How to Start a Septic Tank Business

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Quick Reference

Septic tanks can be a headache for homeowners but a critical amenity in order to get rid of wastewater and sewage. Septic tanks should be professionally inspected every year to keep bigger problems from arising.

If you’ve ever worked in the septic tank business, you know that service is always in demand, so why not start your own septic tank business and be your own boss?

Business Overview

A septic tank business may be a service company only, or they can also handle septic tank installation and removal. The ongoing routine maintenance of a septic tank involves emptying the waste periodically and sometimes cleaning it as well.

Industry Summary

According to IBIS World, the market size of the Septic, Drain & Sewer Cleaning Services industry is $3.6 billion as of 2021. For the last 5 years, the industry has grown 1.9% per year. The business is not generally affected by economic fluctuations since it is a necessary service.

Industry Trends

Septic tanks are needed where there is no municipal sewer system, so the areas where they are installed are generally rural. Septic tanks eventually exceed their life span and have to be removed and replaced, and they will always need service. Because people will always live in rural areas and build new homes in rural areas, the need for septic tank installation and service will always exist.

Target Market

The target market for a septic tank business is anyone who has a septic tank or is building a home and needs a septic tank installed.

Another potential market is restaurants for clearing grease traps.

Skills, Experience, and Education Useful in Running a Septic Tank Business

There are several specific skills that you will need to open a septic tank business.

  • A knowledge of septic tank service. While any service can be learned, if you want to have your own business, you should have extensive experience doing septic tank installations and repairs.
  • Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • Customer service. You’ll need to be able to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.

Costs to Start a Septic Tank Business

Here are the typical costs you will face when you start a septic tank cleaning service.

  • Setting up a business name and corporation costs approximately $200
  • Business cards, logo, brochures, flyers, and postcards for marketing $200 – $300
  • Business website setup $100 –$200 for a basic, do it yourself website, $1000 – $2000 for a professional site
  • Installation and service equipment $20,000 +
  • Tank inventory $30,000
  • Pump truck $20,000 +
  • If operating out of a shop, expect the mortgage, lease or rent to be $1,000 – $4,000 per month depending on the size of the facility
  • Insurance $100 – $200

Steps to Opening a Septic Tank Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your septic business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect septic service name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: 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 a 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.

RelatedComparison of Business Entities

Step 4: Select your Location

Since fuel and maintenance costs can be costly, a location close to your customers will help minimize transportation costs.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

A Commercial Driver’s License (CDL) will be needed to legally drive a septic truck.

Some other common local, state, and federal registrations a septic tank business may need include a sales tax permit and an Employer Identification Number if you plan to have employees. Check with your state to see if specific licenses or permits are needed for a septic tank business.

Related: Common business licenses, permits, and registrations by state

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 pumping 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.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

A septic tank business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a septic tank business include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your septic tank business greater visibility online. Direct mail to homeowners will also be an effective marketing technique.

Related: Low-cost ideas to market a new business

Step 9: Get Insurance

A septic tank business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Property and casualty insurance protects you if your equipment is damaged.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hiring Employees

You may need employees to help run your septic tank business. They need to be reliable and have the right skills.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your septic tank business is critical to the long-term success of your business.

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.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Septic Tank Business

Your profit potential will depend heavily on your location and the competition in your area. According to HomeAdvisor, the average cost for septic tank pumping ranges from $286 to $534, with a national average of $403. Prices to install a new septic system are about $4,000.

Things to Consider Before Starting a Septic Tank Business

Running a septic tank business or any business will have its challenges. You need to be prepared and make sure that you know what you’re getting into.

Acquiring customers and keeping those customers is key. You need to create awareness of your business by spending time and money on marketing.

A cost many people overlook is the travel expense and cost to dump the waste at disposal locations. In some areas, you can pay $100 or more per load, which can eat into profit margins.

Your location is absolutely critical. You have to have many potential customers and little competition. If there are a lot of competitors in your area, you will have a rough road trying to break into the market.

It’s not easy to make a septic tank business successful, so you will be risking the money that you put in if you don’t meet your sales goals.

Talk to other business owners for tips on starting a business and do your homework to determine costs. Research other septic tank businesses to see what they offer and their pricing.

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