When looking to start a sustainable and profitable business sometimes you have to look hard to spot opportunities. However there are certain themes that you can follow that makes the process a safer bet. You have to remember you won’t always be able to start a business that you want; this is because no one is going to provide you with capital in the startup phase. Most times you have to start a business that there is a real need for no matter how unglamourous it is. One of the themes to go for is to provide less affluent consumers with products and services. These types of businesses also require less capital and generate cash flow quicker than businesses that target other markets. I’ve covered this sector before: secondhand clothing, salvage food, cheap bread etc. Today we look at another of those businesses: the 2nd hand building materials industry.
Whenever a house or building owner renovates their place the old is replaced with the new. The majority of the old materials can almost certainly be reused again. Yes, there will be rubble that cannot be upcycled, but the doors and windows as well as door and window frames, beams, bricks, tiles etc. This is a multimillion rand industry in South Africa. The market is enormous.
You have to decide where you want to position yourself in this business. There are essentially two popular business models in the 2nd hand building materials industry:
1. Middle-man. You buy/collect the materials from home owners, building contractors or rubble removers, you then sell this material to a reseller that will usually take the entire batch off your hands.
2. Sell direct / retail. You buy/collect the materials from home owners, building contractors or rubble removers you then sell this material directly to the end-user, the end user will usually only purchase what they need and you will sell your items piece for piece.
While it might not appear so at first, but these business models are quite different and you will see people often gravitate to one or the other. Your position will decide which is best; this will be based on various factors: location, space, capital, transport etc.