What does a woodworking shop’s lumber supplier mix say about its stability?
A shop that buys from one yard depends on that yard’s prices, stock and goodwill. A mix of suppliers with clear terms suggests the shop can handle shortages or price swings. Ask who the main suppliers are, how long the relationships have lasted, and what happens when a favourite species runs short.
Suppliers are a quiet measure of a shop’s resilience. Ask for a list of the main lumber and sheet goods suppliers, with a rough share of purchases from each. Compare it with the shop’s product lines. Heavy reliance on one source may be fine if the relationship is strong and documented, but it is a risk if it rests on a handshake with a person who might retire.
Ask about terms: credit, delivery, minimums and who sets prices. Ask how the shop reacts to shortages. Does it substitute species, stockpile, or tell customers to wait? Specialty or imported species deserve a closer look, because supply can change quickly and the shop may have promised them to customers.
Look at how deals were made. Ask whether the owner has a personal relationship that the buyer cannot expect to inherit, and whether suppliers know a sale is possible. Meeting the main suppliers, with the seller’s consent, is a sound step. Your accountant can compare purchase costs over time to see how the shop has handled price swings. Ask also whether any supplier has ever cut the shop off or put it on hold, and what caused it.
Key takeaways
- Get the supplier list with a rough share of purchases from each.
- Ask how the shop copes with shortages, substitutions and sudden price swings.
- Find out whether key supplier relationships depend on the seller personally.
- Meet the main suppliers, with the seller’s agreement, before you decide.
Related reading
13 pages on the same subject, grouped by topic.
Buying
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Selling
Due diligence
- Expert answerWhat should I ask about a deck builder’s lumber supplier terms?
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to diversify your supply chain
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 04Business Development Bank of CanadaGovernmentWhat is inventory
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