How to Start an Effective Recycling Business in 3 Steps
A recycling business is a great idea if you are someone who wants to devote their time and energy to a worthy cause like helping the environment. But you may be wondering, is this something that I can do full-time? Could a recycling business really be all that profitable?
When done correctly, running a recycling business can indeed be a profitable, full-time job. It can be quite the task, though, as well as a rather competitive industry to break into successfully.
Fortunately, if you want to know how to start a recycling business, you have come to the right place. Follow our guide to help you figure out where to begin, and you will be reducing, reusing, and recycling for profit in no time!
Step 1: Do Your Research
What Materials Should I Recycle?
Since the recycling industry is a rather competitive one, this is an important question. Do your research to find out if there is a niche that needs to be filled when it comes to recycling in your area. If you want your recycling business to be profitable, you need to provide a service that is in demand.
First, figure out what recycling businesses are in your area and what services they offer their customers. Then, identify any gaps in the industry. Does the community need a plastic recycling business, for example? What kinds of raw material or recyclables need to be collected in your area?
There are so many different things your recycling business could focus on, such as:
- Collecting and reselling used items, such as working appliances, electronics recycling, and furniture.
- Gathering materials such as plastic and paper and selling them to processing facilities.
- Waste Hauler. Collecting items that are difficult for people to dispose of, like broken appliances and electronics, and removing the recyclable parts.
- Gathering scrap metal and reselling to larger recyclers.
After determining the materials your business will recycle, you will need to do even more research. Find out where you can sell them, what kind of volume is available in your area, and how much you can charge for the materials. Keep in mind that the going rate for recyclable materials can change substantially, so be prepared for changes in your profit margins.
Do I Need Any Licenses or Permits to Open a Recycling Business?
You will likely need a business license, but the requirements for one vary from state to state. The easiest way to check the requirements in your area would be to do an internet search, but if you cannot find what you are looking for, get in touch with your state’s Secretary of State office.
In addition to the business license, you will likely need to apply for permits to operate a profitable recycling business. The exact requirements will depend on various factors such as your area, the recyclable material you plan to collect, and if you plan to process and/or sell them to the public, but some examples of permits may include:
- Special environmental permits for wastewater and air emissions.
- An annual permit and report for the Department of Environmental Protection
- Permits for your commercial vehicles from the Department of Transportation
Step 2: Figure Out Your Costs
What Are the Startup Costs for a Recycling Business?
This really depends on how you are planning on operating your recycling business. For example, it is generally cheaper to have customers drop off their recycling at your recycling center rather than providing curbside pickup services waste hauler services.
If you plan on just accepting drop-offs at your recycling center, you will likely require less staff and have fewer vehicles on the road at any given time.
That being said, some basic startup costs apply to nearly every kind of recycling business.
- A processing facility. If you have the space, you could do something like this in your garage, but that is not an option for everyone. If you plan to have customers do drop-offs themselves, you want to make sure your facility and recycling company are accessible to the public. Accessible real estate can be expensive, though, so make sure you can afford a recycling plant or center in the long run if you choose to go this route.
- Drop-off points. If you want to have something like dumpsters in place for people to deposit their recyclable materials.
- Employees. (Unless you are starting really small and just doing things on your own)
- Equipment. The kind depends on what you are doing in your business. For example, you may need machinery like crushers, shredders, forklifts, balers, and scales if you are processing recyclables. Then, if you are also collecting, you will need vehicles.
It can be expensive to start a recycling business, with a rough estimate being between $20,000 to $30,000 for your first month alone! If you do not have this kind of money on hand, look into government loan programs. Since your business helps both people and the environment, you may qualify for a low-interest loan.
What Are the Ongoing Expenses for a Recycling Business?
Fortunately, the ongoing expenses are typically not nearly as much as the startup costs of operating a recycling business. Since people are largely providing your products for you, you mainly just have to worry about your rent, utilities, fuel costs, employees (if any), and general upkeep of your vehicles and machinery.
Step 3: Make a Profit
How Much is the Recycling Industry Worth?
In 2019, the global waste recycling services market size (which is mainly made up of paper and paperboard, metals, and plastics) was worth approximately $53.71 billion in USD.
What is the Growth Potential for the Recycling Industry?
With people becoming more aware and concerned about their impact on the environment, the global waste recycling services market is expected to grow at a CAGR (Compound Annual Growth Rate) of 5.2% from 2020-2027.
How Do You Market a Recycling Business?
The first step is to identify your target market. Now, nearly everyone has at least something to recycle, so your target audience will depend on the materials you have chosen to specialize in for your business. If you are recycling household items, for example, then you will want to market to local residents in your community.
If you are recycling something like paper or plastic, then you probably want to target businesses instead, since a lot of individuals probably get rid of their recycling through their city’s recycling program.
After you have identified your target market, you can start advertising to potential customers. In general, it is a good idea to set up a website and social media page for your business. This can be relatively inexpensive, and since many people are online and log in to their social media pages regularly, you will be able to reach both individual households and businesses in some capacity.
Though it is essential for your business to have some kind of online presence, it is also not bad to use more traditional methods like posting flyers and advertising in print. However, if you are targeting businesses, you may also want to take this a step further and contact them directly, whether in-person or cold calling.
Business owners may appreciate a more personal touch, and this allows them to also ask questions to you directly to see if you really can meet their specific needs.
How Much Should I Charge for Recycling Services?
This again depends on what services you are offering to your clients. If you are doing a general recycling pickup service to individual households who do not already have their recycling picked up by their local municipality, for example, the average price charged can be around $5-$25 a month. Some companies also tack on an additional charge of $2.50-$7.50 per bin if customers exceed the agreed-upon limits.
While some recycling business owners may have to charge for their services to make a profit, it is good to avoid it if possible. In the recycling industry, you typically make money from reselling the materials you collect, not by charging your customers for collection. Therefore, it may actually cost you more time or money if you do things this way.
For example, if you have a paper recycling business and charge customers for your services, you may end up getting a lot of garbage mixed in with their recyclable paper. On the other hand, if you are taking away their paper for free, it makes it easier to require that customers sort their recycling properly to take advantage of your services.
Any Other Tips for Jump Starting a Recycling Business?
You bet! Here are some other tips to get your recycling business off the ground:
- If you plan to offer dumpsters for customer drop-offs, try to put them in highly visible, high-traffic areas. If they are located in convenient places, people will be more likely to grab their stuff from home to drop it off on the way to doing something else.
- Consider reaching out to volunteer groups that focus on the environment. They may be willing to pick up recyclable materials free of charge.
- If your profit margins allow for it, partner with a local charity, especially those focusing on the environment. People may be more willing to put in any extra effort to recycle through your company if they know their donations will also be supporting a worthy cause.
Read our general guide on how to start a business for more in-depth information regarding licensing, naming your business, and getting it off the ground.
Be sure to check out our other posts for more ways to start your side hustle!