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piranhas and great white sharks, oh my!

| General - Let's talk business
  1. #1
    IronPirate started this thread.
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    piranhas and great white sharks, oh my!

    Wanted to share some comments I received while asking questions on a entrepreneurial forum about starting/buying an auto scrap yard. To listen to these guys its a wonder any of us make money?!

    Scrappers and junkers will eat your lunch, kid. They have the permits and zoning that you don't have today. They had the financing years ago that you don't even have today.

    They know what everything they hold is worth, too.

    You are a fresh little goldfish thinking that you can jump into a shark tank filled with everything from piranhas to Great Whites.
    I really do not understand how you figure to beat people at their own game who have a lot of experience?
    look out for an EPA nightmare.............
    Nobody in the scrap car business would ever sell their lot for less than the current scrap value + land.

    Its what they do for a living, literally. That's like saying a jeweler wouldn't know what gold was selling for, or what he could liquidate it for.




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    Were there any productive or encouraging responses at all?
    Last edited by freonjoe; 01-26-2012 at 10:39 AM.

  3. #3
    IronPirate started this thread.
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    no, not a single one. the consensus is I'm a moron

    I need to thicken my skin.

    Funny thing I wasn't asking about the industry itself, I was asking about financing a business plan - how to approach banks or investors, what kind of return I need to justify the investment, etc, and they all just jumped on the business idea itself.

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    I think you need to find a local group of retired business people to talk to. We have one here and they really go out of their way to help you.

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    Like Joe said, you need to find a more business-savvy group. With attitudes like that, the only thing that would be worth pursuing is a franchise. And most of them are losing propositions. Look around - the ones who make it big are the ones who do what others say can't be done.
    People may laugh at me, but that's ok. I laugh all the way to the bank.

  7. #6
    IronPirate started this thread.
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    That's why I like you guys - always positive!!

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    Quote Originally Posted by freonjoe View Post
    I think you need to find a local group of retired business people to talk to. We have one here and they really go out of their way to help you.
    Great suggestion Joe! Coffee shops are popular with this type of folk. Them guys are there everyday same chair same stories. Don't ask questions at first and you will learn just sitting there! hang out a few times and you are like part of the group.
    When the white man discovered this country Indians were running it
    no taxes, no debt, women did all the work.
    White man thought he could improve on a system like this. - Old Cherokee saying

    I did not surrender, they took my horse and made him surrender. - Lone Watie

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    almost every town has a group of some kind promoting new business in their town. the larger town have business enqubator offices like SBA and I believe the group is called SCORE, it is made up of retired former business owners who do just what you need. correction, they will advise you as to how to do what you need.

    that said , to start a new auto scrap yard or a ligitimate large salvage yard to day ...... sry to say probably every thing those guys told you is true. we are living in an anti business anti success Amerika right now. they all started their business in the real America. not sayin it cant be done but chancesw are slim I think. just my .02 but good luck hope ya make it.
    we used to b a capitalist country, we are now a vulture capitalist society, and unfortunately most of us are just pidgions.

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    Vultures and pigeons. Is that the realistic way of saying hawks and doves?
    I know lying is wrong, but if the elephant man came in now in a blouse with some make up on, and said, "How do I look?" Would you say, bearing in mind he's depressed and has respiratory problems, would you say, "Go and take that blusher off you mis-shapened elephant tranny?" No. You'd say, "You look nice... John""

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    I have not been on the forum you were asking the questions. I would guess the majority are experts at being on forums and dreaming about owning a business.

    I have for many years owed a small business or worked independently. When ever I asked friends if they might be interested in getting involved their response was similar to what you got. They may be correct but most don't have the guts to try. Mike.
    "Profit begins when you buy NOT when you sell." {quote passed down to me from a wise man}

    Now go beat the copper out of something, Miked

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    Well said Mike! These guys don't sound very entrepreneurial to me.

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    Quote Originally Posted by injunjoe View Post
    Well said Mike! These guys don't sound very entrepreneurial to me.
    For a bunch of supposed risk takers they sound like a bunch of wusses. Best of luck to you pirate, sound like some better advise from this forum.
    Recyclable Material Merchant Wholesaler
    Certified Zip-Tie Mechanic
    "Give them enough so they can do something with it, but not too much that they won't do nothing."

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  19. #13
    IronPirate started this thread.
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    I would but its a subscribed private forum and kind of work related...I have to play nice on there.

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    IronPirate started this thread.
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    Last one, saved the best for last

    I can say coming from the machining and scrapping out machines side that the scrap business is a dirty, largely unethical one. If you plan to run things honestly, you're going to get your clock cleaned. I know quite a lot of machine shop owners and every single one of them has nothing but bad things to say about scrappers.

    -Tweaked scales that read low
    -Fudging the condition of materials
    -Offering one price, then when the stuff is on-hand, changing the price
    ...and lots more.

    If you aren't willing to be dishonest, you are going to be paying a lot more for scrap than all the other guys, because they are the worst bunch of shysters I've ever seen.

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    Scrapette's Avatar
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    Quote Originally Posted by wayne View Post
    Vultures and pigeons. Is that the realistic way of saying hawks and doves?
    I would think it would mean something more along the lines of predator and prey.
    Success consists of going from failure to failure without a loss of enthusiasm...... Churchill

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  23. #16
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    Quote Originally Posted by Scrapette View Post
    I would think it would mean something more along the lines of predator and prey.
    an irish lass with sharp objects. would that be predator or prey?

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    Scrapette's Avatar
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    Quote Originally Posted by rbrooks715 View Post
    an irish lass with sharp objects. would that be predator or prey?
    Neither. sui generis.

  25. #18
    IronPirate started this thread.
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    well played madam

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    Starting or buying a scrap yard is not something the average business person can be sucessful at. You need an excellent set of business management skills and deep pockets.

    The business management skills include general management, financial management, inventory control, shipping logistics, negotiation ability, understanding of contracts, understanding of government rules and regulations, dealing with law enforcement and other government agencies and , of course, metal pricing.

    Profit margins of scrap yards are not anywhere near as high as most scrappers think they are. Schnitzer Steel is a publicly traded scrap company. Here is what they say about ferrous profit for the last quarter:"Operating income per ferrous ton was $11 in the first quarter of fiscal 2012, a decrease of 49% compared to $21 per ton in the first quarter fiscal 2011." At average selling prices of $432 and $353 a ton, those are profit margins of 2.55% and 5.95%.

    This website has scrap yards for sale: http://scrap-king.tripod.com/id2.html

    One of them has sales of $56 million and profit of $3.3 million EBITDA. That is a 5.90% profit margin.

    You need the deep pockets to hold inventory until you can sell it and you need to be able to survive the market slowdowns and downturns. Try to find scrap yard owners who will talk about how they got clobbered by the huge price drops in 2008. Schnitzer Steel (SCHN) stock went from a high of 119 in July 2008 to a low of 16 in November 2008. Undercapitalized scrap yards just went out of business.

    Getting other people to finance a scrap yard business will be rather difficult. It would be easier if you had significant capital of your own. I wish you well with your endeavors.

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  29. #20
    IronPirate started this thread.
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    That was the exact advice I was looking for on the business forum. Thank you for the information!


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