A New Way to Buy Materials
A new way to buy materials.
Margins are important and I often talk about how to increase your margins. Your business runs on margins if you don’t make enough margin you can find yourself running around in stupid circles like that hamster on a wheel, working and making no money which is no fun. You might as well be on the beach, why would you work?
So it’s important to make margins and I often talk about charging more mostly because I see that opportunity for most of the tradies I work with, to charge a bit more reasonably and professionally and make a bit more money.
But, it’s not the only way, is it? It’s not the only way to make better margins. That’s charging more. You could also spend less. Happy days! So if you keep your costs down, it’s another way to increase your margins.
So I’m going to talk today about how a new way to keep your costs down, and specifically on materials for your jobs.
I’m Jon of course. I’m from Small Fish Business Coaching. I help trades business owners grow and scale their businesses, and grow and scale their businesses and make them more profitable because that’s what most of us want. Most of us want to make more profits and have a nicer life and lifestyle.
So a quick point…
It’s no use saving money on your costs if you pass that saving onto your customer. Sure you will be cheaper when you’re doing your quotes but you won’t make any more money. So it’s important that you don’t do that that you keep that saving.
And that’s a topic for another day. We’re going to not confuse the issue. I’ll talk about that in another video. For now, assume that you can keep the extra and still charge more and that extra margin is yours and you’re not going to give it away.
So let’s talk about how we buy materials.
There’s the old way, the normal way even:
- When you ring your favorite suppliers, (the ones who reasonably local to where you are), you tell them what you need.
- Or just fax them what you need
- Or email them what you need
- Or you can lodge it on their website
- And they’ll give you a quote
- And you put that in your quote
- And if you win the job you place your order
And if your only game, like most of you, you might negotiate a bit either when you’re asking for the quote or later when you’ve won the deal and you’ve got, an order in your sticky hand, you’ve got some power you might negotiate the.
Now, that process is fine as far as it goes, and it works. It is some hassle, and some time, and it creates a bit of tension as well between you and the supplier as you know which most of us don’t like. So most people that I know don’t negotiate very hard and tend to just get the quote, put it in their quote, and if you win you buy it.
And I’ve written that in my next high-tech slide, buy better margins, keep the savings for yourself, (we use the telephone), we:
That’s our process. So there’s a new way.
I was approached actually by a company called “Materials Link,” it’s a new business, and I’ll show you a link to their website below.
Now they’re an online materials sourcing platform. So they’ve set up this online platform that goes between you and the suppliers, and they’ve recruited lots of suppliers, and basically what it does is, you put your request for materials in there, and they go to the suppliers automatically, (they’ve automated that process), and the suppliers know:
- That they’re competing against two or three others (and I think it does identify local suppliers of materials)
So they come back with competitive quotes knowing that they’re going to be one of the three and that you’re going to choose one of the three.
So it kind of automates that process for you online. They’ve recruited lots of suppliers they’re looking to recruit lots of trades to do the buying:
- So you submit your requirement
- It goes out to the suppliers
- They come back
- You choose which one you want and if you want to end up buying
So it all sounds very simple and I don’t want to get to into deep the technology of it or how it works, they’re telling me it’s saving people 20% and 30%, compared to the prices they’ve been paying before. And I think that’s in part because the suppliers know that they’re in a competitive environment, strategy works like a competitive tender isn’t it?
- It’s a one-stop shop for you.
- It’s easy to go and get your stuff you’re not ringing around
- Saves you time
- Saves you hassle
- And you get the competition without having to hassle.
So look, it sounds great. I haven’t tested it yet. It’s new and it’s quite a new business. Right now, they’re only into concrete and real steel, and they’re mostly only in Sydney. They are expanding, they told me.
So look, I think I’m going to be looking for opportunities to test it with some of my clients. I think I’d like to encourage you to do the same and why don’t I suggest that you go and test it. Go and see how cheap they are compared to doing it the old way. See if this 20% stands up to testing. And if you do, if you find out and you get some results, let me know, we’ll publish it, and we’ll share. We’ll share with everybody.
So compare it to the old way and of course compare it to buying groups like my friends Asset Builders, I haven’t compared it to them yet.
If you test it I’d love to see what results you get. Of course, this is in Australia right now as well, so I’m sorry all you Brits over there.
Check out the website I mentioned here.
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See you later.