Essentials for Scrap Metal Trading

Recycling scrap metal is not just a lucrative business; it is one of the most environmentally friendly businesses you can engage in. In times of recession, starting a scrap metal business can be a clever idea because it doesn’t require a huge capital, and metal prices are always on the rise. Every tiny bit of scrap metal can be put to use by recycling it, and with metals having an infinite lifespan, the scrap metal trade can turn into a cash cow for anyone who’s willing to invest some time and money into it. Continue reading if you plan to venture into this trade.

Essentials for Scrap Metal Trading

Make a Business Plan

The first thing you need to do is to chart a business plan. Consider every aspect of the business in minute detail, such as company description which includes the hierarchy of your company and essential business components. Draw up a business model based on capital requirements, business expenses, and the kind of equipment you’ll need to invest in. Take into consideration the employees you’ll need to hire based on their skills and competencies. You also need to factor in expansion costs, such as acquiring more land and buying more equipment. You can also create a website and distribute business cards to let people know you’re in business.

Get the Required Licenses and Insurance

Check with the local and state authorities what licenses and permits you need to start a scrap metal business. If your scrap yard is accessible to the public, you need to deal with traffic and parking issues. Find out if you require any kind of registration before you begin trading. Insurance is another important aspect you simply can’t overlook – whether it’s theft insurance, employee insurance, or vehicle insurance especially if you have big trucks.

Know your Metals and their Pricing

You should know which metals fetch the best price in the market. Factors influencing pricing include type of metal and time taken to sort and process it. You can find out the latest scrap metal prices in newspapers and on the Internet. Learn to identify and distinguish between ferrous and non-ferrous metal. Metal prices fluctuate greatly, even within a day, so you need to continually keep abreast of the values. Generally speaking, non-ferrous metals such as copper and aluminum are more valuable than iron or steel, which are ferrous metals.

Collect the Scrap Metal

Scrap metal can be found at building construction sites, demolition sites, and at garages and auto mechanics. Also keep an eye out for scrap metal pieces the day people put out their garbage. Even homeowners discard old appliances like refrigerators, air conditioning units, and plumbing fixtures which are excellent sources of scrap metal. Drive around the town – you’ll find enough discarded pieces of scrap metal lying around which you can collect. Even attending a garage sale might yield something valuable for you, like worn-out metal artifacts which are no longer in use.

Invest in the Right Equipment

Handling scrap metal can be risky, so invest in the right gear. You could be dealing with corroded metal and pieces having pointed ends, which could put you at the risk of injury. You’ll need a magnet, your tool to distinguish ferrous metal from non-ferrous metal.1 You may also want to buy hammers, pry bars, and pliers among other things that’ll come in handy in this business. If you plan to recycle the scrap metal at your own facility, you’ll need to buy the machinery needed to sort, clean, and process the scrap metal. Different metals are processed differently, so investing in the right kind of machinery is of utmost importance.

Find Buyers for your Scrap Metal

If you plan to sell the scrap metal you’ve collected, look up phone directories and yellow pages for buyers of scrap metal and metal recycling centers. You can advertise in the local newspapers that you have scrap metal to sell to intimate metal processers and scrap yard owners. Before you sell scrap, verify the prices of each metal and make sure you’re getting a good deal! Almost every city has a scrap recycling center, so be it the scrap yard in Camden in the east or a scrap yard in a big city like Los Angeles in the west; you can find enough buyers for your scrap metal.

The scrap metal trade can be a very lucrative business idea. It’s not without its dangers and is often regarded as a dirty job. But it can be very profitable in the long run if you view it as a sound investment because metal prices are always gradually increasing and can yield excellent returns. Better still, you get to play a role in helping the planet by reducing the landfill and recycling waste, turning it into something valuable which can be reused time and again!

Source:

1.       http://www.scrapmetaljunkie.com/scrap-metal-handbook-guide/scrap-metal-identification