Why scrap plastic trading firms need to diversify
One of the first bits of advice you get from investment advisers and financial planners is, “Diversify, diversify, diversify.” Everyone who is saving money for retirement is advised to diversify their investment portfolio among a wide range of stocks, bonds, money market funds and perhaps some other investments like real estate investment trusts or other mutual funds. Diversifying your investment portfolio reduces your risk of loss and maximizes the likelihood that your money will grow in the long run as the larger economy and stock and bond markets grow.
The same idea of “diversifying” your portfolio also applies to scrap plastic trading. At BlackBridge Investments, we believe that it’s important to work with multiple grades of scrap plastic material. We buy and sell everything from PET plastic to LDPE to Polystyrene to mixed material.
Here are a few reasons why every scrap plastic trading firm needs to diversity, diversify, diversify:
- Manage your risks: If you work with one type of plastic, you are not very diversified. If you only buy or sell one type of scrap plastic, your business is vulnerable to price swings, price shocks, and major market disruptions like what we saw happen with China’s “Green Fence.” If you only trade one type of scrap plastic material, you are at risk for losing money if the market for that one type of material dries up or weakens or goes away.
- Broaden your customer base: It’s always a good idea to be able to work with multiple types of trading partners. If you can’t provide a diverse trading portfolio, your customers might start to look elsewhere if they can’t get all of the types of material that they need from your operation.
- Keep adding value: The scrap plastic trading business has swings up and down just like any commodity trading industry, so to stay competitive, it helps to be able to know about and be conversant about a number of different materials and trading niches. For example, you might want to branch out into post consumer plastic, post industrial plastic, and even paper and other non-plastic materials. The more you know, the more you learn, the more energetic and well-connected you can be to various industries and niches, the more value you can add for your customers to keep deepening your business relationships.
Just as diversifying your stock portfolio can help your money grow more sustainably with less risk, diversifying your scrap plastic materials offerings can help your business grow faster and with less vulnerability to the ups and downs of the market for any one particular product. A diversified trading portfolio of multiple types of scrap plastic can make a strong foundation for your business.
What do you think about “diversifying” your scrap plastic trading operations? Have you recently expanded to any new types of materials? What did you learn along the way?