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Bulk buying makes a lot of business sense

Posted on March, 13, 2019 at 09:41 am


By Dorothy Nakaweesi

They buy low, sell high and the cycle continues. That is what defines the lifestyle of bulk buyers, a business taking shape for both the employed and unemployed looking to earn an extra coin.

When you buy in bulk, certain items are heavily discounted, making it an economical habit that can save you a lot of money.

Much as living conditions are improving for some, others are struggling to get by. Blame this on the rising cost of products and services amidst stagnant income. For some who get a small percentage increase, it is quickly eaten up by the taxman.

Whining over this will not help. Instead, finding a solution to cope with life is what any financial advisor would tell you.

You can start bulk buying as a side gig, earn millions and improve your living condition.

What it involves

Bulky buying is the purchase of large quantities of a particular product or products, typically at a discount.

In this case, our focus is on food especially dried food items such as maize, beans, peas, rice or groundnuts which you can buy in bulk during the peak season and resell in the low season.

Start

Mr Charles Ocici, the executive director Enterprise Uganda and a distinguished business coach, says: “Bulky buying especially food if done right, can give you higher returns than any other product. Whether you are talking about gold, oil, diamond, nothing would beat the returns in getting the time right to invest in food business.”

Third World countries, for instance, all depend on the rain-pattern to plant and harvest, meaning harvesting is done at once.

Since majority of the farmers are hand-to-mouth peasants, as soon as they harvest, they rush to the market. This brings about a drop in the price yet waiting for about three to four months would push up the price by 40 per cent.

If you did this for one crop and get your 40 per cent profit in one commodity, then another crop takes over, your annual returns will be big.

Success secret

Where then is the trick?

To get that good return, you should monitor your purchases and avoid compromising on quality.

“When you are buying super rice, it should be that not upland rice, because if you don’t get the quality right, what you are buying cheaply could be paying a wrong grade of rice. The moment you make an error on your quality, you will have affected your margins.

Secondly, you need to watch the quantities. This according to Mr Ocici stems from the people you hire to purchase the commodity and buy a commodity which is not fully dried up.
“Buying produce which is not fully dry will cause you to lose about 15 per cent on your volumes,” Mr Ocici warned.

The next step is managing storage, because the bulk purchases you have made are perishable. If poorly managed, you may end up losing 90 per cent of what would have been your profit margin.

You can rent out a shared storage facility at a fee and invest the rest in your business.

This approach also requires you to hire a trustworthy caretaker to watch over your stock while away.

Nonetheless, this does not mean you entirely trust what they tell you always. You should be able to monitor what is on this site occasionally to avoid being ripped off.

Find groups that are knowledgeable about this business and invest in learning more tips on how to improve and expand in the near future.

Some of the losses made during storage result from diseases but there are remedies for them.

Make sure you monitor the store carefully as far as security is concern, to avoid leakages and losing your stock.

“The moment you compromise on security and opt for relatives and friends because they are cheap but they are the source of leakages,” Mr Ocici advised.

You shouldn’t rush to sell so that you get a good price if you are to profit in this business.
Lastly, don’t work with only one commodity. As soon as the season of one commodity is out, switch to another to continue making money.

Experience

Mr Paul Isabirye, a junior employee in a corporate company in Kampala, has been working for close to six years.

However, with increasing responsibilities, he thought of starting a side-gig to supplement his monthly pay-cheque of about $351 (Shs1.3 million) before taxes which was no longer sufficient.

Last year, a friend shared nuggets of information on how he can profit through bulk buying cereals from his friend.

“I had savings of Shs8 million that I used as startup capital,” Mr Isabirye shared his story with Prosper Magazine.

Equipped with the Shs8m, Isabirye went to Mbale, a place well-known for growing super rice and purchased 5,000 kilogrammes (5 tonnes).

Luckily, there was a bumper harvest then and the prices were very low. So he purchased each kilogramme at Shs1,600.

“I anticipate to start selling the rice in the middle of this month (March) because the price is getting better. Each kilogramme is at Shs3,300 and it could go higher,” he said.
If Isabirye sells his rice at Shs3,300 per kilogramme, this means he will bag about Shs16.5 million which doubles his initial investment.

If he waits for the price to hit Shs3,500 per kilogramme, he will earn Shs17.5 million.

“My plan is to reinvest part of the profit from this stock to diversify into other commodities like beans, ground nuts and supply education institutions,” he shares.

Tips

Find time to monitor your stock.
Keep proper records of your accounts.
Invest in proper storage facilities to limit losses.
Hire trustworthy person to watch over this stock.
Seek for knowledge about this business.

Source: Daily Monitor