The cement industry is undoubtedly one of the most flourishing and profitable industries today. The expansion opportunities are tremendous owing to the expedited infrastructural growth surfacing from the smart city development plan launched a few years ago. Starting a dealership business makes profound sense, and what’s more is that knowing how to start a cement dealership and successfully launching one isn’t as difficult as it looks. Knowing how to get a cement dealership requires you to first understand how to become a dealer?
Becoming a dealer usually involves choosing the right product for your business, setting up a workplace, building your network, and eventually, promoting it for steady growth and higher returns.
One key factor when starting out is approximating the capital you can invest. Knowing your capital investment goals and estimated costs can help you decide if this is the best dealership business for you.
You have to consider your budget and plan accordingly. It’s best to not make any decisions you can’t afford. Try and speculate about various instances in the future like labour, transportation costs, and other fixed costs where you’d have to necessarily increase your capital expenditure.
Knowing how to start a dealership business is not enough. It requires consistency and continuous monitoring. Marketing and customer acquisition can be tricky due to the competitive landscape, but the returns are perfectly aligned if done suitably.
The outreach and potential of your cementing business will depend strongly on the brand(s) you choose to work with and the market you cater to. Understanding the market and perceived value of the brand you want to associate yourself with is as important as knowing your customer segment. Here’s a list of some of the top cement dealership companies.
- Ambuja cement
- UltraTech cement
- ACC cement
- JK cement
- Jaypee cement
Each of these companies would require you to make a security deposit somewhere in the range of Rs. 1-3 lakhs. If you want, you can choose to mitigate the dealership cost by arranging your cement from pre-existing dealers. Doing so will help you get a clear idea of what works and what doesn’t. You would typically stock products from different brands on rotation to have a look and feel of your market’s preferred choice. This is a sure-shot way of reducing risk and understanding your customer before you decide to go big on investments.
Type of Cement
There are essentially two types of cement:
- White cement
- Grey cement
Some companies tend to provide different dealerships based on the cement you choose to work with, while others might land you the same dealership for both. JK Cement, for instance, provides it separately to existing complementary businesses.
Finding a suitable location for your warehouse is as important as setting up your local shop in a client-intensive locality. Since no proper infrastructure is needed for your warehouse or your local shop, the costs are significantly lower. However, setting up your warehouse at a location vulnerable to humidity and damping can bear unnecessary costs to your business. Make sure you do thorough background checks when deciding your storage centres.
Knowing the documentation requirements is crucial in understanding how to get a dealership. While the documentation requirement may vary slightly from brand to brand, there are a few essential documents required by every brand. You should have these prepared on time to avoid any inconsistencies during the process.
- GST registration
- Land/rental agreement
- Standard dealership agreement
Some brands might also require a firm registration document from your end. Ultra Tech Cement, for instance, requires you to submit your MSME registration copy when establishing a dealership with them.
Estimating Market Potential
Now that you’ve understood how to start a dealership, it’s time to have a look into your consumer segment. Your consumer essentially decides the future of your business. Knowing and targeting the right consumer is invariably important to grow your business. Let’s have a look at the prospective consumers for a cementing business.
- Household - Cement is an irreplaceable commodity for household repairs and construction.
- Contractors - Look out for contractors in your area as they generally overlook the construction of commercial and residential spaces like offices, pavements, buildings, etc.
- Architects and Interior Designers - Architects require cement regularly to shape their designs and give form to their interiors. Good knowledge of architects and interior designers in your area can help scale your business fast.
- Retail Outlets - Your bulk orders depend on the availability of small retail clients in your locality. Effective targeting and marketing of your business can help you land significant bulk orders.
- Government Projects - Ongoing government projects such as highway bridges or sidewalk pavements have substantial cement requirements.
Also Read: Best Cement Brands in India
Before filling out your application for the dealership, there are some final factors you need to consider to make your process ideal.
- The manpower you would require per day with associated payroll
- Vehicle requirement for deployment at industrial/construction sites and the associated costs
- Water and power supply availability and costs at storage sites
- Knowledge of existing dealers in your locality
Filling Out Your Application Form
Following a thorough assessment of your market and allied business requirements, you should find yourself ready to submit the application form for registration. The application form asks you to mention four specifics in detail, which you should be informed about aptly; they are -
- Details of your acquired land for storage and other functions.
- Location of your local business office (address) and allied godown.
- Names of all the stakeholders of your business, excluding your workers and staff.
- Your capital investment cost.
Know Your Reasons for Starting a Cement Dealership
While there are a lot of dealership business ideas out there, starting a cement dealership is undoubtedly the most profitable, as it yields profits around 8%-9% on average for those associated with it.
The capital costs associated with starting a cement dealership business compared to other small business ideas are also relatively low. Moreover, the brand reputation you get to savour when associated with top brands is unparalleled. The cement industry is one of the few industries that remain unaffected by the recession, so it never lets you run out of business.
Bearing all this in mind, a cement dealership is inevitably one of the best businesses to start with.
Take the First Step
The best business ideas often look extremely intimidating on the surface. All you have to do is start. Once you pursue it, you will realise in no time that your decision was resolute. Take the first step and launch yourself into the market. With the knowledge you now have, all that’s left to do is make an informed decision.
1) How to Start a DJ business for Occasions in a Small Town?
2) How to Start a Lawn Care Tools and Gardening Tools Business?
3) How to Start a Logo Design Business?
4) OkCredit: All you need to know about OkCredit & how it works.
5) Cement Manufacturers in India
Stay updated with new business ideas & business tips with OkCredit blogs in English, Hindi, Malayalam, Marathi & more!
Download OkCredit now & get rid of your bookkeeping hassles.
OkCredit is 100% Made in India.
Q. Is cement dealership profitable?
Ans. The profitability of your dealership will depend on many factors. The supply and demand cycle of your industry, the geographical location of your business, the market goodwill of your product, manufacturer, and your competitive landscape are proficient indicators of your profitability. Your networking and liaisoning capabilities also define the success or failure of your business.
Q. How much investment is required to open a cementing business?
Ans. While there is no fixed amount for starting your cementing business, you should assume an initial investment of around Rs. 5-7 lakhs, irrespective of the brands you decide to associate yourself with. The numbers might vary according to your location and set-up, but you need the quoted capital to launch on average.
Q. How can I get an UltraTech cement dealership?
Ans. There are already a great number of dealers all across India. Companies such as Ultratech and ACC have placed their marks in almost every corner of the country. In case your locality is short of dealers or has no dealers at all, you stand a good enough chance to land a dealership. You must have at least a 3000 sq. ft. area and a godown with a holding capacity of a minimum of 5000 bags of cement. These numbers vary amongst different brands. Having a registered firm is also a prerequisite, along with a minimum security deposit. You can head over to the area office of Ultratech in your city to get more details.