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How to Start a Steel Business
Are you interested in starting a steel business? Iron, commonly found in its ores such as hematite and magnetite, is one of the most abundant elements on earth and widely used in various applications. Majority of iron produced globally goes into making of steel, an alloy of iron.
Steel has 2 percent carbon by weight and other hardening agents such as boron, titanium, manganese, chromium, molybdenum, nickel, and vanadium. This gives steel more tensile strength, hardness, and less ductility than pure iron.
These properties make steel a vital product in almost all sectors of the economy. Automotive, transportation, building and construction, machine and equipment, are all part of the sectors that depend on steel products with building and construction being the largest consumer of steel products.
Steel consumption is every increasing both in developed and developing countries with the latter using large tons of steel due to developmental projects being carried out.
With these facts, getting into a steel business or franchise will pay a handsome return on investment if a good plan, strategy, and execution is done for the business.
Here is a list of profitable steel business ideas you can adopt and adapt to your location:
1. Steel Fabrication Business
Steel fabrication involves the building and making of structures with steel through cutting, bending, and assembling.
Construction companies require steel in various shapes for their work which means that there is almost always a steady demand for a specialist in the steel fabrication business.
Fabrication shops could be employed by contractors, OEMs and VARs in the fabrication of loose parts, structural frames for buildings and heavy equipment, stairs, hand railings for buildings and stainless steel business card holder and case.
2. Steel Production Factory
How much investment is needed to start a steel mill business? This is known in professional terms as a steel mill or steel works and refers to where steel semi-finished casting products-slabs, billets, ingots, and blooms-are made from molten pig iron or scrap.
Starting a steel factory business is highly capital intensive but can yield huge financial dividends and returns in little time.
3. Steel Scrap Recycling
Scrap metal recycling though considered by many as a menial and "dirty" job is highly lucrative with high return on investment. Iron and steel are some of the most scrapped materials and you need to be able to accurately identify them in the rough.
Iron comes in different shades of gray, turns reddish-brown when it rusts, lighter than most metals, strong, and is ferromagnetic. Ensure to invest in quality protective gear for your scrapping as it is a potentially hazardous job.
4. Steel Rods Supply Business
Steel Rods are always in constant demand due to its extensive application in reinforcing concrete for buildings and roads, ladder rungs, railings, door handles etc.
Smooth stainless steel rods are also used for decorative purposes due to its attractiveness. With a good location, proper planning and execution of this new small scale steel fabrication and supplies business, you are well on your way to making a fortune.
How do you get started on some new steel business opportunities? Below are a few pointers:
Get a Business Plan
A comprehensive steel trading business plan describes in detail what you want to do and the strategies you will employ to get it done. This is the most important aspect of starting a business as it will show the strengths, weakness, opportunities, and threats of your business.
The plan will be necessary both you to iron out the intricacies of low-cost steel business ideas in manufacturing and to show potential investors that their investment will be in good grounds.
Your startup steel business plan should contain the following:
• Concept of the Business: Which specific part of the steel business do you want to go into? What will you produce and for which market? The concept should also what advantage the business will have in a competitive steel market.
• Financial Plan and Requirements: Financial details of the business should be clearly stated-cash flow, profits, sales, return on investment etc. The capital needed to start and expand your own steel business should be clearly stated and how it will be used including the source of collateral.
Conduct a Market Analysis
Markets change and what you knew about successful steel related business last year may become obsolete knowledge this year.
• Study your potential market, get information from relevant sources. Sometimes the information you need may not be readily available, and in such cases you have to rely on making educated guesses based on the fact at hand.
• Divide your target market into segments as this will help you strategize better on how best to serve them. For instance, the target market for your viable steel scrap business could be road construction companies, steel rod retailers, house decorators, and house builders. Doing this will help you know what works best for each segment and how best to communicate with them.
• What is the market size for your business? How many potential customers are there? What is the growth of the market? Are more roads being constructed, more houses being built, or are people treading softly on building and construction due to the economic situations? What are the trends in the steel industry that may affect your steel business?
What will be the requirements for your steel business?
• Location has to be chosen depending on what kind of structural iron or steel business you intend to do and the regulations concerning citing of such kinds of business in your country or state.
• Real Estate: Will you rent a shop or build a shed? How much space do you need? If you are into fabrication, then you obviously will need a large facility than someone who is into steel rod supplies and so on.
• How will you the supplies or raw materials for your lucrative steel fabrication business in India and other countries?
• Staffing requirements and salaries of workers, utilities, inventory etc.
• Legal requirements such as registration of business, tax payments.
• Insurance: Your workers will most likely be dealing with heavy and potentially hazardous equipment, hence you need insurance that can cover them in any eventuality.
Marketing Your Steel Business
Every good lucrative steel trading business make plans on how to reach its target customers. This is especially necessary for new businesses. You are breaking into the market with a unique brand and people need to know this.
Find out the most effective way to reach your target audience and continuously and creatively engage it till it produces results. Word-of-mouth, radio, newspapers, social media, television, internet, etc. are all useful and relevant media that can be used to enhance the visibility of your steel business to your market.