Business opportunities are everywhere, even the junk and clutter you see around can turn into unexpected profit. Starting a junk removal business can be a bit challenging, but with the right approach and marketing, you will be able to give solutions to the garbage and clutter problems in your community.
In the US, approximately 350 million tons of waste is produced every year, while there are only a total of 21,426 junk removal businesses - apparently not enough to cater to that much waste to be disposed of in proper places. Aside from hauling heavy garbage, their service scope also includes cleaning a garage full of unused things, tidying up a foreclosed property, and hauling heavy furniture. If you are enthusiastic about doing these things, then you have come to the right place. Let's go through every step on how to start a junk removal business in this informative article.
Starting a junk removal business needs enough preparation. Behind the physical demands and workforce required, there are still many factors that you need to consider in order to develop an effective approach to achieve long-term growth for your business. You should have enough knowledge about the competitive market so you know where to start and what to expect.
The waste removal business has been showing tremendous changes over the years. The market size has reached $10.4 billion in 2023 which shows growth caused by urbanization, construction activities, and increased awareness of proper garbage segregation. The residential areas have contributed mostly to this market growth, reaching $6.1 billion in annual revenue for 2024 alone. This is due to home renovations, decluttering, and moving. It is projected to reach a CAGR of 3.7% between 2020 and 2025.
Getting a feel of how this business works in your area can help you assess the needs and preferences of your target market. Start by surveying the community if there are construction sites, universities, or residential areas around. Use the information you gathered to figure out what kind of garbage or junk can be collected and determine the type of services you can offer.
After doing a thorough research of the industry, use the relevant information you gathered to create a comprehensive business plan. This is generally an overview of what your business looks like and how it will operate based on the recent market trends and demand. Make sure to include these important details into your business plan:
Writing a detailed business plan serves as your guide as you go through the whole process of launching your junk removal business. After this step, look deeper into the cost considerations so you could prepare your resources.
Preparing your budget for the possible business expenses is one of the most challenging yet crucial parts. Make sure to allocate sufficient funds for your junk removal business to operate fully on your target date, especially if you've seen high and continuous demand for these cleaning services in your area. In this section, we will discuss the main factors that impact your budget allocations, so make sure to focus your funds on these matters to maximize your investment.
Priority should be given to acquiring durable vehicles, tools, and equipment but also assess your urgent needs. Without these, your business won't be able to operate to its full potential. A heavy-duty truck usually ranges from $5,000 to $40,000 while quality tools and equipment typically cost $500 to $2,000. If a brand new truck is way out of your budget, you can start by renting or buying a used one until you can fully upgrade into a new one as your profit grows. For other tools, safety gear, and equipment, buy only what you really need and avoid overspending your money.
Making your junk removal business legal and licensed is non-negotiable. It builds credibility and trust from your existing and potential clients. Licensing and legal requirements usually cost around $300 to $1,500 depending on your state's specific rules. Getting insurance gives you protection from liabilities and risks, which usually ranges from $500 to $2,000 every year. Complying to these requirements will not only protect you as a business owner, but also covers your workers and customers.
The junk removal industry has employed 67,000 people in the US in 2023. Depending on the size of your workforce, you also have to consider labor costs before you launch your business. Junk removal requires a lot of physical work, so make sure to hire physically fit workers and pay them fairly. Expect to pay around $100 to $300 for labor costs, and may increase to $500 with a heavy workload. You may choose to pay by project or hourly rate, which typically costs $18 per hour.
Aside from these important things, there are also other matters to take into consideration such as marketing expenses, dump fees, and software. In total, the startup costs for a junk removal business will usually cost around $6,000 to $50,000.
After handling your budget allocations, it is now time to acquire the needed tools and equipment to jumpstart your productivity and efficiency. You don't really need a lot. Focus only on what's urgently important to avoid unnecessary spending. Include these important things in your checklist:
Remember, you can always start slow and small. There are a lot of used tools that are being sold online that are still in good condition. Find some good deals on Craigslist, Facebook Marketplace, and local auctions so you could save money in the first phases of your business. Start with the basics and scale up as your client base and job size grow.
The way you price your services can either make or break your business. Follow a pricing model that will give your team a fair compensation and enough profit for your business to thrive. Based on the leading junk removal businesses in the US, the average cost of junk removal can range from $200 to $250, or $1.25 to $2 per cubic foot. Some price their services based on volume, the type of junk removed, or hourly rates. Make sure that you account operational expenses such as labor, gas, disposal fees, and truck rent if applicable.
Successful junk removal businesses in the US have reported an average gross profit margin of 32.74%, showing a good opportunity to earn. Typically, profitability is reached within the first year or two. This time frame can vary due to many factors such as location, operational efficiency, customer service, and competition in the area. To achieve faster profitability, you must define your niche and develop a strong online presence. You can also try collaborating with construction companies, universities, and residential communities. Focus on providing exceptional customer service to retain more customers and attract new ones.
A junk removal business may be profitable but there are reports suggesting a 50% failure rate within five years. To ensure a high possibility of success, preparing for possible business challenges is crucial. This is where you will appreciate the need for market analysis and a comprehensive business plan before you launch the business. It helps you oversee developing obstacles and prepare for a possible solution ahead of time.
With the challenging junk removal market, the need for a strong marketing strategy to stand out among other competitors should be prioritized. Identify your unique selling points and effectively convey them to your target market. To create an exceptional strategy, a clear understanding of the competitive market should be done in order to be fully aware of your customer's needs and preferences. Customize your strategies to align with the demands and continuously learn about the industry. It's one of the most important factors to consider when learning how to start a junk removal business. This will eventually boost your visibility and appeal.
With the rise of the internet, it is important to focus on establishing a strong online presence. Incorporating SEO techniques when building a professional website can significantly boost your visibility. Your website should contain necessary information such as contact details, address, email address, services, and other company details. Additionally, include before and after photos of cleaning jobs your team has done with consent from your past customers. To reach your potential customers, here are some SEO techniques to enhance your online presence:
Look for establishments, companies, or communities near you where you can establish business partnerships with. For example, try to tie up with dormitory owners so that you can instantly provide services whenever there are renters moving out. You can also do the same with construction companies. After they accomplish renovation or construction projects, that's when your services come in handy. This approach can encourage more cleaning or junk removal jobs for your business.
Social media has become a powerful platform for businesses to reach a wider audience and promote their services effectively. There are certain social media apps that can let you run paid ads which can reach your target audience, such as Facebook, Instagram, and Tiktok. People have been using these platforms not just for socializing but also for finding services that they need.
Complying to the legalities and insurance plays a very crucial role in this business as the job requires moderate to intense physical work involving heavy and sometimes, dangerous objects. These certain conditions call for extra protection for both your business and your workforce. At least get the general liability insurance added with a vehicle and worker's comp insurance to protect you from potential risks and claims.
As for the legal requirements, here are the permits and licenses you need:
Starting a junk removal business doesn't need formal education. It only needs enough time to research more about the industry and create a strategic business plan based on the demands of the customers. You don't have to spend a lot in the first phase of starting your junk removal business. Renting or buying a used vehicle will do and acquiring secondhand equipment is also acceptable. Hiring reliable and physically fit workers for your team and making sure to secure an insurance to protect both your business and your workforce are important aspects of your preparations. Additionally, create a user-friendly website to boost your business' visibility. Treat this venture more than just a small business by complying to the legal requirements and following the appropriate pricing model. Follow these steps on how to start a junk removal business and enjoy the fruits of your labor!
Ronald Osborne is an Australian entrepreneur and experienced business coach. With over ten years of business and mentoring experience, an MBA specializing in Finance, along with launching/partnering with over 10 of his own companies around the globe, he has been able to achieve his version of success. Ronald has been able to help large telecommunication companies, law firms, trade businesses, and everyday business owners improve their business and take it to the next level.
