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High profits come from turning over your recycled and salvage material as quickly and as often as possible

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High profits come from turning over your recycled and salvage material as quickly and as often as possible

by Michael Meuser

When I first started out I wanted to hold on to the material I collected telling myself I was waiting for the best price. It took me awhile to realize that by doing this I was crippling my business and putting it at risk. If you are like I was, you have a limited amount of capital and most likely started out by bootstrapping your business. If you are, it makes the most sense to turn over what you have collected as quickly as possible.

Here's an example. Let's say you paid $500 for a pickup load of high grade computer boards this morning. Gold has been going up and down and now it's a bit down, but you paid the amount you paid based on the value of gold NOW. So, you have to decide if you are in the salvage/recycling business or if you are a speculating investor. A speculator might wait and watch the market but you can't afford to do this. In this business it makes sense to process or sell the goods today or tomorrow - as soon as possible - to get back your $500 stake plus 10-20% profit or more and have your capital available to do it again and again as often as possible.

Look at it this way. If you pay $500 for something and can sell it tomorrow for $550, you've made a 10% profit in one day. If you wait a week for a better price and sell it for $575, you've made a 15% profit in a week but much less than that per day. For the entire week, you have not had your $500 of capital to use to buy and sell more material. $50 every day or so is more than $75 in a week. The more often you turn over your material, the higher your profit will be no matter how marginally profitable some of the individual transactions look at the time.

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One very real risk of hanging on to your material too long is that when you do finally sell it, you'll need some of your capital for everyday expenses leaving less to buy more material with. If you are not careful this will be the beginning of a short downhill slide to not having enough capital to do business and then you have to bootstrap all over again starting at the bottom.

I'm not saying that there aren't times when it makes sense to wait a bit. If you live far from a refiner or buyer, it makes sense to make the trip with a large load rather than a small one. So, you have to factor in the cost of transportation and the value of your time. Some things like electric motor and generator cores or valve cores are sold to remanufacturers who don't want to be bothered with very small lots.

Bottom line is that to be profitable and make the most of your capital and to help make it grow, turn over your material as quickly as you can given the value of your time, transportation and shipping costs, and buyer constraints. In this case, time really is money.

Click here to learn how you can make the money that you need and want in this home-based business.

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Michael Meuser bootstrapped his way into the salvage and recycling business in the early 1980s. He began with building deconstruction and scrap metals and then moved into electronics, computer and telecommunications scrap where he learned to recover gold and other precious metal.
Michael tells his story, provides resources and offers his advice at his website, RecyclingSecrets.com, and his blog, Recycling Secrets Blog. Recently Mike completed the eBook How to Make Money in the Home Based Salvage and Recycling Business. It is a chronicle of his experiences, successes and failures in the business. Also, you can follow Michael on Twitter.

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