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Written by: Esther Strauss
Esther is a business strategist with over 20 years of experience as an entrepreneur, executive, educator, and management advisor.
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 April 25, 2021
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
Pay attention to these important factors as you establish your recycling business:
Before delving into the world of recycling, let’s look at it from a general perspective.
To gain a balanced view of the recycling industry, let’s look at the positives and the negatives.
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)).
The latest trends in recycling are:
Some of the challenges are:
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))
Among the workers in recycling are the collectors.
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:
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:
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 Costs | Ballpark Range | Average |
|---|---|---|
| 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 - $50,000 | 45000 |
| Equipment | $85,000 - $90,000 | 87500 |
| Vehicles | $30,000 - $40,000 | $35,000 |
| Website | $1,000 - $3,000 | 2000 |
| Total | $156,550 - $184,100 | $170,325 |
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:
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.
The recycling industry is a highly regulated space, so you need to be aware of several barriers.
Here are a few:
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.
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:
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.
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.
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.
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.
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 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.
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 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.
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:
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 options, other than friends and family, for funding a recycling business. You might also try crowdfunding if you have an innovative concept.
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.
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.
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.
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.
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.
Here are some powerful marketing strategies for your future business:
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:
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.
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:
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.
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!
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.
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.
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.
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.
Commonly sought-after recycled materials include paper and cardboard, plastic bottles and containers, aluminum cans, glass bottles, and certain types of metals.
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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