We earn commissions if you shop through the links below. Read more
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on December 21, 2021
Investment range
$7,550 - $16,100
Revenue potential
$215,000 - $700,000 p.a.
Time to build
1 – 3 Months
Profit potential
$170,000 - $280,000 p.a.
Industry trend
Growing
Commitment
Flexible
Here are the most important things to consider when starting your junk removal business:
A junk removal business has pros and cons that you should consider before deciding if the business is right for you.
Eco-friendly junk removal has been in greater demand of late, as people want their junk recycled or donated rather than in a landfill. The EPA reports that in 2018 over $145 million tons of solid waste went to landfills.((https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/national-overview-facts-and-figures-materials#Landfilling)) About 80% of that waste could have been recycled. The amount of solid waste that went to landfills no doubt increased in 2020 during the pandemic as most people stayed at home.
Demand for junk removal services is rising due to these trends:
The industry also faces challenges:
Startup costs for a junk removal business range from $7,500 to $16,000 or more. The largest expense is the down payment on a vehicle, so your costs will depend on how large and how new a vehicle you want to start with. You can always get a larger truck later, once your business is up and running.
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corportation | $150 - $200 | $175 |
| Licenses and permits | $100 - $300 | $200 |
| Insurance | $100 - $300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Equipment such as dollies | $1,000 - $2,000 | $1,500 |
| Down payment on a truck to haul junke | $5,000 - $10,000 | $7,500 |
| Total | $7,550 - $16,100 | $11,825 |
For more details on acquiring a truck in order to start a business, you could check out Step By Step’s articles on starting a dump truck business and on starting a box truck business.
Totals vary by load size, but the average price of a junk removal job is $230. If you start out as a solopreneur, working out of your home, your profit margin should be about 80%.
In your first year or two, you could do three jobs a day six days a week and bring in $215,000 in annual revenue. This would mean about $170,000 in profit, assuming that 80% margin. As your brand gains recognition, you could rent an office and hire staff, reducing your margin to 40%. But if you and your crew can do 10 hauls a day, you’d see annual revenue of more than $700,000, and a tidy profit of $280,000.
There are a few barriers to entry for a junk removal business. Your biggest challenges are:
Now that you know what’s involved in starting a junk removal business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research junk removal businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a green junk removal service, or one that operates 24/7 and offers emergency pick-up.
You might consider targeting a niche market by specializing in a certain aspect of your industry such as hazardous waste removal.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You need to create a list of your offerings. You could offer:
Junk removal jobs run from $100 to $800 per truck load, with a national average of $230. Your prices should be based on the size of the load and the time required. Your costs will be hired labor, overhead, and fuel. When you’re on your own you should aim for a profit margin of about 80%, but once you rent out a space and hire staff, you can expect a margin of 40%.
Once you know your costs, use the Step By Step profit margin calculator to determine your price points.
Your target market will probably be homeowners, but you could also do commercial junk removal. You can probably find both of those groups on Facebook or LinkedIn.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a sorting facility. Find commercial space to rent in your area on Loopnet, Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to junk removal businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your junk removal business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
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 be 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.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than personal, for funding a junk removal business.
Starting a junk removal business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business 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.
If you have a box truck for hauling, you’ll need to obtain a commercial driver’s license from your state DMV. You’ll also need a Department of Transportation number and a Motor Carrier Authority number, both of which you can get by registering with the Federal Motor Carrier Safety Administration (FMCSA). Finally, you’ll need to complete a unified carrier’s registration.
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 check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a 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 junk removal 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 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:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You can use industry-specific software, such as Soft-Pak, Trash Flow, or Jobber, to manage your scheduling, quoting, and invoicing.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. 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.
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.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your junk removal business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Signature USPs for your junk removal business could be:
It’s also a good idea to optimize calls to action. Experiment with text, color, size, and position of calls to action such as “Schedule Now”. This can sharply increase purchases.
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a junk removal business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working as a junk removal operator for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in junk removal. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a junk removal business would include:
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, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Junk removal is a big industry with big opportunities! And at $230 a load you can bring in healthy revenue. Junk removal is a service that almost everyone needs at some point, so there’s no shortage of potential customers. You could eventually have a fleet of trucks and a large crew and make a very comfortable living as the master of junk!
You now have the knowledge you need, and should be ready to start hauling your way to entrepreneurial success.
Yes! A junk removal business can be very profitable. Prices for junk removal range from $150 to $350 per load, so even if you do just 3 loads a day at an average of $250 per load, you’ll be in the money!
Junk removal laborers generally make $13 – $14 per hour. You should check other junk removal businesses in your area to see what they pay to ensure your wage is competitive.
You can generate more leads by building local partnerships, targeted advertising, utilizing lead generation websites, and offering customer incentives to attract new customers.
Ensure safety by providing comprehensive employee training, appropriate safety equipment, conducting risk assessments, and obtaining sufficient insurance coverage to protect your employees and customers.
Differentiate your junk removal business by focusing on green initiatives, promoting responsible disposal and recycling, offering specialized services, and providing exceptional customer service to stand out from competitors in the market.
Published on December 1, 2022
The services sector is undoubtedly the biggest economic sector in the US as it accounts for nearly 70% of the country’s gross domestic product. It ...
Read Now
Published on July 29, 2022
Just about everybody wants to live in a warm, welcoming close-knit community, and you can help build one by starting a business that helps peopleliv ...
Read Now
Published on July 14, 2022
Demand for cleaning services in both homes and offices surged in the last two years because of the COVID-19 pandemic. It is expected to remain higha ...
Read Now
No thanks, I don't want to stay up to date on industry trends and news.
Comments