The recycling industry has many different opportunities for someone who wants to start a small business. If you are considering starting a small business, starting a recycling business is not only profitable, but it also helps the environment. Starting a business can be a big undertaking that takes a lot of hard work. Starting a recycling business is not as simple as putting some bins around the city and collecting what people drop off; a lot more goes into it than that. If you are going to start a recycling business, this article shares how to get started on a new recycling business.
Step 1: What do you want to recycle?
When people think about recycling, they usually think about breaking down cardboard boxes and putting a bin at the curb, but there is so much more to recycling than that. Let’s look at some of the types of recycling businesses that you could open.
- Food waste: Billions of pounds of food get thrown away every year. If you open a recycling business that can process that somehow, you can make a difference.
- Glass: Glass is a common material to recycle because it is so easy to melt down and turn into many things.
- Plastic: This is one of the most common types of recycling, so it can be a good thing to focus on for a recycling business.
- Paper: Recycling paper is easy and common to do. It has minimal costs, so it can be pretty profitable.
- Clothes: Secondhand clothing has made a big comeback in recent years, so it can be a profitable recycling business. You can sell secondhand clothes or upcycle the material from old clothes into something entirely new.
- Ink Cartridges: Ink cartridges can take up to 1,000 years to decompose, so having them end up in a landfill is not good for the environment. You can run an ink cartridge recycling business that not only collects old cartridges but also allows people to refill their empty cartridges and buy ones that you refill from the empty ones people are recycling. This can save your customers money and be quite profitable for you.
- Computers: Computers are mostly made of metal and plastic, so they can be taken apart and recycled.
- Scrap Metal: Metal recycling businesses typically have pretty low costs and need a few tools to work, so this can be a low-cost, high-profit recycling business.
- Batteries: Batteries need to be recycled, not thrown away, so a battery recycling business can be beneficial to the environment.
- Tires: Tires can be melted down and made into other materials, which saves them from taking a long time to decompose or polluting the air by burning them.
What type of recycling does your city need?
Take some time to research the recycling businesses in your area before you settle on what you plan to recycle. You do not want to start a niche recycling business if there are already others of that type in your area. There are enough niche types of recycling businesses out there that you should be able to find one that will work for you and be profitable.
Research Incentives from the EPA and Government
The Environmental Protection Agency (EPA) and other governmental agencies may offer special grants or loans for your recycling business, which can help you with the costs of getting started. The startup costs for any small business can be pretty high for the first few months, so any extra funding you can get for your recycling business is good. The incentives vary depending on your state and the type of recycling business you are starting, but this research is important when you are just starting out.
Step 2: How do you want to collect recyclable materials?
There are a few ways that you can choose from to collect the materials your business will be recycling.
- Drop off: You can have a facility where people will bring you the materials that they need to recycle. Another style for drop-off is that you can choose to have some drop-off centers around the city and a team to collect them regularly.
- Pick up: You can have recycling bins in the city with a team that will collect them regularly, depending on the schedule you set.
You can do a combination of those methods, too; you are not stuck with just one.
Step 3: What are your startup costs?
Your startup costs will vary depending on the type of recycling business you will be running. The materials themselves that you will be recycling will be a big factor in your startup costs. If you have people drop off the materials to recycle, you will have a lower cost than if you start out offering curbside pickup for your materials. However, it might make it harder to get people to choose to recycle their objects with you since it means they have to drop things off at a facility. Some of the things you will need to factor into your startup costs are:
- Processing facility
- Drop off stations
- Recycling bins
- Equipment
- Utilities
- Transportation
- Licenses and certificates
Step 4: Write a Business Plan
Now that you have done the research into your recycling business, you are ready to put together a business plan. Your business plan will help you determine your needs as you proceed with starting this business. It is also necessary if you plan to take out any small business loans. A business plan should include the following:
- The goals of your recycling business.
- Your niche and services.
- How you will structure the business.
- How you will process the materials and, if applicable, you will sell products.
- How much money you need, what it is needed for, and how much you need to borrow.
- What makes your recycling business unique.
- A market analysis and competition research.
- Your projected profits.
- Your plan to market the business.
Step 5: Secure Financing
Now that your business plan is done, you can start working on securing financing to open. You can apply for traditional loans through a bank or the Small Business Administration. You can also look into EPA incentives to help with financing, as we mentioned above.
Step 6: The Legalities of Start a Recycling Business
There are quite a few legalities that you will need to navigate to start your recycling business.
Business Structure
You need to choose what your business structure will be. You are probably not starting a corporation, so the structures you need to know about are sole proprietorship, partnership, and LLC.
If you are the only owner of the business, your recycling business is likely to start as a sole proprietorship. They offer the best tax benefits; however, you will be held personally liable for the business and its debts. If you have business partners, you can open a partnership. If you do not want to be held personally liable for the business and its debts, then you should consider opening an LLC or limited liability company.
Each business type will require you to file different forms to register your company. Consult an attorney for any questions you may have about forming your business structure.
Register Your Recycling Business
You will need to register your recycling business with your local government as well as with the IRS. If you are going to have employees, you will need to obtain an Employer Identification Number (EIN) from the IRS too.
As part of registering your business, you will need to obtain a business license. You can usually get one through your local government.
Obtain Permits
Every state has different requirements for what permits a business is going to need to operate. Look into all of the permits your city and state require you to have before you get into business. There may be extra requirements for you as a recycling business, depending on what your niche is. For example, if you handle hazardous materials, you might have to get special permits.
Read Also: Top Challenges for New Businesses
Step 7: Find a Space
You will need a building to store and process your materials, so you can buy or lease a building. Since you are opening a recycling business, if you want to own your building, consider buying a custom steel building. Steel is nearly 100 percent recyclable, making steel the greenest, most eco-friendly building material available. This is the perfect choice to house a recycling business.
Make sure you spend some time researching zoning laws in your area; there might be specific ones in place for your business.
Step 8: Hire Employees
You are most likely going to need employees to help you run your business, especially if you are going to be reselling the materials that you recycle. You will need people to pick up the recyclables and process them for you. It is also a good idea to consider hiring a bookkeeper and someone to help with your marketing.
Step 9: Spread the Word
You will need to get the word out there that your business exists. Set up a website, get on social media, use flyers, and take out ads to get the word out about your business.
You should also reach out to local businesses to try to start an agreement with them to recycle through you. This is a great way to help spread the word about your business and help you build credibility with your community.
Final Thoughts
The recycling industry can be a highly lucrative one. Opening a recycling business is not just a profitable venture, but it also helps the environment, making it a great business idea. There are many opportunities for recycling businesses, so you have a lot of choices when you get started.
