Small margins on solar products

[Isetech]

I had to laugh when the person mentioned small margins when I enquired about the discount structure.

When you take off your trady hat and put on your business cap you need to understand profit margins.

I have situation at the moment whether to re register with VAT, I cut back my turnover and only work enough to keep below the threshold.

So my material markup is around 25 %, its ok it pays the bills.

Now that I have moved in the solar game, I sit with a huge problem, my turnover will exceed a a million a week, which means I might have to cut back to working 2 days a month or I have to reregister with VAT.

The margins on a couple hundred thousand a month need to be higher compared turning over a million a week.

I didnt think it would become an issue so quickly.

Think about it, you buy a couple odds and ends for a new build with a small team, the outlay is small, suddenly you do one solar install and the material cost is R150 000, it take 3 days to complete the installation, that's just for one team, now you start selling 1 unit a day , suddenly that's R750 000 x 5, eeeesih you have a vat registration problem

[Isetech]

Lets use a socket outlet as an example.

The wholesaler buys the socket for about R20 marks it up about 200%, then offer you between 10 and 20% depending on your purchase volume, plus VAT.

Now imagine they marking up 200% on a R100 000.00 product.

A wise man once told me dont be greedy, his "profit margin" was only 2.5%, his turnover per month was well into the millions, he still became a multi millionaire within 5 years and he could sleep at night with a clear conscience

Getting rich is the easy part, it is how much of your soul you are willing sell that makes it so difficult.

[Leecatt]

A little of topic. I'm getting interested in solar and hybrid inverters with batteries. The hurdle I'm facing at the moment is that of obtaining the equipment from a retailer. Is there such a thing or are the guys who are in it importing their own equipment?

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[Isetech]

A little of topic. I'm getting interested in solar and hybrid inverters with batteries. The hurdle I'm facing at the moment is that of obtaining the equipment from a retailer. Is there such a thing or are the guys who are in it importing their own equipment?

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Everyone is climbing on the band wagon, the wholesalers have realised the huge market even forums and groups have climbed on the sales band wagon.

What the smaller guys are doing is taking advantage of the tier pricing, it all boils down to the quantity. What you do is create a group with a bunch of small operators and buy using one company name. That way you qualify for way better prices. Just make sure the guys pay upfront, otherwise whoever is doing the buying will get screwed.

It also helps if you import directly, you can import volume.

Those days of loyalty to a supplier are like video rental stores, a thing of the past.

There are just so many opportunities, the group can start solar PV courses for the group, bulk purchases.

There are groups selling directly to the public at prices installers dont even quality for, the whole industry is just one massive rat race at the moment.

If Dave was smart he would turn part of this this forum into a shop and offer members really good prices at small margins and make fortune. We talking a million rand operation. There are some smart people on this forum with a wealth of business knowledge and capital, I am surprised it has taken so long for anyone to realise the opportunity.

[Isetech]

There is already a private members section on this platform and there are members based all over the country.

We could even do online seminars for members who would like staff to learn more about solar

We wouldnt need to hire warehouses around the country, just join our resources and utilise spaces we already have.

[Dylboy]

For the VAT issue could you not open a second company and then invoice under that ?

And one thing I want to add is that it is such a rat race and huge margins and that is why knowledge is not shared and secrets kept...



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