1.Assess the market for junk removal. Research the current junk removal businesses in your area. Look for major players and the existence of smaller, competing businesses. Decide whether to focus on residential or commercial junk removal, or both, and then only look at competitors in that market. Make sure to look into their advertising strategies, prices, and service areas. In particular, look for any underserved demographics or markets in your area.
If there seems to a be a dominant player in your market, try to understand why they are dominant. Think about what makes them more trustworthy or effective in the customer’s eye. Then, use what you’ve found to influence your own business choices.
2. Decide whether to franchise or start your own business. Franchises offer a number of benefits, including existing business models, advertising, and branding. They’ll also help you set up your trucks or give you the option to purchase existing ones complete with branding. However, starting a franchise also can be expensive in the beginning, as you are paying a franchise fee to get into the business. You may also have to give a portion of your profits to the parent company once you’ve begun operating. Weigh these pros and cons before deciding to buy into a franchise.
Some of the major junk removal franchises are College Hunks Hauling Junk, 1-800-Got-Junk, JunkLuggers, J Dog Junk Removal, and Junk King.
The total cost of starting a franchise with one of these businesses can range from about $40,000 to over $200,000.
3.Create a business plan. Your business plan spells out how you intend to start your business and make money. Start by stating your objective and explaining what exactly you will do (which market you will serve, any specialties, etc.). Then, include your market research showing that there is room in the market for your business. Go on to explain your pricing model, startup costs, marketing strategy, and how you plan to fund your business.
Your pricing model should be based on both your expenses and the prices charged by your competitors. Estimate your expenses (overhead, equipment, employee wages, disposal fees, and gas) and then work from there to determine a suitable pricing schedule.
Your pricing strategy is up to you. You can charge by weight (though this can be difficult or impractical), by how space in the truck is filled by the junk, or by the job in a sort of holistic, estimated way. Remember, this is just your initial plan; you can always adjust prices later as you become more experienced.
One strategy is to undercut more established companies by charging less than they do. You may not make as much profit, but you will earn some of their business.
Consider whether you will use employees, contract labor, or both. Regardless of which you choose, you need a thorough understanding of the laws that define the nature of the workers and the laws affecting their relationship with the company.
4.Obtain funding to get you started. Luckily, you don’t need to worry about setting up an office or leasing storage space to start a junk removal business. However, you will still need some money to get started. Your startup funding needs to cover the cost of your truck, equipment, marketing efforts, and some working capital for your first few jobs. You can cover these expenses with a loan from a bank or credit union, or money from a friend or family member. The Small Business Administration (SBA) also guarantees business loans at banks and can help you qualify for the money you need.
The first few months could be hard to find enough clients to cover your expenses, so make sure your initial budget can fill the gap.
You can save some money by renting a junk removal trunk when needed instead of buying one immediately.
- Getting Ready to Open For Business
1.Buy a vehicle. Purchase a second-hand van or truck that you will use to transport client’s junk to waste recycling or disposal facilities. Look for one with large load capacity and good fuel economy. You don’t need any extras like climate control or leather seats to your vehicle that will just increase its cost. Just make sure it runs reliably; you don’t want to end up spending more on repairs than you would on new truck payments.
You may also need to buy a GPS system if you don’t have a smart phone or are unfamiliar with your service area’s layout.
2.Buy hands-free calling equipment. The specifics of a waste removal business are such that you will not have time to sit in your home office waiting for clients to call once your company is up and running. Instead you will have to make and take business calls while you work. A Bluetooth headset or similar hands-free phone equipment will allow you to talk with clients and business partners while you are out collecting people’s rubbish.
3.Buy heavy duty work wear. Removing rubbish is a dirty and demanding job for which you will need durable work clothes and gloves. Loose-fitting trousers are suitable for both household and outdoor jobs. They are not only comfortable to wear for long hours but will prevent household and garden pests, which you will most likely encounter through your career as a waste collector, from biting you through your clothing. Other tools you should buy are a shovel and a rake. Use them to remove dirt, leaves, sand, and other similar debris.
You may also need more heavy-duty protection, like dust masks and goggles, if you plan to handle more hazardous junk. That said, never agree to a job that puts your employees at risk.
Use environmentally friendly products to clean your work wear and tools. EcoSense cleaning products from Melaleuca.com can handle tough cleaning jobs without using harsh chemicals that can be hazardous to your employees and the environment.
4.Acquire a business license. Register your company according to your local government requirements and guidelines for waste carriers. You may need to contact your local chamber of commerce or SBA branch to get more specifics on these requirements, as they vary between different counties and states. You will likely have to register a “doing business as” name with your local government, at minimum. There may also be special permits or licenses you need for transporting scrap metal or just transporting junk.
5.Purchase appropriate insurance. You will also need business liability insurance before you can begin your operations. You will also need auto insurance for your vehicle(s) and workers compensation insurance if you have employees. Check the offers of several insurance companies and select the best deal. Your insurance policy should cover your van, equipment, and any damage caused to a client’s property when removing junk from it.
At minimum, you will need general liability insurance and property insurance. These cover legal expenses resulting from lawsuits, such as if one of your trucks damages the client’s property, and damage or loss of business property, respectively. As a small business, you may be able to combine both of these into a business owner’s policy.
You may also want errors and omissions (E&O) insurance to cover situations like a breach of contract with your regular clients. This could result from a perceived failure on your end to collect junk according to an agreement with a customer.
Finally, workers’ compensation insurance covers your business if you are sued by an employee. For example, if an employee is injured on the job, your workers’ comp insurance may cover their medical bills.