If you’re thinking about getting into the scrap recycling business, here’s how to set yourself up for success.
Many aspiring entrepreneurs have likely considered the possibility of establishing a recycling scrapyard. Recycling scrap material can be a lucrative venture when it’s done right.
You have the power to set yourself up for success in the early stages of starting your scrap recycling business. It’s simply a matter of determining the most promising path forward—and following it. Here are four specific things to think about when you’re gearing up to build a recycling scrapyard:
The startup costs of setting up a recycling scrapyard
Starting a scrap recycling business requires startup capital. But the amount needed will vary based on your startup plan.
If you’re planning to buy land and build from scratch, your initial investment will be significant. Of course, a new build gives you the luxury of achieving the exact look and layout you want. But your construction timeline will determine how soon you can start turning a profit.
But there are more cost effective options available to you. You can rent a building near a port or industrial park. Or you can buy an existing business, which usually comes with a customer list and a little stock. Plus, if you take this route, you can hit the ground running.
Your strategy may also be affected by real estate prices in your area. Run the numbers and talk to a commercial real estate agent. Your best option may differ from that of your peers in another city.
The location of your recycling scrapyard
It’s true in real estate and it’s true in the scrapyard business: Location, location, location.
The location of your recycling scrapyard can have a big impact on your business. This starts with the simple matter of convenience. If you situate your business near a major industrial complex or a port, you can easily strike up relationships with big companies. Your proximity will make the process of buying up their waste metal, for example, much smoother.
Plus, partnering with nearby businesses can save you from spending too much time and money on transportation. Setting up shop far from your potential sources and customers can be impractical.
There are regulatory benefits and drawbacks to consider as well. In some areas, there may be limitations on what types of metal you can accept and which suppliers you can buy from.
Your desired materials
When it comes to material selection for a recycling scrapyard business, there are several schools of thought.
You can specialize in a few specific materials or designated categories. For example, you might stick to a short list of metals, like copper, aluminum, and steel. Or you might work with scrap plastics and nothing else. If you follow this route, identifying suppliers and customers can be simpler. But your business can be more vulnerable to volatility in your specific market.
Alternatively, you can decide to be a generalist. In other words, you’ll take anything and everything. This approach grants you a lot of flexibility. If you come across a great deal on a bizarre material, you can jump on it. Plus, your business is diverse enough to absorb ups and downs related to a given material. However, the lack of specificity can make your customer base a little more unpredictable.
You’ll find extremely successful businesses in both of these categories. Only you can decide which route is best for you.
Your recycling scrapyard’s customers
As a recycling scrapyard owner, you can decide who you want to accept supply from. You might choose to work exclusively with other businesses, buying their waste material and other stock. But you might also choose to accept material from residential customers. For example, if you work with scrap plastics, you might take old toys or milk crates from local families.
In some cases, the quantity of a residential supply purchase might be too small to be worth your while. But you may also come across some really valuable materials. It’s worth reflecting on whether you’d like to put limits on what you’ll accept.
The right systems for your recycling scrapyard.
There’s one final thing to consider as you prepare to open your recycling scrapyard: Your systems. Good systems and tools can make a huge difference in the efficiency of your business.
One example is your truck scale software. Scaleit is an industry-leading truck scale software designed to be user-friendly and cost effective. Our team is dedicated to providing thorough training and support whenever you need it, so you can use Scaleit with confidence.
To learn more about Scaleit, get in touch