STEEL TRADING AND MANUFACTURING BUSINESS PLAN GUIDE
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.
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.
Here is a sample business plan for starting a steel trading and fabrication company.
Get a Business Plan
A comprehensive 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 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.
STEEL TRADING AND MANUFACTURING BUSINESS PLAN EXAMPLE
Whatever area of iron or steel business you are interested in; there are basic things that cannot be overlooked. This is more so when you want to establish a successful one. This steel trading business plan sample will serve as guide when writing your plan.
Because no business will function smoothly without a plan, we will consider some of its vital parts.
How much do you know about your business idea? How do you intend to raise your start-up capital? Is there real demand for your products? These questions and more need to be answered by you.
To provide satisfactory answers, you are expected to have done your background check. If you have, then follow this plan as we show you how to organize your findings;
- Executive Summary
21st Century Metal works is a steel machining company that provides top of the line quality products for the manufacturing sector. We are located in Phoenix, Arizona and provide our services to heavy manufacturing industries both within and beyond the state. The steel industry is crucial to the growth of any economy. We have the capacity to handle complex steel machining jobs for all types of light and heavy industries.
Our business model is built on the provision high skilled services. There is a huge demand for our types of services and we seek to expand such services to handle the growing demand. At 21st Century Metal Works, we have a highly skilled workforce. These are people with significant years of experience in the steel industry. In addition to our collection of high precision tools and machines, we will be adding more to meet up with demand.
- Our Services
We service different industries through the provision of highly technical machining jobs. Our clients bring their steel plates and tell us just what they need. We listen carefully in order to provide the best steel machining jobs. In the case where our clients have little technical knowledge, we offer advisory services on the best way to get the job done.
- Vision Statement
We are not in the steel business sector to just make up the numbers. We are in it to provide valuable and highly efficient services. This is a tradition we seek to maintain and to build on our successes to establish a thriving brand.
While providing high quality steel machining for the heavy industry, our services are within reach to small businesses as well as individuals.
- Mission Statement
Our mission is to be a trusted name in steel machining and fabrication. In addition to our team, our clients are our greatest assets. We are very meticulous in the handling of every job. The aim is not only the provision of excellent services but to even exceed the expectations of our clients.
To drive our expansion growth, we are applying for a bank loan of $5,000.000.00. This money will expended on the purchase of more equipment which will take up a significant portion of these funds. The loan arrangement is being finalized between our management team and the bank officials. An interest rate of 3% is being charged with the loan having tenure of 10 years.
- SWOT Analysis
To measure the health of our steel business, we have done a SWOT test. This has raised the lid on important areas of our operations such as;
Our strengths lie in the constitution of our human resources. We have a skilled technical team led by the proprietor who is an engineer with 3 decades of experience in steel machining. Other team members are equally skilled in handling different aspects of our production. We have the reputation for scrutinizing every job to ensure it meets the highest standards.
Our weakness rests on our capacity. At the moment, clients bring in their steel plates and tell us the job they want done. Our expansion plans seeks to address our shortage in capacity by having these steel plates supplied as well as the availability of pre-fabricated machine parts.
At our current production capacity, the demand for our services outstrips our installed capacity. We see this as an opportunity to expand our steel machining plant. By purchasing more machines and equipment (steel trading business model), we will be able to meet up with demand.
The ongoing trade war between the United States and China has led to the imposition of tariffs on steel. This hurts our business and puts us in trying times. Also a global economic crisis will adversely affect the steel industry. This is a threat that will affect every sector of production.
- Sales Projection
There is a high demand for our steel machining services than we can handle. This is why we are currently embarking on an expansion drive. With this in place, we predict a significant growth in our revenues due to increased production capacity. The chart below summarizes this growth.
- First Financial Year $900,000.00
- Second Financial Year $5,000,000.00
- Third Financial Year $12,000.000.00
- Competitive Advantage
21st Century Metal Works has built a reputation over the last 5 years as a reliable steel machining business. This has led the huge growth of our customer base. We are not taking this for granted as we seek better ways to serve our clients.
We are at the forefront of customer satisfaction in Phoenix and will not rest on our oars until we dominate the steel market in the whole of Arizona.
- Marketing Strategies
We have the advantage of having a steady stream of clients. However we feel we can do better. This is why we are embarking on an expansion drive that will result in the handling of a greater number of clients. Our marketing department will adopt multiple strategies that will include newspaper ads, entering into business partnerships with manufacturing businesses and more.
This is our steel business plan sample. There is a tremendous amount of data that is required for setting up this business plan. This plan does not represent a real steel business but gives you a tool to work with. With the right attitude and patience, you will be able to set a great plan. You should note that a plant is not effective in itself unless implemented.