Starting a waste management business is a feasible option for business enthusiasts, especially due to the size of the waste management industry. According to United Nation environment program as on first research 11 billion tonnes of waste is collected by waste management and recycling businesses all around the world and making a whopping $410 billion of revenue each year and catching the eyes of aggressive entrepreneurs increasingly.
While starting a waste disposal business, it is important to understand that this industry is very concentrated. The top 50 waste management companies earn more than half of the industry’s revenue in the US. Moreover, for developing countries, there is a huge opportunity to get into this business. And so, entrepreneurs are needed to excel in scalability and reach to the right audience to generate awareness for your brand about what makes your services different from the ones already available. Let us take a look at the steps that are needed to start a waste management business:
Understanding the Niche
The first and foremost thing to do, before starting a waste management business, is to understand your niche. Depending upon your budget, you can select your niche or even a combination of 2 or more types of wastes. There are several types of waste products and materials, each of these wastes requiring different means and procedures for disposal. Some of the different types of waste disposal businesses are:
- Hazardous or toxic waste disposal business
- Medical Waste disposal business (e.g.: used needles, syringes, soiled clothing, chemicals, medical devices etc.)
- Biomedical Waste disposal business (e.g.: unclaimed dead bodies of human beings or animals)
- Electronic waste disposal business (like CDs, computer parts, mobile phones)
- Green waste disposal business (decomposable materials like leaves and grasses)
- Construction waste disposal business (e.g.: nails, insulation and electrical wiring, tree stumps etc.)
- Nuclear waste disposal business.
- Household Waste disposal business (e.g.: rotten vegetables, newspapers, cardboard etc.)
- Chemical waste disposal services (e.g. chemicals used in factories, laboratories etc.)
- Industrial rubbish removal business (e.g.: wastes generated in mining, manufacturing, construction and metallurgical industries).
These can also be categories as commercial waste disposal business and household waste disposal. It’s totally upto you that know you understand your market to capture it.
For starting waste management business successfully you will need-
- Location Rent: Rs. 1, 00,000/ month
- Employees: Rs. 2 lakh/ month
- Transportation Trucks: Rent charges depends on per kilometer/per day charges with the truck owners
- Equipment: Rs. 5,00,000
- Insurance Cover: Rs. 2 lakh/year
- Advertisement: Rs. 20,000/ month
Before starting your waste separation business, get a clear idea of your potential competitors, local junk haulers in your region and their pricing. Compare these with your costs to get an idea of the profits. Understand how tough the competition in the market that you are considering is. If the competition is too tough, you might need to think about starting your business in a different area where these services are not being provided or might have to choose a different niche. Look at major players and even smaller, competing businesses. Decide if you wish to focus on residential or commercial junk removal. Take a look at their advertising strategies, prices, and service areas.
Next, see how big is the market, whether you will be able to sustain or not. Research the prevailing junk disposal business in your area. Try to have a conversation with someone in the same business, in particular in a different city and is willing to discuss the industry with you. Also, figure out where you want to sell; to the landfill, scrap dealers, to nearby charities, or for some other use.
Create a business plan and state your business objectives. Explain what exactly you will do, what will be your target market, what are your specialties, what makes your business unique and better than that of your competitors etc. Explain your pricing model, startup costs, marketing strategy, and how you plan to fund your business.
Create a business plan to answer the following:
What waste materials you plan to recycle? These can be the ones with the maximum demand or depending on your business budget.
How do you plan to dispose of your wastes? For example, Nuclear wastes are meant to be disposed of by sealing the materials in lead barrels and bury them in the ground so that it doesn’t leak.
What would be your waste material collection plans? Proximity to your source is important to save in transportation costs.
Who would be the buyers for your end products? And how much would they pay for recyclables in the ready to use form?
How will you finance your business? These can be loans provided by the government and costs involved in setting up your business.
How do you plan to make your business more efficient and scalable? You might consider processes like sorting, baling, storage and delivery of recyclables for reuse.
Next thing which you have to sort out while making a business plan is deciding on how your business will fetch you revenue or you can say you have to prepare a revenue model of your business. There can be following options for generating revenue in case of waste management business.
- Charge directly from people from whom you are collecting wastes.
- Collect all the waste, separate out different types of wastes and then send to particular recycle business. E.g.: glass, plastic, paper, metal, medical waste. You can charge them money for supplying them recyclable wastes.
- Deploy your own ‘Recycle system’. Let us say you specialize in the recycling of glass. So, out of all the waste accumulated, you filter out and recycle it. Rest all items you sell out for recycling or simply dump them.
Set up Needed
Choosing a suitable location for your Waste Management Business becomes the next important thing. Starting a waste collection business comes with its own share of challenges so it is important to choose the location wisely. It is important to have a contract for a place where you plan to dump or burn waste, preferably away from the cities with the medium cost of transportation involved and to keep away the city from all sorts of diseases. For this reason, one cannot start a waste management company in residential areas, no matter which country they set up their business in. One can only do this in a land designated for waste collection and management companies and for waste recycling plants.
Next, comes important equipment needed to run a successful waste management business. Here is a list of important tools and equipment that are needed:
1) Waste Collection Truck: You can either use a second-hand van or truck or buy a new one to transport client’s waste to recycling or disposal facilities. To save money, you can also opt for a rented junk removal truck instead of buying a new one initially. The truck should have large load capacity and good fuel economy.
2) GPS System: For those who do not have a smartphone or are unfamiliar with your service area’s layout, you would also need a reliable GPS system.
3) Heavy Duty Work Wears: To remove dirt and garbage, you would need durable work clothes, gloves, and rubber boots. Loose fitting trousers are suited for both indoor and outdoor jobs and are also comfortable. Clothes should be such that they prevent household and garden pests from biting you.
4) Shovel and Rake: These are needed to remove dirt, leaves, sand and other debris.
5) Heavy-duty Protection: These include facial masks and goggles, dirt and product separator to prevent any contamination from dust and dirt.
6) Incinerators, trash cans, dustbins and waste bags.
7) Hose and pipes for the continuous supply of water.
The number of employees that you should consider for starting your business depends on the budget of your business. Particularly in a waste management business, services from the following professionals are needed:
- Chief Operating Officer
- Admin and HR Manager
- Transport and Logistics Manager
- Business Developer
- Waste collection team (around 8-10 on-site workers)
- Truck drivers (3-4)
- Technical team (3-4 employees)- to separate out the wastes and recycle them)
- Front Desk Officer
Initial funding to start a waste management business is required to cover the cost of setting up an office or leasing storage space, cost of trucks, equipment, marketing activities and hiring workers. One can opt for banks or investors for initial funding. But in this kind of business, you should raise funds atleast for 2 years of operations.
First thing is to register your company name according to the requirements of your local government and guidelines for waste carriers. Contact your local chamber of commerce to gain more insights for this as registration laws differ for every country and state.
Special permits or licenses will also be taken for transporting scrap metal or any kind of scrap. In some areas, licenses are needed to haul large amounts of materials for commercial purposes, failure of which can impose heavy fines. There are also special waste removal permits in major cities worldwide which must be obtained before starting the business. In some countries, you will need a certificate from transportation department to transport your scrap metal. Additionally, one might also need employer identification number to hire employees. For choosing a legal entity for your business, one can choose from the general partnership, a limited partnership, an LLC, a ‘C’ corporation or an ‘S’ corporation, depending on the scalability and city of operation of your business.
Also, in most countries, one cannot operate a business without having some of the basic insurance cover required by the waste management industry. A budget for insurance policy cover should be allocated too. Some of the insurance policies one should consider purchasing to start a waste collection and management business in the different countries are:
- General insurance
- Health insurance
- Liability insurance
- Equipment and Auto Insurance
- Risk Insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
A successful waste management business requires finding right customers because most homeowners and landlords already have a waste management provider and wouldn’t be too keen to switch to a new player that easily. Hence, it is important to contact RWAs of residential societies, government offices, hospitals and commercial offices to educate people about your business.
Your brand should be more visible and unique to acquire new customers. It is important to make sure that your messaging highlights the uniqueness of your company and services so that users can differentiate you from other players in the market. This unique factor can either be price, efficiency or scope of services or motivate new customers to come onboard and avail your services. Make social viral videos on cleanliness and upload them on various social networking sites. Also, publish articles on health-related issues caused due to different types of waste through your blog.
Keep your initial advertising plan low on budget and make it work. You can consider parking your vehicle in an easily accessible location, cold calling potential customers or placing a small ad in a local newspaper or magazine.