How to Become a Lumber Broker
A lumber broker is a professional who facilitates the sell of timber between growers, sawmills, lumber yards and consumers. They can work for themselves or as part of a team for a large brokerage firm. Working on commission, a thriving lumber broker can earn in excess of $100,000 per year. There are training and education requirements and sales experience is a definite plus, but there are steps to minimize risk and become a successful lumber broker.
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Instructions
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Obtain a commodities broker's license. A broker, according to the Securities Exchange Commission (SEC), "Is any person engaged in the business of effecting transactions in securities for the account of others." Registering with the SEC and passing a Series 3 exam to assess your current knowledge of contracts, options and commodity markets are prerequisites.
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Raise capital, if needed. Whether you need start-up funds will depend on where and how you plan to work. If you work for a brokerage firm, as part of a team, or independently from home, costs will be minimal. However, if you choose to lease an office, start-up costs can easily exceed $5,000. Apply for a small business loan through your bank or local credit union. In an effort to keep costs down, many independent lumber brokers work out of a home office in their first 18 months in business.
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Build relationships with several sawmills. They will be your primary source of lumber. The work you're able to obtain will heavily depend on the impression you make, your experience and the current state of the economy. A commodity is a product, which is of uniform quality and traded across various markets. This means fluctuations in market conditions can affect the demand and price of lumber; so be prepared. When the economy is thriving, sawmills can easily sell timber without a broker's assistance. However, sawmills will eagerly seek the help of qualified lumber brokers when the economy begins to slow down.
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Promote your services. Contact lumber yards and get your name out. No one will do business with you if they don't know you exist. Make if easy for customers to find you with an impressive website. In a 2008 Forbes article, Melanie Lindner writes, "Entrepreneurs can't just build websites these days -- they have to build great ones that truly snag viewers and turn them into paying customers." Try to work only with organizations that are buying in bulk. This will increase your earnings and help solidify your reputation as a professional within the industry. Do not neglect growers. Lumber brokers serve primarily as middle-men between sawmills and lumber yards, but commissions can also be earned by negotiating terms between growers and sawmills.
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References
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