How to Start a Dumpster Rental Business
When you envision the type of business you dream of starting, going into the dumpster and waste industry might not be at the top of your list. But before you write off dumpster rental businesses, it’s important to realize that these businesses can be lucrative opportunities, especially if you’re located in an area with limited rental resources. Owning a dumpster rental business requires a fairly minimal time investment since, aside from customer phone calls and dumpster deliveries and pickups, you don’t necessarily have to be available on a set schedule. Read on to learn more about this business opportunity to see if it might be the right entrepreneurial move for you.
Business Overview
Dumpster rental businesses provide important services for a variety of customers as trash is always in demand. These businesses typically offer a number of different dumpster sizes for rent. Residential, commercial, and industrial customers rent dumpsters for temporary or longer-term use. When a dumpster is rented, the rental company delivers it to the specific location, then picks it up again once the rental period is over. Some companies also periodically remove the dumpsters to dispose of their waste contents.
Dumpster rentals mean that customers don’t have to worry about buying a dumpster that they’ll only temporarily need. Dumpster rental businesses enjoy rental fees on their dumpsters time and time again, allowing them to profit from their dumpster purchases and possibly expand the business by buying more dumpsters.
Before starting a dumpster rental business, it’s important to research the competitors and the opportunities in your area. Get details on the size of the dumpsters that competitors have, as well as the rates that they charge. Look for opportunities that other companies may have missed, whether it’s serving a certain area or marketing toward a customer base that’s been overlooked.
During your initial research, contact local landfills and research your local waste disposal restrictions. If you can establish a relationship with landfill operators, you may be able to negotiate a discounted disposal rate, which can pay off with big savings for your business. This is also the time to learn about materials that require special disposal, like hazardous waste materials. These restrictions will affect the rates that you need to charge. When you’re familiar with these restrictions and regulations, you can use that knowledge to design your own business rules and rates to reflect the additional costs and trouble you’ll face if customers dispose of these materials.
Related Industries
Industry Summary
According to IBIS World, the dumpster rental industry experienced 2.3 percent annual growth from 2014 to 2019. In 2019, the industry was expected to bring in $414.1 million in revenue. As of 2019, there were 262 businesses in operation, and industry employment was at 4,576.
The industry’s performance and growth are closely linked to consumer spending. As profits and economic health increase, construction activity does too which is a major source of business for the dumpster rental industry.
Industry Trends
The waste management industry is influenced mainly by the needs and wants of its customers. According to U-Dump Trailers, one new and evolving trend is the increased use of digital services. Customers are increasingly researching dumpster rental companies online. They’re reading reviews, comparing pricing, and choosing the company that they want to work with.
In response, dumpster rental businesses need to accommodate this online need for information and accessibility. Businesses should develop websites with FAQs and basic information. Some businesses have even created websites that allow customers to order rental dumpsters online. This digital dumpster rental trend is likely to continue to increase, so businesses should look toward their websites and social media pages to differentiate their business from others.
Target Market
Most dumpster rental businesses offer services for residential, commercial, and industrial customers. Their target market is usually anyone with significant waste disposal needs, like those generated by a construction project, home renovation, or business.
Real estate agents are another great source of referrals for landlords and property owners needing to clean out their properties.
Checklist for Starting a Dumpster Rental Business
If you’re thinking about starting your own dumpster rental business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Â Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a dumpster rental business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
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The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
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Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 3:Â Choose a Business Name
Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Related: Tips and ideas for naming a dumpster rental business
Step 4: Select your Location
While many dumpsters will spend most of their time at customers’ sites, the business needs a location where they can be stored when they’re not rented out. Rental costs for a storage lot will vary depending on the lot’s size and location. Remote locations tend to cost less, but a location that’s closer to larger towns or cities could potentially save time and gas for deliveries.
Related:Â Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are no specific licenses for a dumpster rental business; however, drivers will likely need a CDL.  There are also general business registrations that may be needed, such as a business license, sales tax permit, Employer Identification Number, and Occupancy Permit, among others.
Related: What licenses does a dumpster rental business need?
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a dumpster rental business is another. Â Funding to start a dumpster rental business can be difficult. Â To get a loan, the borrower(s) will need to have good credit and personally invest 15-25% towards the total start-up costs.
Related:Â Finding the money to start a business
Step 7:Â Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
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Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
Good marketing is essential to getting the business established initially. Because customers rent dumpsters temporarily, a business also needs to market continuously to bring in a steady stream of new customers.
With more customers turning to the internet to find dumpster rentals, online paid advertising, and social media are valuable marketing strategies. Dumpster rental businesses might also explore print advertising, direct mail, and email marketing.
Related:Â Low-cost ideas to market a new business
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Step 9: Get Business Insurance
There are several types of insurance to consider when starting a dumpster rental business. A few of these include:
– General liability insurance protects the business if a customer is ever injured, such as during a dumpster drop-off or while on the business’ property. This insurance can cover costs like legal fees and expenses.
– Commercial automobile insurance protects the business against expenses that can occur if a business vehicle is ever in an accident.
– Worker’s compensation insurance helps to cover expenses like medical bills or lost wages if an employee is ever hurt while working.
The cost to insure a dumpster rental business will vary because of factors like the cost of the business’ equipment and the number of employees on staff. To get an accurate idea of insurance costs, request quotes from multiple providers. When comparing the quotes, pay particular attention to details like each policy’s coverage limits and exclusions, premiums, and deductibles.
Related: What types of insurance does a dumpster rental business need?
Step 10: Hire Employees
While a dumpster rental business may be able to initially handle all of the work associated with the business, as the business grows, an additional driver may be helpful. According to Indeed, waste management truck drivers earn an average of $17.11 per hour.
In addition to budgeting for salaries, the business’ budget will also need to incorporate expenses like workman’s comp insurance, paid time off, and health insurance contributions.
Related:Â Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your dumpster rental business is critical to your business’s long-term success.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
How much does it cost to start a dumpster rental business?
Starting a dumpster rental business can require a significant initial investment, especially if you plan to stock large-scale roll-off dumpsters.
The major initial purchases will be a truck and dumpsters. Truck N Trailer has used roll-off trucks ranging from $60,000 up to $100,000, while new models start at $150,000 and up. Small dumpsters start at $1,000 new, but larger roll-off dumpsters can cost $6,000 or more. Plan to spend $175,000 or more to outfit a small business with a truck and 10 dumpsters.
Some other common startup costs for a dumpster rental business include:
– Business uniforms
– Website
– Dumpster rental software
– Signage for the truck and dumpsters
How much can a dumpster rental business owner make?
Dumpster rental business profits depend on many variables, like the business’ size, location, and years in business. According to Home Guide, 10- to 15-yard dumpsters bring in an average $363 weekly rental fee. A business with 10 of those dumpsters could earn as much as $3,630 per week before expenses like garbage disposal and general operating expenses. Businesses that run efficiently and have most or all of their dumpsters out on rent at any given time stand the best chance of bringing in significant income.
A potentially profitable niche market may be found through hazardous waste disposal services such as collecting ammunition, leftover paint, fluorescent light bulbs • tires, pharmaceuticals, biomedical waste, etc. There are additional requirements for disposing of these items, but the reward may be worth it.
What skills are needed to run a dumpster rental business?
Starting a dumpster rental business doesn’t require a business degree, but certain skills and experiences can increase the chances of the business being a success.
CDL training and education. According to Driving Tests, driving a roll-off truck requires a Commercial Driver’s License or CDL. The requirements to earn a CDL vary from state to state, but most states require that drivers complete a CDL training and education program.
Organization skills. A business owner with great organization skills can thrive in this industry. Maintaining schedules, tracking invoices, and following up with customers all require a well-organized approach.
Customer service skills. Great customer service can earn a business repeat customers, and these loyal customers can also be a valuable source of referrals. Promptly returning phone calls, addressing customer concerns, and offering quality service will help build a great reputation.
Attention to detail. Attention to detail is very important in the waste management industry. When disposing of dumpster contents, it’s important to pay attention to the presence of hazardous materials to ensure they’re disposed of correctly. Scheduling and business organization can also involve lots of detail.
Networking skills. Networking is a valuable skill in this industry since it can help business owners to connect to new potential customers and to find new opportunities.
Are there grants to start a dumpster rental business?
It’s extremely rare to find a grant to start a dumpster rental business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a dumpster rental business?
It’s extremely rare to find a grant to start a dumpster rental business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
Resources:
Institute of Scrap Recycling Industries, Inc.
National Recycling Coalition
National Waste & Recycling Association
Solid Waste Association of North America
