Wholesale Trade of Building Materials: Fierce Competition or Diamond Mine?

How It All Began

After numerous business experiments in various fields, I settled on trading sand, gravel, and other materials with delivery.

The story began just over a year ago - my classmate was already working in such a business and offered me to join him. He had a friend who worked as a truck driver. My classmate was finding orders for him, and I started doing the same. Initially, it looked very primitive - we posted free ads online, went on the truck with the driver, and immersed ourselves in this field of activity. Of course, we couldn't cover large volumes with just one truck, so gradually we started to increase our turnovers by looking for other carriers.

Financial Upsurge

We transported loads of gravel, sand, and soil for individuals, marking up about $7-12 per truck, and worked for cash. We didn’t earn much at that time, realized it was time to register a limited liability company because large construction firms mainly operate on a cashless basis.

The business slowly but surely developed. We signed contracts directly with quarries and a cement plant - negotiated to get a favorable price for the material and made agreements with carriers to transport goods on their trucks. This way, we were able to increase our profit compared to when we simply found an order and passed it entirely to the supplier for our cut.

Crisis and Seasonality

Of course, such a business is seasonal, but it's not as fatal as one might think. I started working in December and earned some modest amount - around $80. I was terribly disappointed and almost gave up, but my classmate said that construction picks up closer to spring. After another weak January, February brought in $390, and in March, I earned $1,700. In the next December - 2014 - despite the off-season, my income amounted to $980, as we gradually gained regular clients - they buy materials in both winter and summer.

There is no need to fear crises - perfect times will never come, but construction projects have their ups and downs. Moreover, we have a link in the chain of “supplier-us-carrier-client” that secures our position. If everyone raises prices, we will too, and customers will continue to buy - just like with gasoline. Its price periodically rises, yet no one switches from a car to a horse because of it.

The Secret to Success

In our business, as probably in any other, 90% of success lies in WORKING! Moreover, working regularly and solving priority tasks for business development. When I started selling materials, I thought everyone had everything, everything was taken, and everything was paid for. However, I found many clients throughout the year, one of them being the most significant. A very large company with 4 projects around the city, and the whole city was covered with posters offering to buy an apartment from them. I negotiated with their department head, and he called me himself. Now, we transport between 1 to 3 thousand tons of materials for them per month.

However, small firms should not be underestimated. If big players need large volumes at low prices, for medium-sized firms, we can transport materials with even greater profitability. Suppliers for small companies do not always understand pricing, and sometimes it's possible to earn very well.

Once, I spoke with a supplier from a company where they asked me to quote the price of gravel with delivery. The site was located outside the city, so I had to calculate the distance and transport cost. But the manager insisted on an immediate price for the material. I estimated, added a margin, and said that 260 tons could be delivered for $11 per ton. We immediately agreed. I called all my acquaintances who were suppliers, chose the cheapest one, and he delivered this volume for $8 per ton. This way, I earned $320 in one day.

Philosophy and Motivation

I believe the most stable occupation is running a business. There are months when I earn around $390, and there have been times when I made over a thousand for two consecutive months. In the off-season, my savings come to the rescue, allowing me to take a little break without worrying about how to make ends meet.

Many acquaintances looked at me with doubt, especially in the beginning, and said that there is no stability in such a business and can't be. To which I replied: "When I worked in a factory, my monthly salary was only $200, and it was often delayed. Now, I have had very modest months, but sometimes, I earn in a month as much as I would in half a year working at the factory. Besides, now I have savings, a luxury I couldn’t afford at the factory. So, where is the stability there?"

For those planning to start such a business - I'll say this: start and don't be afraid to fail. Initially, it won't be easy, but then you'll get used to it, build a clientele, make valuable connections, and the money will flow.

Recently, I also started an educational project - I launched a training program on starting a business in wholesale sales of construction materials. I created a small training series of video lessons where you will learn how to choose a niche, find a reliable supplier, and attract a flow of clients from various channels. You can access the training on my website - www.opt-business.ru.