Buying in bulk to save moneyis tempting. If we can buy 100 of something and get a 25% discount, it’s worth it. Right?
Not necessarily. The math that’s required for buying in bulk isn’t complex, but it’s important to think about.
How much do you need?
Remember the toilet paper crisis last year? It was caused in large part by people who bought a ton of toilet paper they didn’t need. It was all very strange since there was no real shortage. It was panic buying.
How much toilet paper will you need in a year? How much PPE will you need for your crew in a year? How many 2x4s will you need in the next three months?
The core question is how much of anything will you need in defined period of time. You don’t want to buy things that you’ll need to hang onto for years. It doesn’t make sense.
How will you store it?
If you buy three truckloads of 2x4s for jobs, then leave them sitting in the rain to warp and become worthless, you’ve lost money.
How are you going to store whatever you buy? For example, if you’re buying PPE for your crew to remove mold and replace wallboard, you can probably keep it all in a garage. If you’re buying 35 generators to you can be sure to have a genny on-site when you need it, you’re likely wasting money.
When you calculate how much you’re going to save by buying in bulk, you have to consider how much storing it will cost you. If you’re paying $1000 a month for a building to keep stuff in, that adds to the cost and cuts into your profits.
How available is the product?
If you work in marble a lot and you can get a great deal on rare Italian marble, it might be worth storing a lot of it. If you’ve never worked in marble, but you’ve decided to buy three pallets, even though it’s a tiny discount, it’s not worth doing.
If the product is readily available and you’re not saving a lot of money on the deal, it doesn’t make sense to do.
Only if you’re making a decent profit on the product is it worth it at all.
Should you resell something you bought in bulk?
Sometimes, we’ll look at something and consider that we can always sell it to someone else if we don’t use it. If you buy 25 drying fans because you get a great discount, figuring you’re going to sell them if you need to, ask yourself: Do I want to be in the fan selling business? There’s a lot that can go into getting rid of a bunch of anything. Do you want to suddenly change your business and start selling hard goods?
A buyers’ club gets you and businesses like yours discounts by negotiating with manufacturers and retailers for better prices. It’s the power of quantity discounts without having to do all the buying yourself.
Consider joining one or several buyers’ clubs so you can get better prices on materials. The Restoration Entrepreneur has a great one just for restoratoin and construction companies. Contact us to learn more.
Saving money is easy, but you have to do it in a way that you’re really saving, not simply getting “a deal.”