Dain Smith of Weatherford, Texas loves to build things. Part artisan, part seasoned contractor, he can see an object and look beyond what it is to what it can become. Likewise, Robert Henry, president of Magnetic Sweeping of America, Inc. sees a niche market and understands how to bring a company to life.
What these two have in common is a convergence of dual concepts of innovation and entrepreneurship that are essential to the success of any business.
Both turned to a resource from an unlikely source: the Department of Defense (DOD) through Government Liquidation.
Government Liquidation (www.govliquidation.com) operates an innovative and powerful online sales channel that enables surplus buyers to purchase available government assets in a convenient and open environment. Government Liquidation is the exclusive contractor of the Defense Reutilization and Marketing Service (DRMS) for the sale of surplus and surplus scrap assets of the DOD.
The company earned the exclusive contract with the United States Department of Defense (DOD), by incorporating the critical tenets used in live auctions to move thousands of surplus items and scrap surplus weekly from the armed forces through an Internet auction site. Every auction starts at $50 and the bidding stops after the last bid is placed and there is a 15-minute quiet period.
From heavy equipment like cranes and tractors or industrial equipment like generators, pumps and valves, to material handling including forklifts, hoists and winches, and even tons of scrap metal - authentic military surplus can represent a savings of thousands of dollars. Most items can be acquired for less than five percent of their original costs.
The construction industry has its own unique set of circumstances that make starting and growing a successful business completely dependent upon the vision of its owners. In the United States, the construction industry represents about 12 percent of all businesses and its market is the largest in the world. It drives employment with an estimated 7.3 million jobs; making it a major contributor to the gross domestic product at about nine percent or nearly $1.2 trillion dollars.
Unlike manufacturing companies and other industries, the construction industry is fragmented and comprised of mostly small enterprises serving local markets. Only a handful of organizations have a national scope.
In addition, every project - whether resulting in a finished product like a warehouse or a road - differs in its execution. Moreover, this people-intensive and -dependent environment requires an orchestration of architects and engineers, prime and subcontractors, and regulatory agencies. This can often lead to inefficiencies and combative relationships. In Patricia W. Attalah's book Building a Successful Construction Company (Kaplan AEC, 2006) the author discusses these concepts and how strategic thinking is essential for starting and running a successful construction business today. The author discusses five key determinants presented by Michael E. Porter, a professor at Harvard Business School and an authority on competitive strategy. They are: 1) barriers of entry and their extent; 2) bargaining power with customers; 3) bargaining power with suppliers; 4) ease of product substitution; and 5) the degree of competition.
The ability to reduce the risk of entry, price competition, dealing with low profitability, supply chain inefficiencies and volatile material costs that are associated with the five key determinants mentioned above is paramount.
With that in mind, Government Liquidation has become a de-facto "business incubator" of sorts. By providing an arsenal of equipment and inventory at drastically reduced prices, it allows small businesses to enter the market more cost effectively and with minimal overhead on the front end.
Just ask Robert G. Henry, entrepreneur and visionary president of Magnetic Sweeping of America, Inc. Having recently sold his successful manufacturing businesses, Henry saw a niche market in magnetic sweeping. Over the years he observed the manufacturing process producing residual metallic items that posed continual challenges for maintenance staff to remove during the factory cleaning process.
That got Henry thinking. Nails, fasteners, clips and metal debris left on the ground from contractors and from fill brought in by landscapers plague many construction sites, often percolating to the surface years after the job is done.
And what about the debris that everyone sees on the side of the road that usually never gets addressed for the public benefit? This residual debris can become airborne and penetrate windshields, often leading to accidents, injury and even death.
The challenge in creating a magnetic sweeping company to tackle these problems was to create a business plan that would weigh heavily on doing more with less.
"Trying to keep initial and short-term expenditures low, Government Liquidation fit the utility with slightly used and generally well-maintained equipment," Henry said. "The unique application for our purposes worked hand-in-hand with the unique equipment offered by Government Liquidation. This allowed a creative aspect of ours to come forward and be developed and executed to produce a sound business and operational model," he added. "The past uses of Government Liquidation products and offerings don't have to necessarily match one-to-one uses in the afterlife."
Henry adapted and reused items he purchased to fulfill a need that would otherwise have caused him to seek custom, high-margin and high-dollar solutions from custom fabrication and specialty shops.
He purchased equipment from Government Liquidation that would have cost 50 percent to over 100 percent from traditional sourcing. A sample of items purchased include low-time, well-maintained electrical generators; electrical test equipment and items for maintaining and building their equipment. They also purchased trailers for transport and office equipment from "A to Z."
According to Henry, "for the most part, with all said, the final remaining factor was the launch and execution of the business plan, to hang our shingle, toot our horn and deploy our services as planned."
The business has been thriving since its launch in 2005.
On a smaller scale, Dain Smith a sole-contractor in Weatherford, Texas says:
"If a person took the time and really looked at the times for auction they would see there are so many other money-saving applications," said Smith.
That's exactly what he did. Smith purchased four tables made of dexion angle iron to help with building a free-standing metal shop. He purchased the tables for $100 basically for just the material alone, but says it ended up being more than that in the end.
Taking the tables apart, he had 160 feet of dexion angle iron, 12 casters, and 100 feet of wood 2 x 4's. He used the angle iron to maintain 18 arches during construction and used the twelve-foot-long tabletops for scaffolding. When the shop was finished, the same table-tops became work surfaces inside and left over angle iron used for shelving.
"That was some of the best money I ever spent," said Smith. "Not only did I get the material I needed during construction, but I was able to recycle the materials into useable product saving me at least thousands of dollars in the process."
At Government Liquidation, visitors to the site can search for an item by category or by manufacturer. Once an item is identified, a user can evaluate the condition of the merchandise, contact shipping companies to verify shipping costs and even identify independent screeners who can evaluate the items on-site before making a final bid decision.
"The condition of the equipment we purchased was as expected, but in most cases, exceeded our expectations," said Henry. "The process is easy from start to finish," he added.
Visionaries like Henry and Smith know that having an edge is critical. For the construction industry, made up largely of small businesses, it is essential. Plus the ability to successfully compete for jobs, and win them, is totally dependent of having the right equipment - that you own.
And finally, as cautioned by Atallah in the book's opening comments: in forecasting your business, "look before you leap."
I invite you to "look" at our auctions and amass your inventory at drastically reduced cost and risk.
Whether you are about to leap or you have already taken the plunge, Government Liquidation makes it easy to get incredible inventory to grow your successful business.
Government Liquidation is the leading global seller of U.S. military assets in over 500 different commodity categories. Government Liquidation offers surplus buyers a unique and dynamic pool of property for purchase and resale from over 150 military bases throughout the continental U.S., Alaska, Hawaii, and Guam. For more information visit www.govliquidation.com or call (480) 367-1300.