Should I buy a steel distribution business or start one?

Both routes can work, and neither is better in general. Steel distribution is capital hungry: you need stock, machines, a yard and delivery, and you need suppliers who will ship to you on terms. The question is whether you would rather pay for something already running, with its history, or build the same thing slowly and carry the early risk yourself. Compare them against your own money, skills and timeline.

What buying brings with it

An existing business comes with supplier accounts, customer relationships, processing equipment, a yard and staff who know the trade. It also comes with inventory bought at earlier metal prices, which may not match today’s market. Some of the accounts depend on the seller personally. Ask how long the seller will stay on, and which suppliers and customers will confirm they continue with you.

What starting asks of you

A new distributor has to earn supplier credit, usually slowly, and often pays up front at first. Customers have to be won from established competitors. You do choose your products, your site, and when to buy each machine and each load of stock. That control has a cost in time. Many start-ups find the first years hardest on cash. For the questions a buyer asks in another stock-and-equipment trade, see tire sales and service centre due diligence.

Questions to settle first

• How much of your own money and how much lender money can you put in?
• Do you know the products, the customers and the suppliers already?
• Can you run the yard and the equipment, or will you hire someone who can?
• How long can you wait for the business to carry itself?