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How to Start a Recycling Business

Written by:

Esther is a business strategist with over 20 years of experience as an entrepreneur, executive, educator, and management advisor.

Edited by:

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.

How to Start a Recycling Business

Fast Facts

Investment range

$156,550 - $184,100

Revenue potential

$300,000 - $700,000 p.a.

Time to build

3-6 months

Profit potential

$120,000 - $210,000 p.a.

Industry trend

Growing

Commitment

Full-time

A recycling business is the entrepreneurial equivalent of killing two birds with one stone: it has good money-making potential AND it’s a good thing to do for our world. By starting a recycling business you’ll be fighting climate change while setting yourself up to make a good living.

Of course, starting any business takes determination and hard work. The key is gaining the relevant knowledge and moving patiently through the launch and development process, as detailed in this step-by-step guide.

Read on, and you’ll soon be on the road to recycling business success!

Step 1: Decide if the Business Is Right for You

Before delving into the world of recycling, let’s look at it from a general perspective.

Pros and cons

To gain a balanced view of the recycling industry, let’s look at the positives and the negatives. 

Pros

  • Join growing global fight against climate change
  • You’re the boss — choose your specialization, work when you want
  • Growing industry with huge potential

Cons

  • Capital and labor-intensive
  • Small margins and limited profit potential
  • Underdeveloped recycling infrastructure

Recycling industry trends

A look at Google Trends for the search term “recycling services” shows consistent interest over the last five years((https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=recycling%20services)). 

Industry size and growth

recycling industry size and growth

Trends and challenges

recycling business Trends and Challenges

The latest trends in recycling are:

  • Paper and paperboard wastes are declining, while plastic waste is increasing. 
  • Public awareness about recycling is increasing.

Some of the challenges are:

  • Finding CDL drivers and helpers 
  • China’s National Sword policy which cuts imports of recyclable waste

Popular materials

Nearly 70 million tons of municipal solid waste in the US were recycled in 2018, according to the Environmental Protection Agency. These are the most common materials that are recycled.((https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/national-overview-facts-and-figures-materials#NationalPicture))

  1. Paper and paperboard (66.5%)
  2. Metals (12.6%)
  3. Rubber, leather, and textiles (6%)
  4. Wood (4.49%)
  5. Plastics (4.47%)

What kind of people work in recycling?

recycling industry demographics

Among the workers in recycling are the collectors. 

How much does it cost to start a recycling business?

Starting a waste collection business will be your cheapest option because you won’t need to process any material. For a collection business, you’ll need $20,000 to $30,000 to get started.

Here are a few things that you’ll need:

  • Licenses
  • Staff 
  • Vehicles
  • Warehouse
  • Equipment

If you’re looking to start a small production or processing business, you’ll need an investment of about $170,000. On the higher end, you’ll be looking at $3 million and up. 

You’ll need a handful of items to successfully launch your recycling business. Here’s a list to help you get started:

  • Vehicles
  • Conveyors
  • Hydraulic lifts
  • Industrial loaders
  • Magnets
  • Cranes
  • Vibratory feeders
  • Recycling screens
  • Balers
  • Compactors
  • Pulverizers
  • Grinders

Ensure that you have all the necessary equipment before you start your business; otherwise, you could end up with delays.

Here’s an idea of what your investment will cover:

Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Business licenses and permits$100 - $300$200
Insurance $100 - $300$200
Business cards and brochures$200 - $300$250
Recycling plant$40,000 - $50,00045000
Equipment$85,000 - $90,00087500
Vehicles$30,000 - $40,000$35,000
Website$1,000 - $3,0002000
Total$156,550 - $184,100$170,325

How much can you earn from a recycling business?

recycling business earnings forecast

Recycling advocate Green Biz estimates that the cost of processing a ton of recycling material is $75. In addition, you’ll need to evenly split any income above this mark with your local municipality. 

Roughly speaking, here is the revenue you would generate per ton of materials:

  • Cardboard: $25
  • Paper: $2.50
  • PET plastic: $150
  • HDPE plastic: $250
  • Aluminum: $1,325

In your first year or two, you could recycle 15 tons of waste in a day for five days a week, bringing in nearly $300,000 in annual revenue. This would mean around $120,000 in profit, assuming a 40% margin. As your brand gains recognition, your capacity could climb to 30 tons a day and you could extend operating hours to six days a week. If you hire more staff and invest in additional equipment, your profit margin would be reduced to around 30%. With annual revenue of around $700,000, you’d make a tidy profit of $210,000.

What are the barriers to entry?

The recycling industry is a highly regulated space, so you need to be aware of several barriers.

Here are a few:

  • Several permits and licenses required
  • Expensive insurance
  • Demanding OSHA regulations
  • High startup costs

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
How to Start a Recycling Business

How to Start a Composting Business

How to Start a Recycling Business

How to Start a Waste Management Business

How to Start a Recycling Business

How to Start a Junk Removal Business

Step 2: Hone Your Idea

develop a business idea

It’s time to think about where you’ll fit in the recycling industry, your business’s location, and other finer details

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.

Why? Identify an opportunity

To determine your competition, you could look at the city, county, state, or even national level. You might look through trade organization databases or Google Search businesses in your niche. 

Try to get as much data from your recycling business competitors as possible, like how much material they collect, process, and produce, how they price their products and transport goods. By learning about your competition, you put yourself in a good position to beat them. 

There are many types of recycling businesses. They vary by which part of the recycling process they’re in and what material they recycle. The three primary recycling business niches are also steps in the overall process: 

  • 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

What? Identify your recycling business focus

Will you specialize in metal? Plastic? Electronics? You could start a plastic recycling business, recycled paper company, or even an aluminum recycling facility. There are many possible avenues. So you’ll need to do your research and choose the best fit. You should take into account the availability and demand of materials, the costs of starting in a particular niche, and which step of the recycling process offers the best fit. 

You could collect waste materials, transport and process them, store materials, or manufacture and sell products. 

Keep in mind, until you choose your niche you won’t know what equipment to purchase, your target demographic, or how to market your new business.

How much should you charge for recycling?

Since materials and commodities usually fluctuate in price, you’ll have to check out the latest valuations to determine the worth of your recyclables. You can also look at your competitors’ prices to give you a better idea. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be the primary customers for your products. For example, if you have a plastic recycling business, your target market will be producers of any goods made out of recycled plastic. 

At the same time, you could also offer to collect plastic for recycling from consumers and businesses. If you were to structure your business like this, you’d have target markets on both ends of your business — in-take and output. 

Where? Choose the location for your recycling business

Choosing the right location is essential for your recycling centers. It’s a good idea to have a site near your customers to keep your transportation costs low, especially since you’re dealing with tons of materials. A typical location for this type of business would be in an industrial area on the edge of the city to avoid high rental costs. 

recycling business rating

Step 3: Brainstorm a Recycling Company Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “climate” or “recycling”, boosts SEO
  • Name should allow for expansion, for ex: “Green Cycle Recycling” over “Battery Recycling Solutions”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

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. 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 set 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.

Step 4: Create a Recycling Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: Present a brief of your recycling business, highlighting the types of materials you’ll process and the environmental and economic impact you aim to achieve.
  • Business Overview: Describe your recycling business’s role in waste management, focusing on the materials you’ll recycle and the processes you’ll use.
  • Product and Services: List the services you offer, such as collection, sorting, processing, and reselling of recyclable materials.
  • Market Analysis: Evaluate the demand for recycled materials in your area and the sectors you will serve, like manufacturers or municipal programs.
  • Competitive Analysis: Identify your competition and how your business will offer more efficient or sustainable recycling options.
  • Sales and Marketing: Outline your approach to securing sources of recyclable materials and finding buyers for the processed goods.
  • Management Team: Introduce the team that will lead the business, emphasizing any expertise in environmental science or waste management.
  • Operations Plan: Detail the operational workflow, from material collection to processing and resale.
  • Financial Plan: Provide an overview of your startup costs, operational expenses, and revenue projections.
  • Appendix: Include supplementary documents, such as certifications, detailed market studies, or partnership agreements, to support your 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.

Step 5: Register Your Business

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! 

Choose where to register your company

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 recycling. 

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. 

Choose your business structure

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 main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • 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.
  • C Corp – 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. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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. 

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Step 6: Register for Taxes

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.

Step 7: Fund your Business

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

types of business funding
  • 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 your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Bank and SBA loans are probably the best options, other than friends and family, for funding a recycling business. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Recycling Business Licenses and Permits

Business Licenses and Permits

Starting a recycling 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 (DBA), health licenses and permits 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 and local county or city-based licenses and permits, such as storage and recycling permits and hazardous material permit. 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, 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.

Step 9: Open a Business Bank Account

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 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. 

Step 10: Get 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:

types of business insurance
  • 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.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

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. 

Running a recycling company entails a lot of moving parts which makes for complicated management processes. But by automating these processes, you can spot errors and improve your efficiency. You may want to use industry-specific software, such as ScrapRight, Waste Logics, and ReMatter.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

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 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.

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. 

Marketing

Here are some powerful marketing strategies for your future business:

  • Educational Workshops: Host workshops in schools, community centers, and local events to educate people about the importance of recycling, proper sorting techniques, and the impact on the environment.
  • Partnerships with Local Businesses: Collaborate with local businesses to set up recycling bins at their locations, fostering a sense of community responsibility and expanding your recycling network.
  • Reward Programs: Implement a reward system where individuals or businesses earn incentives for recycling, such as discounts, coupons, or recognition, creating motivation for active participation.
  • Social Media Campaigns: Leverage social media platforms to showcase success stories, recycling tips, and engage with the community, building a strong online presence and encouraging participation.
  • Mobile Recycling Units: Introduce mobile recycling units that can visit different neighborhoods or events, making recycling more accessible to a broader audience.
  • Participation in Local Events: Set up booths or participate in local fairs, markets, or festivals to raise awareness about your recycling services and interact with potential customers face-to-face.
  • Community Clean-up Initiatives: Organize or sponsor community clean-up events, highlighting the positive impact of recycling while creating a sense of pride and unity within the community.
  • Branding through Unique Containers: Design visually appealing and easily identifiable recycling containers, making your service more recognizable and encouraging people to use them.
  • Collaboration with Municipalities: Work with local governments to establish partnerships, ensuring that your recycling services align with municipal waste management goals and regulations.
  • Data-Driven Marketing: Collect and share data on the positive environmental impact of your recycling efforts, demonstrating the tangible results of community participation.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that set 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 recycling 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. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your recycling business could be:

  •  The most eco-friendly recycling processing system
  • The best prices on recycled materials 
  • Full-service recycling, from pick-up to delivery! 

Networking

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 recycling facility, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in recycling 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 recycling. 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.

Step 12: Build Your Team

Building a Team for a New Business

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 
  • Facility 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 Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Recycling Business – Start Making Money! 

Running a Business

Recycling is a fast-growing industry worth more than $7 billion in the US. By starting your own recycling business, you not only stand to make some good money, you’ll also be doing a service to your community and helping combat climate change. 

But you’ll have to be ready to invest a significant amount into your processing facility and equipment. So it’s a good idea to identify possible sources of funds from the start. Having distinctive upcycled products is also ideal.

If you’ve followed all the steps laid out in this guide, you and your recycling business should be ready for success!

Recycling Business FAQs

How do recycling companies make money?

The intricacies depend on the type of business, but most recycling companies make profits in three ways. They can either charge for the collection of recyclable material, sell recycled material to a producer or sell a recycled product directly to a consumer.

Which recycling business is most profitable?

There isn’t one most profitable recycling business because there are many niches and approaches businesses can take. But two niches that have good potential are waste paper and electronic waste.

Waste paper requires minimal sorting and processing, so your initial capital outlay can stay low. While electronic waste usually has components that are made of precious metals.

What can be recycled for money?

There are a number of items that you can recycle, including scrap metal (which can be reused many times without degrading), junk cars and parts, bottles and cans (with aluminum fetching over $1,000 per ton), ink cartridges, electronics, furniture, plastic waste, and solid waste.

How do I market my recycling business?

Utilize online platforms to showcase your services, engage with your target audience, and share informative content. Collaborate with local businesses and organizations, conduct educational outreach, and promote convenience and ease of use. 

What recycled material has the highest demand?

Commonly sought-after recycled materials include paper and cardboard, plastic bottles and containers, aluminum cans, glass bottles, and certain types of metals. 

What material is hardest to recycle?

The material that is often considered hardest to recycle is typically Styrofoam (expanded polystyrene). Its lightweight and bulky nature poses challenges in the recycling process, as it requires specialized machinery and processes to efficiently break it down and recycle it. 

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How to Start a Recycling Business