Do you want to start a scrap metal recycling business? here is a complete guide to starting a scrap metal recycling business with no money or experience .
Ok, so we’ve provided you with a detailed example of a scrap metal recycling business plan template. We also took it a step further by analyzing and writing a sample Scrap Metal Recycling Marketing Plan, backed by actionable guerrilla marketing ideas for scrap metal recycling companies. In this article, we will cover all the requirements for starting a scrap metal recycling business. So put on your entrepreneur hat and let’s move on.
Why start a scrap metal recycling business?
Recycling scrap metal is one of the hardest ( and dirtiest) businesses to establish. However, it is a very profitable business. The scrap metal recycling business is very profitable, even though it is capital intensive and requires a lot of technical know-how. When most people hear the word “scrap” they automatically assume it is scrap aluminum or iron. Most people don’t know that gold, silver, lead, tin, copper, nickel, etc. are all metals that can be redesigned. Therefore, in the field of metal recycling, do not limit yourself to aluminum cans only, as there are other sources of income besides aluminum cans.
Metal recycling involves the reconstitution or reproduction of old metal products such as vintage cars, steel, aluminum, etc. into new products. Metal recycling involves the secondary production of metals by recycling scrap metal obtained from metal objects. Scrap metal obtained from discarded machinery, mechanical equipment, building materials and electrical components can be recycled and reused to make metals.
Metals recycled from scrap can be divided into three broad categories: ferrous, non-ferrous, and others (eg, precious metals). Several types of metals such as iron, steel, copper, aluminum, zinc, nickel, lead, tin, gold, silver, platinum and palladium can be recycled. Recycled metals can also be used in a variety of end-user industries such as building construction, automotive, electrical engineering, industrial equipment, shipbuilding, and household appliances.
So, if you decide to start a scrap metal recycling business, you should be prepared to conduct a thorough feasibility study and market research before committing your money and other resources to it. If you want to start a scrap metal recycling business, you should read this article carefully.
Getting Started with Scrap Metal Recycling The Complete Guide
- Industry overview
The metal industry in the United States is a capital intensive industry with only 146,000 workers in the United States alone. For more than 200 years, it has been an integral part of the U.S. economy, global commerce, and resource sustainability.
Statistics from 2015 alone show that over 130 million tonnes of scrap metal, plastic textiles, rubber and electronics worth over $ 80 billion were produced to industry specifications. recycling of scrap metal in the United States. These materials have been sold to industry in the United States and other countries around the world. It contributed nearly $ 18 billion in export sales, which significantly contributed to the United States’ trade balance.
The metals recycling sector is considered to be one of the main industries involved in the transformation of materials for the sole purpose of creating new products. Industry stimulates the economy by turning old things into new. The metal industry collects, processes and purchases old materials that will be converted into new products.
The Metal Recycling Plant provides essential resources to the manufacturing industry in America. With increasing emphasis on reducing greenhouse gas emissions and protecting our natural resources, the metals recycling industry is doing well in this regard. The metallurgical industry plays a vital role in the US economy as a job creator, major exporter and engine of the manufacturing industry.
Can you imagine a world without recycling? The world would be a different place filled with more pollution and greenhouse gases and a faster depletion of our natural resources. The metallurgical industry has successfully recycled over 130 million tonnes of obsolete materials into useful raw materials per year. The metal recycling industry protects water, air and soil, thereby contributing to a better quality of life.
Over the past five years, the scrap metal recycling industry has found itself at the height of the global economy. While the industry rebounded rapidly in 2010 with continued improvement in 2011 and 2012, domestic and international demand for it declined, but the industry did not reach its pre-recession high level.
However, the industry is expected to experience a less volatile period from 2015 to 2021 as fluctuations in metal prices decrease. Experts predict that the metalworking industry will grow by around 1.9% per year. The metal recycling industry rightly enjoys the support of environmentalists and government as it serves as a means of protecting the environment and its degradation, greenhouse gas emissions and pollution.
One of the main factors that motivates entrepreneurs to start a metal recycling business is that it is a very profitable business and they can easily get government support. Additionally, you will face many challenges in starting and running a metal recycling business, but it can be rewarding at the same time. The industry is open to both large investors who can start large-scale production from a world-class recycling plant and aspiring entrepreneurs looking to start on a small scale.
Start of market studies for scrap metal recycling and feasibility studies
- Demography and psychography
The demographic and psychographic makeup of those in need of raw materials from scrap metal recycling companies may be limited to manufacturing companies that make products with metal components and metal products.
So, if you want to define the demographics of your scrap metal, in this case you should target manufacturing companies such as metals (ferrous and non-ferrous metals), manufacturing companies, car companies, roofing companies and roofing companies. construction, shipbuilding companies, manufacturers and distributors, contractors and startups that will need recycled raw materials.
List of junkyard niche ideas you can specialize in
Basically, there is no clear niche in the scrap metal recycling industry, although a scrap metal recycling company may decide to specialize in steel and iron scrap or non-ferrous scrap. . But on average, almost all scrap metal recycling companies recycle all types of metals.
So, if you want to start your own scrap metal recycling business, you need to clearly define your market so you know how to supply them with recycled scrap. Here are some of the niche specialization ideas that an industry scrap metal recycling company can specialize in:
- Recycling of steel and iron scrap
- Recycling of scrap copper
- Recycling of aluminum scrap
- Recycling of lead waste
- Recycling of other non-ferrous scrap
Level of competition in the scrap metal processing industry
No matter which company you decide to pitch your tent in, you will always be competing with others and even the government doing the same business and recycling junk. business is no exception.
The recycling industry is an emerging market that has not yet fully embraced the whole world, so there is currently little competition in the industry. Although there is a relationship between emerging players, because they can not do without each other. Because the industry is multi-stage, collaboration between players is necessary to ensure a win-win situation for all players.
Without a shadow of a doubt, there are many large investors who have stakes in the scrap metal recycling industry; but one thing is certain, there is enough room to accommodate all the actors. So if you enter the industry today, you need to prepare for cooperation and prepare for serious competition in the near future, once the recycling industry enters a boom period, this period is definitely will come, especially in developing countries, after some time, when the recycled product is seen in the same light as the new “virgin” material.
List of well-known brands in the scrap metal recycling industry
Here are some of the leading scrap metal recycling companies in the United States of America;
- OmniSource Steel Dynamics Inc.
- Sims Metal Management
- Commercial Metals Co. (CMC)
- Schnitzer Steel Products Co.
- Trading company for the treatment of ferrous metals (FTP).
- David Joseph Co. (DJJ),
- PSC metals
- AMG Resources Corp.
- Miller Compressing Co., Milwaukee
- Cohen Brothers Inc., Middletown, Ohio
- Scrap metal recycling
- Camden Iron Metal Inc., Camden, NJ
- Joseph Behr Sons Inc
- Mervis Industries
- Galamba Metals Group LLC, Kansas City, Missouri
- Gershow Recycling Medford, New York
- Newell from Atlanta
- General Iron Industries, Chicago
- American compressed steel, Kansas City, Missouri.
- Morris Recycling Inc., Albany, Mme.
- Atlantic Scrap and Processing LLC, Kernersville, North Carolina
Economic analysis
When you start a scrap metal recycling business all you need to do is do the right economic cost analysis, if you intend to start a business it is to be profitable, to grow the business and eventually to grow. develop the business and start to be competitive nationally.
When doing an economic and economic analysis of your scrap metal recycling business, all you need to do is critically analyze these key factors. ; location, price and promotion. In fact, you will need to regularly review these key factors when running a scrap metal recycling business. As the owner of a scrap metal recycling business, you just need to have a good understanding of your competitive landscape if you are serious about maximizing your profits and being at the forefront of the industry.
It is important to note that the refueling of trucks and the cost of servicing and maintaining the recycling plant, which is one of the most important factors affecting the total cost of operating a recycling plant. scrap recycling, and should be considered the primary factor in your cost and economic analysis. …
This is why standard scrap metal recycling companies prefer to build an in-house maintenance and repair team rather than outsource the maintenance of their trucking companies and recycling plant to a vehicle maintenance and service company. .
Build your scrap metal recycling business from scratch instead of buying a franchise
When it comes to starting this type of business, it will pay you from scratch compared to buying a franchise.
It’s also easier to start and run a zero-to-profit scrap metal recycling business without using a well-known brand. People will patronize your products based on availability and price rather than relying on the brand name.
Note that most of the large, successful scrap metal recycling companies started from scratch and built a strong brand name. Business success requires dedication, hard work, and determination, and of course you can start your own scrap metal recycling business to become a successful scrap metal recycling business in your area of expertise and even be competitive at the level. national.
Threats and potential challenges you will face when starting a scrap metal recycling business
If you decide to start your own scrap metal recycling business today, one of the main challenges you are likely to face is having well-known scrap metal recycling companies in your target market. The only way to avoid this problem is to create your own market; focus on start-up manufacturing companies that need raw materials from a scrap metal recycling business.
Some other threats and challenges that you are likely to face when starting your scrap metal recycling business are mature markets, a bad economy (economic downturn), fierce competition, volatile costs, and rising fuel prices.
Also, unfavorable government policies, seasonal fluctuations, demographic / social factors, a downturn in the economy which can affect consumer spending and of course the emergence of new competitors in the same place as yours. There is virtually nothing you can do about these threats and challenges except hopefully everything works for you.
Starting a Scrap Metal Recycling Business Legal Issues
- Best Legal Entity To Use For A Scrap Metal Recycling Business
Starting a scrap metal recycling business is a very big business, so the legal entity you choose will largely determine how well you want the business to grow. Without a doubt, choosing a legal entity for a business can be a bit tricky.
When it comes to choosing a legal entity for your scrap metal recycling business, you have the option of choosing from a general partnership, a limited liability partnership, an LLC, a C corporation, or a corporation. S. It is important to make it clear that these different forms of legal structure for companies have their advantages and disadvantages; that’s why you need to properly weigh your options before making your choice.
Here are some of the factors to consider before choosing a legal entity for your scrap metal recycling business; limitation of personal liability, ease of transfer, acceptance of new owners and investor expectations, and of course taxes.
If you are not in a rush to critically examine the different legal entities that will be used for your waste collection and management business, you will agree that a limited liability company; LLC is the most appropriate. You can start this type of business as a limited liability company (LLC) and in the future turn it into a “C” corporation or an “S” corporation, especially if you plan to go public and international.
Upgrading C or C Corporation will give you the opportunity to grow your scrap metal recycling business to compete with the major industry players not only in the United States of America but also globally; you will be able to receive capital from venture capital firms, you will have a separate tax structure and you can easily transfer ownership of the business; you will benefit from flexibility in ownership and in your management structures.
Attractive business name ideas suitable for a scrap metal recycling business
Usually when it comes to choosing a name for your business, you have to get creative because whatever name you choose for your business, you will have a great idea of what the business is. In general, when naming their business, people generally follow the trend of the industry they intend to work with.
If you’re considering starting your own scrap metal recycling business, here are some catchy names you can choose from:
- Life Gate Metal Recycling®, LLC
- Scrap Cone Processing, Inc.
- Andrew Anderson Sons Scrap Metal Recycling Company
- Mexico Heritage Scrap Metal Recycling Ltd.
- Mike Pally Metal Company
- Hardline Scrap Metal Recycling Company
- Silver Liner Waste Recycling Company
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- Save the environmental recycling business
- The Metal People Company
- Santiago Matt Group, Inc.
Insurance conditions
In the United States, and of course most countries around the world, you are not allowed to do business unless you have some of the basic industry required insurance policies that you want. It is therefore imperative that you budget for your insurance policy coverage and perhaps consult with an insurance broker to help you select the best and most suitable insurance policies for your business. scrap recycling.
Here are some of the basic insurance policies that cover the purchase costs if you want to start your own scrap metal recycling business in the United States of America.
- general insurance
- health insurance
- Liability insurance
- Equipment and auto insurance
- Risk insurance
- Accident insurance
- Workers compensation
- General expense insurance for disability expenses
- group insurance for business owners
- payment protection insurance
intellectual property / trademark protection
If you are planning to start your own scrap metal recycling business, you generally will not need to seek IP / trademark protection as the nature of the business allows you to successfully run the business without no reason to challenge anyone in court for illegal use of your company’s intellectual property.
On the other hand, if you just want to protect your company logo and other documents or software that are unique to you or even the concept of work, you can apply for intellectual property protection. If you want to register your trademark, you should start the process by applying to the USPTO. The final approval of your mark is subject to legal review, as required by the USPTO.
Is professional certification required to run a scrap metal recycling business?
If you are intending to open a scrap metal recycling business in the United States of America, it is highly recommended that you obtain professional certification; this will go a long way to show your commitment to the business. Here are some of the certifications you can look for if you want to run your own scrap metal recycling business;
- ISO certified recycler of scrap metal and electronics
- RIOS certification (Recycling Industry Standard)
Please note that all scrap metal recycling companies are required by law to obtain the appropriate business license, permits and certification.
List of legal documents needed to run a scrap metal recycling business
The essence of having the necessary documentation before starting a business in the United States of America cannot be overstated. It is a fact that you cannot conduct business successfully in the United States without proper documentation. If you do this, the long arm of the law will overtake you faster than you expect.
Here are some of the basic legal documents you need to have in place if you want to legally operate your own scrap metal recycling business in the United States of America;
- Scrap Metal Dealer License
- Company registration certificate
- Commercial vehicle operator registration for trucks
- Appropriate driving license for drivers
- Assistant licenses for assistants
- Medical examination certificate
- Proof of ownership, correct identification and license of the vehicle
- Copy of the license of the technical assistance center (recycling plant) and / or recent inspection report
- taxpayer ID
- fire certificate
- registration certificate
- business license
- business plan
- Non-disclosure agreement
- Employment contract (letters with proposals)
- Employee Handbook
- Operating Agreement for LLC
- Operating Agreement for LLC
- Insurance policy
- Apostille (for those going to work outside the United States of America)
Finance a scrap metal recycling business
Setting up a standard, well-equipped scrap metal recycling facility capable of supplying recycled metal to large manufacturing companies can be capital intensive, especially if you choose to set up a large scrap metal recycling company that can supply from recycled metal to manufacturing plants, not only your direct communication, but also and in your state and country.
Securing a ground facility, a fleet of vehicles, building a metal recycling plant, and purchasing equipment are some of the things that will require a significant chunk of your start-up capital. but if you decide to start a small business with just one truck, you may not need to find a source of funding to fund the business.
There is no doubt about corporate financing. One of the first and perhaps the most important factors to consider is writing a good business plan. If you have a good, achievable business plan document, you may not have to work on your own before convincing your bank, investors, and friends to invest in your business.
Here are a few options that you can use when finding seed money for your scrap metal recycling business;
- Collect money from personal savings and sell personal stocks and property
- Raise funds from investors and business partners
- Sale of shares to interested investors
- Apply for a loan from your bank / banks
- Submit your business idea and apply for business grants and seed funding from government, donor organizations, and angel investors
- Source of concessional loans from family and friends
Choosing the right location for your scrap metal recycling business
Starting a business as a scrap metal recycling business has its own challenges; it is a business that cannot be started anywhere that you choose. In fact, you won’t be allowed to open a scrap metal recycling business in a residential complex in the United States of America. The only place you can be allowed to start a scrap metal recycling business is on land designated for such a business, and it’s usually located on the outskirts of town.
It cannot be overemphasized that the location you choose to set up your scrap metal recycling business is the key to the success of the business, so contractors are ready to lease or lease a facility in a location. visible place; a place where the demographics are made up of companies with the requisite purchasing power and a place where the obstacles to be overcome are minimal, especially with regard to the construction of a scrap metal recycling plant.
If you made the mistake of renting or leasing a facility for your scrap metal recycling facility in a hard to reach location; In difficult terrain, you should be prepared to spend more to refuel and maintain your trucks.
It’s important to note that a well-located business center doesn’t come cheap, so you should be able to set aside enough leasing / rental funds within your budget. If you are new to the dynamics of choosing a location for a business such as a scrap metal recycling business, you are free to chat with a business consultant or real estate agent who fully understands the city and possibly the country in which you intend to start your business. Scrap metal recycling company.
Setting up a Scrap Metal Recycling Company Workforce Details
After you have built a scrap metal recycling plant, you need to install all the equipment and machinery required to run your business.
Here are some of the equipment and machinery needed at your scrap metal recycling plant; Scrap balers and sorters, scrap and steel handling machines, shredders, cable granulators, catalytic converter recycling machine, scrap melting furnace, wire and harness processing machines, alligator shears, machine Scrap Ingot Casting, Belt Conveyor System and Power Plant, among others. It is important to clarify that this equipment can be purchased as fairly used if you are working on a low budget.
When it comes to choosing between renting and leasing a facility for your scrap metal recycling business, the size of the scrap metal recycling business you want to own and your overall budget for the business should influence your choice. .
If you have enough capital to run a large enough well-equipped scrap metal recycling business with a standard scrap metal recycling plant, you should consider a long-term lease or land buyout; When you lease or buy land, you’ll be able to work with long-term planning, structuring, and expansion.
When it comes to how many employees you need to work with to start a business, you will need to consider your finances before making a decision. On average, when it comes to a large-scale business start-up. a standard scrap metal recycling plant, you will need the following specialist services; Chief Operating Officer (you can fill this position), Chief of Maintenance, Administrator and Human Resources Manager, Transport and Logistics Manager, Head of Marketing and Sales (Business Developer), Accountant, Waste Treatment Plant Engineers and Operators, Scrap collection truck Driver and customer service specialist. Executive director.
In addition, you will need a minimum of 10-15 key employees to effectively operate a mid-sized but standard scrap metal recycling plant. Please note that sometimes you will need to hire experts to help you with certain job responsibilities.
If you are just starting out, you may not have the financial capacity or the business you need. a structure to attract all the professionals who are supposed to work with you, so you should plan to work with professionals from the industry.
Manufacturing process in a scrap metal recycling company
Basically, the business process that scrap metal recycling companies are involved in involves scrap collection / transport vehicles passing through designated areas to collect the scrap which is packed tightly into a waste drum / bin and then transported to a factory. of scrap metal recycling.
Once the scrap is unloaded from the truck, sorting the scrap is the next step. After sorting the scrap, it is transferred to a scrap metal recycling plant; it usually goes through various processes such as melting, molding and packaging. Each process requires a conveyor belt to transport the materials from one location to another in the recycling plant.
Finally, once the recycling process is complete, the recycled scrap is packaged and then shipped or transported to manufacturing companies that use the recycled scrap as a raw material for the production of products, depending on demand.
Start of a business marketing plan for scrap metal recycling
- Marketing ideas and strategies
The fact that the barrier to entry to starting a small scale scrap metal recycling business is not a strong point means that there are bound to be more players in the industry no matter where you choose to start the business. your. Basically, you have to find creativity and innovation if you need to create a market for yourself in the market available in your community, city, state, or country.
So, when developing your marketing plans and strategies for your scrap metal recycling business, be sure to create an attractive personal and business profile.In addition to your qualifications and experience, it is important to clearly state in practice what you have been able to achieve in the meantime. scrap processing. This will help you increase your chances in the market when marketing your services.
Here are some of the platforms you can use to promote your scrap and product recycling business;
- Introduce your business by sending cover letters with your brochure to manufacturing companies such as the metal industry (ferrous and non-ferrous metallurgy), manufacturing companies, automotive companies, roofing and construction companies, shipbuilding companies, manufacturers and distributors and contractors. and get started – who needs recycled raw materials.
- Open up your scrap metal recycling business to grab the attention of residents who are your primary targets.
- Promote your business on community newspapers, local television and radio stations.
- List your businesses and products in yellow page ads (local directories).
- From time to time take part in roadshows in targeted circles. Borhoods (how that relates to getting scrap metal from a residence).
- Use online resources to promote your scrap metal recycling business.
- Do direct marketing and sales.
- Encourage the use of word of mouth (referrals) marketing.
- Use online opportunities to promote your business (when you regularly write about key issues about your business, from people who see you as an expert in this area).
- Join local chambers of commerce around you for the primary purpose of networking and marketing your product; Most likely, you will receive referrals from these networks.
- Hire direct marketing marketing managers and business developers.
Strategies to increase the visibility of your scrap metal and create a corporate identity
No matter what industry you belong to, the truth is that the market is dynamic and requires constant brand awareness and sperm promotion stimulation. continue to attract your target market. Your corporate identity has just as much to do when it comes to building a profitable, long-lasting business.
Here are the platforms you can use to build your brand awareness and branding for your scrap metal recycling business;
- Place advertisements in both print media (in newspapers and magazines) and electronic media platforms
- sponsor relevant social events / programs
- use on the Internet and social networks such as; Instagram, Facebook, Twitter, YouTube, Google +, etc. To promote your business
- Set up notice boards at strategic locations in the city or state
- Take part in roadshows from time to time in targeted areas (until you collect scrap metal from your home)
- Distribute leaflets and flyers in targeted areas
- Contact manufacturing companies that use recycled scrap metal as a raw material for their operations. manufacturing process and residence (for scrap metal collection) in your target areas by calling and informing them about your scrap metal recycling company and the products you offer
- List your scrap metal recycling business in local directories / yellow pages
- Promote your scrap metal recycling business on your official website and implement strategies that will help drive traffic to the site.
- Make sure all your employees are wearing your branded shirts and all your scrap cars and cks are properly branded with your company logo etc.
