This article provides a blueprint for starting a physical commodity trading firm and achieving millions in revenue within three years. The author, Damien, is the owner of several successful commodity trading companies worldwide and shares his expertise on how to establish a vision and milestones for a new trading firm.
The article begins by emphasizing the importance of identifying the starting commodity. Damien advises against choosing a commodity based on current market trends or hearsay. Instead, he recommends a “buyer-led start” approach, where the trader finds a buyer in their network and offers to match their current supplier’s payment terms and quality. This approach minimizes risk for both parties and allows the trader to establish their reputation in the industry.
Key Takeaways
- Start with a commodity that a buyer in your network wants to purchase
- Find more clients by asking your first client for referrals and using tools like LinkedIn and trade association websites
- Use personalized and authoritative emails to reach out to potential clients, and consider offering a trial shipment with no payment until quality testing is complete.
Identifying Your Starting Commodity
Buyer-Led Approach
To establish a new physical commodity trading firm, it is crucial to find a starting commodity that will attract buyers. The best way to do this is through a buyer-led approach. This involves finding a buyer in your network who works in an industry that requires raw materials, ingredients, or commodities. You can then ask for an introduction to this person and offer to match their current supplier’s payment terms and quality. By doing this, you can start your company with the commodity that your first buyer wants.
Understanding Your Role
As a commodity trader, your job is to de-risk the transaction for your buyer and seller. Therefore, it is risky for both parties to deal with a new company that knows nothing about the industry. This is why finding a buyer through your network who is willing to give you a try is the best approach. Once you have made your first deal, delivered the product, and ensured that your client is happy, you can start finding more clients like them. The easiest way to do this is to ask your first client if they know other companies that need the same raw materials. Another method is to search for companies that will be buyers of the raw material on LinkedIn, event conferences, and trade association websites.
It is essential to put all your leads into a CRM to ensure that you don’t forget them or lose them down the line. Using a dedicated software like Pipe Drive is recommended. A data aggregator like vu.com can also help you find real buyers and suppliers. When you have all your leads in your CRM, you can start reaching out to them through email or LinkedIn. A good email subject should start with a quick question and be personalized. You should also add some context and authority to your email and end with a clear call to action.
In conclusion, finding a starting commodity through a buyer-led approach and understanding your role as a commodity trader are crucial to establishing a new physical commodity trading firm. By finding a buyer through your network who is willing to give you a try, you can de-risk the transaction for both parties and start building your client base. Using a CRM and a data aggregator can also help you find leads and real buyers and suppliers.
Building Your Client Base
Leveraging Your First Client
When starting a physical commodity trading firm, it is important to find your first client through your network. This means finding someone who works in an industry that requires raw materials and ingredients. You can ask for an introduction to this person and offer to match their current supplier’s payment term and quality. This will help you establish trust with your first client and ensure that they are willing to give you a try. Once you have delivered your product and your client is satisfied, you can ask for referrals to find more clients.
Utilizing Web Resources
Another way to find potential clients is by using web resources such as LinkedIn, conference websites, and trade association websites. These platforms provide a wealth of information on companies in your industry that may require your services. You can also use data aggregators like vu.com to find real buyers and suppliers.
Effective CRM Use
It is important to keep track of all your potential clients and leads in a dedicated software like Pipe Drive. This will ensure that you don’t lose track of any opportunities and can follow up with potential clients in a timely manner. By using a CRM, you can also see where your leads are in the closing pipeline and ensure that you don’t miss out on any potential deals.
Exploring Data Aggregators
Data aggregators like vu.com can be a powerful tool for finding potential clients and suppliers. These platforms collect shipment information from third parties and allow you to find real buyers and suppliers. By using these platforms, you can find new leads and expand your client base. However, it is important to use these platforms cautiously and only work with reputable companies to ensure that you are not putting your business at risk.
Outreach and Communication
Crafting Effective Emails
When starting a physical commodity trading firm, it’s important to reach out to potential clients in a way that is both effective and personalized. Damien, the owner of several successful commodity trading companies, suggests starting with a quick question in the email subject line to pique the recipient’s curiosity. The first line of the email should be personalized to show that the sender has done their research and understands the recipient’s business. Adding context and authority to the email can also help establish credibility. The call to action should be small and non-invasive, such as a quick chat. It’s important to follow up with potential clients and to use a CRM software to keep track of all leads.
Follow-Up Strategies
Follow-up is key when it comes to outreach and communication in the commodity trading industry. If there is no response to the initial email, it’s important to follow up with a second email or phone call. Persistence is key, but it’s important not to be too pushy or aggressive. A gentle reminder of the initial email and a brief explanation of the value the sender can offer can be effective. It’s also important to keep track of all follow-up attempts and to note any responses or lack thereof in the CRM software.
The Secret Email Template
Damien shares a secret email template that has helped him open doors at some of the biggest companies in the commodity trading industry. The template involves offering a trial shipment of a product with no risk to the recipient. If the recipient likes the quality of the product, they can keep it and pay after quality testing. If not, the sender will take it back. This strategy can be risky, so it’s important to only use it when the sender is confident in the quality of their product and the credibility of the recipient. The value of a commodity trading company is in de-risking the transaction for both the buyer and seller, so this template aligns with that principle.
Risk Mitigation Strategies
When starting a physical commodity trading firm, it is important to have strategies in place to mitigate risks. Damien, the owner of multiple commodity trading companies, recommends the following strategies:
- Buyer-led start: Instead of choosing a commodity to trade based on personal preference or market trends, find a buyer through your network who needs a specific raw material, ingredient, or commodity. Match their current supplier’s payment terms and quality, and offer to give them a try. This reduces the risk for both parties and helps establish your company’s reputation.
- Networking and lead generation: Once you have your first client, ask them if they know other companies that need the same raw materials. Use LinkedIn, trade association websites, and data aggregators like vu.com to find potential clients and suppliers. Keep track of all leads in a dedicated CRM like Pipe Drive to avoid losing contacts and unclosed deals.
- Personalized email outreach: When reaching out to potential clients, use personalized subject lines and first lines to catch their attention and establish authority. Keep the ask small, like a quick chat, to increase the likelihood of a response. Follow up if necessary and be persistent.
- Trial shipments: If you want to take a riskier approach to winning new clients, offer to ship a container as a trial. If the client likes the quality, they can keep it and pay afterwards. If not, you take it back. This approach requires confidence in your product and the company you are dealing with.
By implementing these risk mitigation strategies, a physical commodity trading firm can increase its chances of success and growth in a competitive market.