3 comments:
Its a Very nice and good steel for construction purpose.
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Please provide me name and addresses of steel manufacturer
What can i do to open steel and iron company
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