Starting a green business like a recycling company can be both profitable and fulfilling.
Recycling is a way to do well financially while doing good for the planet. Each person in the U.S. creates, on average, 4.9 pounds of trash per day. Half of that trash ends up in landfills. Your recycling business can help reduce that waste.
The idea behind a recycling business seems simple: Somebody has a product they no longer need and they are willing to give it to you for free or at an extremely low price. Sometimes they will even pay you to pick the item up. You then take that item and turn it into something you can sell, hopefully at a considerable profit. It's a win-win-win. The consumer gets rid of an unwanted item. You get something for free that you can turn a profit on. And the planet benefits because that would-be trash doesn't end up in a landfill.
Like any small business, starting your own recycling enterprise takes planning. You will need to determine which products you can gather and recycle, how you are going to dispose of them, and how you are going to manage all of the accounting and tax-related tasks that every small business owner must oversee.
The following covers what you need to know in order to get your recycling business off the ground.
Create a Business Plan for Your Recycling Business
Creating a business plan is an important first step in any new small business venture. Factors to consider for your startup recycling business include:
- The type of recycling business you want to start
- The type of facility you will need and where it will be located
- What it will cost to run your business and what your potential revenue streams will be
Decide What Type of Recycling Business You Want to Start
The first thing you will need to consider is what type of recycling business will work for you. What you choose to recycle will depend on the availability of the products you will collect, the market for these products as recycled items, and how saturated that particular recycling market is in municipalities close to you.
Some examples of potentially profitable recycling businesses include:
- Collecting materials like aluminum, paper, and glass to sell to facilities that reprocess these items
- Collecting used furniture, appliances, office equipment, and other types of durable goods with the intention of repairing, refurbishing, and reselling them
- Collecting used textile products - such as clothing, upholstery, towels, blankets, and carpets - and either reselling them directly to consumers or selling them in bulk to manufacturers who recycle them back into raw materials
- Picking up used mattresses and selling them to mattress recycling plants
- Collecting items like broken electronics to harvest and sell their electronic waste as recyclable components
- Recycling and refilling printer ink cartridges
- Collecting used tires and selling them to tire recycling plants
- Collecting used batteries and either harvesting and reselling and using parts yourself or selling them to a battery recycling facility
Choose the Type and Location of Your Recycling Facility
Once you collect - or people drop off - the items you are going to recycle, you will need a recycling center (a place to stage, store, refurbish, or offer the items for retail sale). For some smaller items that you can take directly to a recycling facility, you don't need an actual operating location, just a truck or van large enough to haul the goods. If you are planning to refurbish items yourself, you will need a workshop. And if you are going to sell recycled goods directly to consumers to reuse, you will need a brick-and-mortar storefront, an online store, or both.
If you plan to create your own recycling plant that breaks down the recycled matter for subsequent use in the manufacturing of new products, you will have to consider the cost of building and maintaining the facility, as well as any expertise needed for reconditioning or processing. You will also need to take zoning issues into account. Along with local business permits and licenses (discussed below), you may also need special Environmental Protection Agency (EPA) permits if you are handling hazardous materials.
Conduct a Recycling Business Viability Analysis
Before offering your recycling services or committing to working with certain recyclable materials, you will want to conduct some recycling industry market research, focusing on the niche you plan to penetrate. This will assist you in determining the viability of your recycling business plan in your area, identifying potential revenue streams, and projecting potential revenue.
For example, the aluminum industry has invested over $4 billion in the last decade in the US, and the market for recyled scrap aluminum is growing. While more than 110,000 aluminum cans are recycled each minute, hundreds of millions of dollars worth of aluminum is still placed in landfills each year. It is clear that - given the right circumstances - aluminum recycling can be a continuous and viable business.
However, if you are in a community that already has aluminum recycling infrastructure - either through the local government or a private enterprise - the market may already be so saturated that there is little additional opportunity for your business. You will want to do this kind of viability analysis for the items you plan to recycle.
Create a Budget for Your Recycling Business
Once you have determined that your recycling business will be viable from a market competition standpoint, you will need to undertake an additional cost-benefit analysis before embarking on your recycling venture. After planning for how you will cover your startup costs, you will need to estimate:
- Your ongoing operating expenses, including recurring overhead costs
- What your net working capital needs are
- How long it will take you to reach the break-even point for your business
This information will help you determine whether you can bootstrap your business or will need to seek partners and investors to help you get your business off the ground.
Taking the First Steps as a Recycling Business
After you complete the planning stage, it is time to consider the operational aspects of your business. You will need to:
- Create a legal structure for your recycling business
- Make sure you have a business license and any necessary permits
- Plan for the day-to-day operations of your recycling business
Legal Structure for Your Business
You can choose from several types of legal structures for your business - a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. Factors to consider when choosing the right structure include how many owners there will be, the potential for personal liability exposure, and tax issues.
Generally speaking, corporations can shield you from liability but will cost you more in taxes. Sole proprietorships and partnerships may be your best bet from a tax perspective but do not protect your personal assets from business creditors. LLCs are a comfortable middle ground for many small businesses as they offer some liability protection while also providing some tax benefits.
If you decide to form a corporation or an LLC, you will need to decide which state you will form your company in and then follow that state's requirements as you:
- Choose an available business name
- Appoint directors
- File your articles of incorporation/organization
- Pay a filing fee
- Create corporate bylaws/operating agreement
- Issue stock to all stockholders (for corporations)
Most states have a division of corporations website you can access that will walk you through these steps.
You will also need to make sure that you procure any permits or licenses for your business. Your state division of corporations should also be able to help you determine what permits may be needed. As mentioned, you may need to obtain additional permits from your state EPA and the federal EPA depending on what direction you take your recycling business.
Before you open a business bank account, enter into business contracts, hire employees, or conduct any other business in the company's name, you may need to obtain a federal tax identification number. You may also need a state tax ID number depending on the state where you are operating and the nature of your enterprise.
Create a Marketing Plan
Regardless of the type of recycling business you decide to create, you are going to need to form a comprehensive marketing plan that addresses how you will source your recyclable goods and how you will find purchasers to turn them over to for profit. You might want to consider:
- Creating a business website to give your venture credibility and to provide your background story and contact information
- Establishing a social media presence for your business on sites like Facebook, Instagram, and LinkedIn to connect with customers and people interested in offering you their goods to recycle
- Creating a Google My Business account to make it easy for people to find your business
- Issuing press releases about your business to get local media interested in picking up and publishing your story
- Targeting digital advertising on search engine platforms like Google and/or social media sites to let people know that you will recycle their goods for them and/or sell them recycled goods
- Producing and distributing flyers extolling the benefits of your recycling business and how people in the community can participate
Set Up Operational and Accounting Systems
Fortunately, Skynova offers ready-to-use business templates that you can immediately use to track important business transactions. In addition, our accounting software makes running your business easy, even if you don't have an accounting or finance background.
Make Your Recycling Business Run With Skynova Templates and Software
Entering the recycling business can be fulfilling, but it can also be an uphill battle. There is a lot to consider - from which types of goods you want to recycle to how to establish yourself in the recycling industry. The last concern you should have is how to effectively manage your small business accounts as you get your venture off the ground.
That is where Skynova comes in. Skynova's suite of software products and business templates is specifically designed to help new business owners like you. With Skynova's business solutions, you can free up your time to focus on your real objective: making a profit while saving the planet.