Last Updated on September 2, 2020
If you enjoy staying physically active and like the variety of doing something a little different every day, the junk removal industry might be right for you. Starting a junk removal business of your own means you’ll be your own boss and no two work days will ever be quite the same. You’ll enjoy the satisfaction of providing a service that people need, while also being able to bring in some nice profits for your work. But starting this type of business isn’t as simple as just heading out in your truck. Read on to find out what’s involved and whether this business opportunity might be right for you.
Junk removal businesses provide an important service to homeowners and renters, home buyers, construction workers, and more. These businesses come into a site and clean out junk, which can consist of everything from old appliances to brush and trees to bags of garbage. These cleanup jobs are often large and physically demanding, and they’re usually jobs that the property owner doesn’t have the time, strength, or resources to do on their own.
Most junk removal businesses consist of teams of employees working out of a pickup truck or dump truck. Once they’ve removed the materials, these businesses typically bring them to landfills or recycle appropriate materials. Because clients rarely have ongoing needs for junk cleanup, a junk removal business usually works with a variety of different customers at many different sites in a single week.
According to IBIS World, the waste collection services industry has undergone steady growth from 2015 to 2020. The experience grew by 1.2% during that time, reaching $51.7 billion in 2020. That growth is driven by an increase in the industrial, construction, and commercial business industries, which results in increased demand for waste collection services. As of 2020, 12,158 businesses employed 219,049 staff.
This industry is expected to continue to grow from 2020 to 2025. This growth will be driven by an increase in waste production that correlates with population growth.
Understanding current junk and waste trends can help a business owner to determine the services that will be most in-demand. According to Junk Happens, each person in the United States generates an average of five pounds of waste per day, and the amount of waste that the United States generates in a year could double by 2050.
Electronic waste is a particularly big problem, and it results in approximately 70% of the toxic waste in the country. Less than 13% of electronic waste gets recycled, and electronic waste made up of mobile phones, computers, and TVs accounts for about 10 million metric tons of waste.
A junk removal business’ target market will depend on the business’ specialty. Some businesses market to homeowners and renters who need junk removed. Other junk removers specialize in working with commercial businesses, construction companies, or other large-volume markets. Some businesses may specialize in a certain type of junk removal, like recyclable metal, brush, or old appliances. These specialties will determine the appropriate target market.
Skills, experience, and education useful in running a junk removal business
It doesn’t take a business degree to start a junk removal business, but certain skills and experiences can increase the chances of that business becoming a success.
Knowledge of local disposal regulations. A junk removal business owner will need to be familiar with local disposal regulations and facilities so that they can choose appropriate disposal locations and methods.
Physical strength and endurance. Junk removal is a physically demanding career, so strength and endurance are important to productivity and to the business owner’s wellbeing.
Attention to detail and an eye for safety. Junk removal, especially when it involves larger, heavier items, can be dangerous. A business owner will benefit from an eye for detail and situational awareness to keep themselves and employees safe.
Knowledge of proper lifting techniques. A knowledge of proper lifting techniques is important and can help to prevent injuries in the owner and in staff.
Customer service skills. Strong customer service skills can help a business owner to develop good relationships with customers to get referrals, positive reviews, and even repeat business.
Management experience. A business owner who has experience in hiring, training, and managing staff will be well-prepared to hire the right employees for their business.
Amazon has some good books on starting a junk removal business that may be worth checking out:
How to Make Your Junk Removal Service STAND OUT from Competitors (Free on Amazon Kindle Unlimited)
Costs to Start a Junk Removal Business
Depending on the vehicle that you already have access to, starting a junk removal business can be rather affordable or quite expensive. Accessing an appropriate vehicle, like a pickup truck, will be the largest expense, but can be done affordably by looking for a lower-cost used vehicle. Plan to spend $15,000 or more on the vehicle and common startup costs.
Common startup costs for a junk removal business include:
- Tools and equipment
- Safety equipment like gloves
- Vehicle signage
Steps to Starting a Junk Removal business
Step 1. Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. 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.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
It’s possible to start a junk removal business from home, especially if it’s just a single-vehicle business. As that business grows and expands into a multi-vehicle fleet, it may be time to rent a commercial property or garage. Rental costs will depend on the type and size of the property, as well as its location.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
A junk removal business owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located.
According to Haul Away Cash, a junk removal business will need to obtain additional licensing if it transports hazardous materials like paint, chemicals, and oil. This can be dangerous, so plan to budget not only for licensing, but also for training. Many junk removal businesses avoid this challenge by working only with non-hazardous materials.
Some other common local, state and, federal registrations a junk removal business may need include, an Employer Identification Number, and Occupancy Permit among others.
Step 5. 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 junk removal business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 6. Get your Marketing Plan in Place
Marketing is an ongoing expense that a business’ budget will need to include. Junk removal businesses can market in many different ways, but some of the most common include social media marketing, online advertising, print advertising, and even direct mail advertising. Some businesses may explore radio and TV advertising, too. The cost of marketing will vary depending on the activity and volume. If a business owner can manage some or all of their marketing on their own, they can save money over the costs of hiring a professional to help.
Step 7. Get Insurance
A junk removal business needs several types of insurance for full coverage:
- General liability insurance helps to protect the business against expenses that could result if a customer or their property are hurt or damaged as a result of the business’ work.
- Commercial property insurance can help to cover expenses and losses that the business might face if its equipment is ever damaged or destroyed by a fire or other type of event.
- Commercial auto insurance helps to protect the business from expenses like medical bills and legal fees that it might face if one of its vehicles were in an accident.
- Workmans comp insurance helps to cover expenses like medical bills and legal fees that might occur if an employee were hurt on the job.
Insurance policy cost can be affected by factors like the business’ location, the number of employees on staff, and the value of its vehicle. To get the most accurate idea of insurance costs, request quotes from multiple companies. When comparing the quotes, evaluate not only how the premiums, but also the plan exclusions, coverage limitations, and deductibles compare.
Step 8. Hiring Employees
A junk removal business will need at least one employee from the start for practical reasons, since many junk removal jobs will require multiple people to lift and remove at least some of the items. ZipRecruiter reports that junk removal salaries average $30,641 per year, though salaries can range from $21,500 to $38,000 per year.
In addition to budgeting for salary costs, a budget also needs to include other related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are all common expenses that come with hiring staff.
Related: Hiring your first employee
How much can you potentially make owning a junk removal business?
Business profits will vary depending on factors like the business’ location, profit margin, and number of years in business. According to Junk Removal Authority, a well-managed business with appropriate pricing will have expenses totaling approximately 41% of its income. If that business charges $350 for an average job, then the job’s expenses will be $143.50, leaving the business with an average gross profit of $206.50. Building that business so that it has a full schedule, then expanding to encompass multiple teams of staff with multiple trucks can increase those profits.
Things to consider before starting a junk removal business
When starting a junk removal business, do some research into the disposal regulations in your area. Disposing of certain materials, like hazardous waste, may require additional permits and fees. The same is true of disposing of large items, like appliances. Familiarize yourself with the different facilities that you will need to travel to, and get an updated list of disposal prices. Having this information can help you to appropriately price jobs so you don’t lose out on profits because of these fees.
Don’t forget the importance of networking and developing relationships with other professionals in the area. Realtors, construction contractors, and real estate flippers are all likely to frequently encounter situations needing junk removal. Building these relationships can lead to repeat business and referrals.
Because there are low barriers to entry in this industry, your business will be up against plenty of competition. This means it’s even more important for you to create a recognizable brand and offer services that are better than what competitors provide. This doesn’t mean that you have to charge less than competitors, but rather that you have to provide a quality service and experience that customers won’t find elsewhere. Consider what you can do to make your business stand out, whether that’s offering last-minute bookings, complimentary cleanup services, or above-and-beyond customer service.
National Waste & Recycling Association