Starting A Profitable Recycling Business

by Erich Lawson, online marketing manager at Northern California Compactors, Inc.

Over the past decade, consumers have become more sensitive about their contribution to environmental degradation through waste. As such, a growing number of consumers are turning to products made from recycled or recyclable materials. Such products offer them a way to help conserve the environment. Stringent regulations have also contributed to the drive towards use of recycled products and proper waste management and disposal practice. For the entrepreneur, this is a business opportunity.

The recycling industry has been growing at a considerable pace. A report published by IBIS World Recycling Facilities in 2015 forecasts growth of the recycling facilities industry in coming years. The growth will be primarily fueled by increased consumer awareness on environmental conservation and the introduction and enforcement of regulations that will require manufacturers to use more recycled products.

There’s no better time to set up a recycling business. This article will act as a guide to starting a profitable recycling business.

Why money is in waste.

The drop in commodity prices has triggered increased consumer spending. This in turn means more waste that needs to be disposed of. Most consumers are sitting on waste materials that they have no use for and would willingly give away to free up space. Setting up a recycling business would help get rid of the waste materials and earn you profit.

On the other hand, manufacturers are sourcing for recyclable waste for use in their manufacturing processes. Your business will essentially act as an intermediary between the consumer and the manufacturer. In theory, your business will source waste materials at a cheap price and sell it at a profit to the manufacturers.

However, you’ll need to lay down the foundations if your business is to succeed. Here are the basic things to consider.

What waste materials will you recycle?

The key to running a successful recycling business is finding recyclable materials that are in high supply (consumers) and in high demand (manufacturers). This will ensure that your business stays afloat even when the industry is in a meltdown.

Some of the waste materials to consider include plastics, cardboard, electronics and textiles. Metals are also a great option but usually require high initial investment and are highly regulated.

Financing your startup.

Compared to most industries, setting up a recycling business requires significantly less startup capital. Some of the basic startup costs you’ll need to consider include the following:

• Licenses
• Staff
• Trucks
• Waste-holding facilities
• Equipment

The best places to find financing for a recycling business include the government and environmental agencies. Unlike traditional bank loans, grants and loans from environment-conscious agencies are more flexible and attractive favorable interest rates.

Apart from getting loans and grants, you can also opt to rent or lease equipment such as trash compactors and balers. Some of the businesses offering this service don’t require down-payment which enables you to start your business with little capital.

What is required to start a recycling business?

Before starting your recycling business, you’ll need to consider the following.

Legal requirements.

First, consider the legislations that govern the handling and disposal of waste in your area. There are different laws that cover specific areas such as handling of waste, its transportation and health and safety issues.

You’ll also need to consider other legal issues such as licensing and your preferred business model.

Source of the waste material.

Your business’ success hinges on the availability of waste. At this point, you should consider what type of recyclable waste is readily available within your area. Before setting up shop, you must contact each source and verify their willingness to let you handle and dispose of their waste.

Equipment.

Having the right equipment will allow you to sort, process and transport waste materials efficiently. The type of equipment you invest in will largely be determined by the type of waste you recycle. For example, if your business will focus on recycling cardboard, a cardboard baler will come in handy. The most basic pieces of equipment include a crusher, baler and shredder.

Labor.

Most small recycling businesses start as a man-and-van operation. However, if you’re handling huge volumes of trash, a larger labor force might be necessary.

How will you collect the waste material?

Your business operations will involve collecting waste material, transporting it, sorting and processing it, storing and finally selling it to your clients. Most of these stages will require investing in trucks for transportation.

How you’ll collect the waste materials will largely depend on your agreement with your waste product suppliers. You can opt to collect waste from their premises (best for small areas) or, agree on a centralized point where the waste is deposited for collection.

Who will buy your final product?

At the end of the day, you’ll want to pass on the waste you’ve collected to the buyer. Most recycling businesses start even before knowing who will buy their product. As a result, they end up holding huge volumes of waste for extended periods of time.

Some of the possible buyers for your products include manufacturers, larger recycling businesses and even consumers.

How to make your operation efficient and profitable.

Your goal is to make profits by selling recyclable materials. Some of the easiest ways to maximize on profits include the following.

• Lease or rent equipment rather than buy them
• Opt for automated equipment to cut down on labor needs
• Ensure that you meet legal requirements before starting the business to avoid fines and legal procedures
• Focus on recycling materials that are in constant supply and in high demand

In a time where manufacturers and consumers are shifting focus towards recycled products, starting a recycling business can be a profitable venture. How successful your business becomes depends on how much work you put in to lay its foundations. By following the steps mentioned in this guide, you should be able to start a recycling business that turns a profit from the word go.

Erich Lawson works with Northern California Compactors, Inc. as an online marketing manager and writes on a variety of topics related to recycling, including tips and advice on how recycling machines can be used to reduce industrial waste. He loves helping businesses understand how to lower their monthly garbage bills and increase revenue from recycling.