Business planning

This may seem like a pointless exercise to some, but I got to considering this since I am reforming my business. In the past, I simply bought from whoever and wherever I could and sold to several scrap yards. My aim now is to concentrate on businesses which produce fairly large amounts of waste metal. In doing this, my goal is that the businesses will perceive what I’m doing as a service which removes unwanted clutter. In the process, I started thinking about such things as if I were buying and selling goods or providing a service. Then I started wondering if the businesses I was targeting were rightly called customers or something else. Since I have no formal training in business, I did some research and found that there are two broad categories called “goods” and “services” - but was I actually buying and selling goods or providing a service? "Goods" is defined as something tangible - something you can see and/or hold. "Services" are things provided for you by other people. Further research indicated that there is a difference between “customer” and “client”. Customer is defined as someone who purchases a good. Client is defined as someone who purchases a service. Now I have come to the conclusion that although I was involved in purchasing a good, I would now be providing a service since the focus of my business changed. The business from where I get the stuff would be rightly called a client. Although no money is being exchanged, technically they are purchasing my service (keeping their work area clutter-free) through the value of the metal that I get. Does this mean, then, that the scrap yard is the “customer”? Am I a customer of the business?

What do you think? Too much time on my hands? How many actually have developed a written business plan that you follow?

It's not the kind of thing I've thought about a lot (as I'm just getting started), but now that you've brought it up, I have something to think about. And the thanks isn't just for this. I've been doing some lurking since I've joined, and always find your posts interesting if not outright helpful.

to answer your last question, the scrap yard would be your customer. You are selling them goods (scrap metal).

I agree with irrationalist. Even though you have to seek the customer out as opposed to having a storefront and they come to you......think door to door salesman.

Yes, I agree that the scrap yard is my customer by definition. My asking it was rhetorical - to make people think.

My point is, that although the outcome is the same in both models of business, the first is based on exchange of goods; the revised model is based on providing and purchasing a service. This will actually change some aspect with reporting income to the IRS.

Soo since your providing a service by removing "large amounts of waste metal" does that mean you are going to stop purchasing? I would think that if your going to target businesses that produce large amounts of metal, its more of a reason to purchase, and you sell for a profit. I cant imagine a business just giving away "large amounts" of metal on a regular basis, when they can just sell to some1 else.

My bad. I understand what you're getting at now.

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Originally Posted by BigIgg

Soo since your providing a service by removing "large amounts of waste metal" does that mean you are going to stop purchasing? I would think that if your going to target businesses that produce large amounts of metal, its more of a reason to purchase, and you sell for a profit. I cant imagine a business just giving away "large amounts" of metal on a regular basis, when they can just sell to some1 else.

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I already have three businesses where I have an arrangement to keep the area clean without paying for metal. One is an auto body shop, another is a general repair shop and the third is a trucking co that does his own maintenance/repairs. I go pickup just before it snows OR every week during winter and every other week during other months. The difference is that as a "buyer", you'll be on your schedule or maybe not at all. As a "Service Provider", I go on their schedule.

And, yes, if I'm providing a service, I'll stop paying.

Well like i said many times before, if these businesses are giving you large amounts of metal, God bless thats great.. but that wouldnt happen where im located.

You're not maintaining or selling inventory to them, so I'd say service.

I've wondered- are most here 'junk/hauling guys' that also get scrap? or are they solely scrap metal guys??

I'd define yourself as whichever one has to pay less taxes

Good thing to think about. I do not have a business plan that I follow as I feel that it changes alot due to the market I am in. I have an idea what needs to happen and aim for those marks... beyond that the road will change a few times.

Now the scrap yard is your customer as they hand you money for the items you have and or anyone else who comes off the street to buy something that is usable.

The service and client part...this is how I see it. 1+2 =3 and 2+1=3 the end number is still 3 now matter how you look at it.

But this is how I see it. Each person is a client in my book but I do one of two things...either they come to me and or ship/mail something to me and get paid.

Or give a service (a cost to them) to go to them and buy from there home/company. I would pay the same amount other than the fact that the service cost (of me going to them) is removed from the total cost of the scrap that was picked up.

Now..if that is right or wrong or something else, I do not know but that's how I see it

First and foremost, with no business plan you are destined to fail. A plan wil, map out what your goals are as well as how you plan to achieve them. Now this does not mean that you never review the plan and change it just that you have one and can show yourself where to go.

I have a business plan and review it quarterly. In the last year I have made adjustments to the plan abot five or six times. The core is still there but I have discovered new way to get there due to market changes as well as client changes.

As for a customer or client your definition is sound. A customer is one who buys a good while a client is one wo buys a service. They an change as well. Fr example, we buy wire from people. They are my customers. Some will sell me wire and also will use me as a processor. When they do that they are buying a service and are labeled a client. Either way unless its vital to your business plan to define them don't worry too much about sematics.

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Originally Posted by High Voltage Processing

First and foremost, with no business plan you are destined to fail.

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Not true. My dad started his own successful hydraulic repair business in the early 70's and never had a "business plan". He raised 5 kids and made sure we all graduated high school. 2 of us went on to college, 1 joined the military, 1 a vo-tech, and 1 married a the owner of a small cross country trucking company (5 trucks and trailers). He had no written business plan either and still trucking strong.

Daddy kept a roof over our heads, food in our bellies, and clothes on our backs. We by no means were "rich", but we had no wants that he didn't meet. He knew how to hustle and get work and keep his business strong. He was honest and fair in his dealings. Never messed over none of his customers. His only advertising was his business cards. His best advertising was word of mouth.

I'm not against a business plan, but one is NOT "destined to fail" without one.

I use a business plan because it gives me milestones to reach. It definitely keeps me motivated to get out and beat the brush for new customers and new ways to increase my imcome stream.

I wouldn't go as far to say a business would fail without a plan, as skyline pointed out, but a person my want to think of it as growing the business to maximum potential without a plan or clear goals could be tough.

Having a business plan could help if there are more than one party to use it as a meeting of the minds. In my case I am a sole owner (100% rights) so on a simple sheet of paper and or in my head I can draw up my goals and mile markers with out having to draw out a professorial business plan.

I have view some business plans and they can take alot of time. Now if you would like to gain bank funding and or state/gov funding a business plan would be a MUST have, another good reason why you need a business plan is if you are not the full owner (dose not matter if you own more shares or not) having a business plan that both you and the person who owns the other shares can view and have a CLEAR understanding where things are going.

As noted since I have full shares I don't in fact have to have a professorial business plan that's on paper, but dose that means I do NOT have a business plan? That would be a wrong statement as I do

I am a sole owner too. I keep mine on a single sheet of paper. It does keep me on track as far as investing back into the business. I see too many scrappers that only plan out far enough to the next tank of gas or truck payment.