How To Start A Profitable Recycling Business From Home?

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Some of the best ideas for businesses come from the desire to have a social purpose

A recycling business fills that bill – you can do something good for the environment by keeping recyclables out of landfills, and you’ll make a good living at the same time. If you’re interested in starting a recycling business from home, read on.

What do recycling businesses do?

There are three types of recycling businesses:

  • Collectors – Gather, sort, store, and deliver recyclables such as plastic bottles
  • Processors – Recycle used materials before passing on to manufacturers
  • Producers – Take raw material from processors and create products

If you run your business as a collector, your costs will be minimal.

How To Start A Profitable Recycling Business From Home

You’ll need the following:

  • Business registration cost – Approximately $100, depending on your state
  • Recycling business licenses and permits – $100 - $300
  • Business cards - $100
  • A website - $1,000 - $3,000

You’ll also need a truck to transport the recyclable materials you collect.

 How much can you make?

Recycling facilities will pay you for the materials you collect. How much they pay varies by the type of materials and can range from $25 to $75 per ton.  

That sounds like a little for a lot, but you’d be surprised how quickly the weight of paper, plastic, and metal items can add up. 

So, if you collect 20 tons a week at $50, that’s $52,000 in revenue per year.

You can also make money from the people that you collect the recyclables from. You may be able to collect a fee of about $25 per month from each customer, so if you get 100 customers, that’s an additional $30,000 in revenue per year.

Target market

You’ll have two target markets – the people you pick up the recyclables from, and the recycling facilities

You should market to both on social media, on sites like TikTok, Instagram, Facebook, and LinkedIn. You can also call the recycling facilities directly. 

How to conduct your recycling business

The first thing that you’ll do is contact recycling facilities in your area to find out their procedures for accepting recyclables

They will tell you how the materials need to be sorted and the process for bringing the items to them. They will also tell you if you need to sign a contract with them in order to get paid for the items you collect.

The next step is to market your pick up services to homeowners and businesses. As you start to get clients, you’ll put together pick up routes to collect the recyclables with your truck. 

The things you can collect include:

  • all newspaper
  • cardboard
  • plastic jugs and bottles
  • all colors of glass
  • aluminum cans
  • other bi-metal products

Each day after you make all your collections, you will follow the recycling facility’s procedures and drop off the items

As you get more pickup customers you’ll eventually need more trucks and drivers. 

Create a business plan

A recycling business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals.

Create a business plan

A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Brief overview of the entire recycling business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your recycling services and products in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth.
  • Competitive Analysis: Analyze main competitors in the local recycling market, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of the management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.

Select your business structure

Recycling business entities come in several varieties, each with its pros and cons. The legal structure you choose for your recycling business will shape your taxes, personal liability, and business registration requirements, so choose wisely

Here are the four main options:

  • Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner: you get to keep all the profits, but you’re personally liable for all debts.
  • Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses.
  • Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.

Obtain an EIN

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more.

Keep in mind, if you’ve chosen to structure your recycling business as a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month.

This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Get financing

Securing financing for your recycling business is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
  • Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

For a small recycling business, a bank loan is probably your best bet. 

 Licenses and permits

Starting a recycling business requires obtaining a number of licenses and permits from local, state, and federal governments.

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The licenses and permits that you’ll need depend on where you live, so it’s best to find local assistance. But to give you an idea of what you need, here are some that might be applicable:

  • Storage and recycling permit
  • Hazardous material permit
  • General business license

Federal regulations, licenses, and permits associated with starting your business also include doing business as:

Health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level licenses and local county or city-based licenses and permits

The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. You could also check this SBA guide for your state’s requirements. 

 Business bank account

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your recycling business as a sole proprietorship. 

Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you.

Once you choose your bank, bring in your EIN (or Social Security Number) if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Business insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

 Website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your recycling expertise and professionalism

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable but figuring out how to build a website can be time-consuming.

If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.

Market your business

You’ll need to get the word out about your recycling business.

Market your business
  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Schedule Now”. This can sharply increase purchases.
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
  • Flyering – Distribute flyers in your neighborhood
  • In-Person Sales – Offer your collected recyclables to local recycling facilities
  • Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal.
  • Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
  • Seek out referrals – Offer incentives to generate customer referrals to new clients.
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Pay-per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
  • Make a podcast – This allows you to make a personal connection with your customers
  • Create infographics – Post infographics and include them in your website content

Hire employees

If you’re starting out small, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a recycling business would include:

  • Collectors
  • General Manager
  • Accountant
  • Marketing Lead

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business

You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn or Facebook. 

You can also use free classified sites like Jobs and AngelList. You might also consider a premium recruitment option, such as advertising on IndeedGlassdoor, or ZipRecruiter.

Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

In closing

The recycling industry in the U.S. is worth over $7 billion, and you could get a share of that market with your own recycling business.

You’d also be helping people dispose of their recyclables and doing something incredibly valuable for the environment

It’s a business that you can start and run from home, and the only real cost to start is a down payment on a truck to transport materials. 

Now that you understand what’s involved, it’s time to get your recycling business up and running!

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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