Do you want to start recycling wooden pallets? here is a complete guide to starting a wood pallet recycling business with no money or experience .
Ok, so we have provided you with a detailed example of a wood pallet recycling business plan. We also took it a step further by analyzing and writing a sample wood pallet recycling marketing plan backed by actionable guerrilla marketing ideas for wood pallet recycling companies. In this article, we will cover all the requirements for starting a wood pallet recycling business. So put on your entrepreneur hat and let’s move on.
Why start a wood pallet recycling business?
All over the world, countries are increasingly aware of their environment. Many industries use wood pallets, especially for transportation, due to the safety and hygiene practices they follow when using wood instead of plastic pallets, so if you are going to be doing business only for your own benefit, you can also make sure you do whatever you can to improve the environment.
The wood pallet recycling business is seen not only as a hobby, but also as a business enterprise. The fact that there are so many companies using wooden pallets for shipping makes this business very profitable for any environmentally conscious entrepreneur. While pallets aren’t the best out of wood, they are considered to be very useful, as they can even help put together the furniture needed around the home, but in a way that isn’t as expensive as using it. ‘other types of wood.
Since this is a recycling business, it is important to conduct all the necessary research that will let you know everything there is to know, especially as it relates to how the business works. and its success. Your market research should lead you to a search where you can get wood pallets cheap or for free. Typically, the sources of wood pallets can be distribution companies, magazine publishers, manufacturers, newspapers, and mailers, where most throw away the pallets and give them away for free or sell them at a very low price.
Once you have a constant flow of suppliers, you also need to figure out who your primary customers are and where to find them. In some states, you may be lucky enough to get a list of wood pallet users, which will help you know which customer group to watch.
Be sure to contact the buyer or the shipping services of the companies you want to contact. However, before you start sending out offers to your potential customers, you need to have researched pricing to be able to compete fairly with your competition.
This is a business that requires you to comply with environmental regulations and, therefore, you must ensure that not only the safety and insurance of your business is strictly regulated, but also that it complies with EPA and Department of Labor regulations. Only then can you obtain the business license and permit that will be required to operate your business in the state where you wish to operate your business.
Start-up of a wood pallet recycling business. The Complete Guide
- Industry overview
Wood processors generally prefer the most common pallet sizes in the United States, as well as other popular wood sizes. Pallet recycling has not only become an important part of the industry, but is also seen as a segment that has grown rapidly over the past decade. Due to the change in perception, pallet users have become more used to pallets that have been remanufactured as the price is considered lower compared to new pallets of the same quality.
According to a report by the Freedonia Group, sales of new and remanufactured pallets are expected to increase 3.5% between 2013 and 2021, resulting in an increase in value of $ 16.9 billion to an estimated value of 1.3 billion. units.
Block pallets dominate the market as more and more manufacturers replace side members with new block pallets. Although plastic pallets are considered harmful to the environment, they continue to grow above average. Metal pallets, however, have obtained the greatest advantage among the three types of pallets – wood, metal and plastic.
Even though metal and plastic show above-average growth, they are still considered a lower percentage when it comes to the market share they represent, and therefore the revenue they generate can be considered minimal. However, wooden pallets occupy a dominant share of the market, particularly as regards the unit; plastic pallets represent 4 percent of the market and metal pellets only 1 percent. The market recall is due to the use of folded wooden pallets, corrugated wood pallets and pallets made from other alternative materials.
According to the Freedonia Group report, 60 percent of the wooden pallets sold are used, while only 40 percent are new. However, it is believed that interest may shift in favor of new wooden pallets. The reason for the transition to new pellets is that since 2012 there is a shortage of quality used pallets on the market.
The trend towards plastic pallets is largely driven by companies looking to control the pool of their pallets by taking advantage of the lifespan of plastic and also considering the environmental concerns of wooden pallets.
No company has a dominant market share in the wood pallet industry, although the industry has a turnover of 10 billion dollars and a growth rate of 6.4% has remained stable. from 2012 to 2021. There are over 2,600 manufacturing plants in the United States. wooden pallets, which employ more than 54,800 people.
Growth in industrial production and consumer spending is expected to continue to drive industry growth, allowing demand for pallets to increase over the next five years, even as growth from the previous five years. The increase in manufacturing activity will continue to provide stable income to the industry.
However, the industry faces increasing competition from alternative materials such as metal, plastic and paper, and although wood still dominates the market due to its lower cost, competition from substitutes is increasing, especially in due to the fact that they offer the best sanitation solution.
Consumer spending as well as industrial production is expected to continue to grow between 2021 and 2022, allowing the industry to generate revenue and grow. While competition from external sources is expected to continue to grow, the focus will be on operator recovery of pallets.
The pallet industry has a low market concentration, especially since no single pallet manufacturer accounts for about 5% of the industry’s total turnover. A large number of pallet companies operate either in the same state or in the region, and this is due to the fact that interstate activities are not profitable for this type of business, especially due to the high cost of the transport and low cost of pallets.
Another reason why operators in the industry are also reluctant to expand their business is the more frequent implementation of a just-in-time production method, with companies seeking to obtain products with minimum turnaround time.
Getting started Market study and feasibility studies for the treatment of wooden pallets
Demography and psychography
The demographic and psychographic makeup of those who buy wooden pallets are local stores, manufacturing companies and downstream sector industries and households. Therefore, if you are looking to define the demographic profile of your wood pallet recycling business, your best bet is to take a look at the popular market segment.
List of niche ideas in wood pallet recycling companies that you can specialize in
Wood pallet recyclers typically produce wood pallets as well as other wood parts for companies that make wood products, and these products are sold to industries that use pallets not only for storage but also for storage. storage. also the transport of consumer and industrial goods.
Many wood pallet companies focus only on their basic functions, but a large number of wood pallet companies are starting to look for a niche in which they can differentiate themselves in order to better compete with their competitors in the same industry. Some of the niche ideas specific to this particular business to specialize in include:
- recycled wood pallets
- new wooden pallets
- plastic pallets
- Block pallets
- Metal pallets
The level of competition in the wood pallet processing industry
Although there are many wood pallet stores in some areas, there are not many in some areas and therefore the level of competition will depend entirely on the concentration of the pallet recycling business in existing timber in the area you are looking for. run your business from.
The main customers of wood pallet businesses are manufacturing companies and local stores, and any area that has many such businesses would be of great benefit to your business. Most of these customers are looking for a wooden pallet that is well cleaned as needed and at a reasonable price.
If you are going to locate your business in an area that already has many pallet stores, you must be prepared to have well thought out plans for how you are going to collect resources for customers and where you also intend to go. provide your wooden pallets in order to have the necessary advantage. ahead of the competitors. However, you have to keep in mind that large wood pallet stores will have an advantage over small wood pallet stores in terms of economies of scale.
List of famous brands in the industry
Being a well-known brand in any industry is entirely dependent on the quality of your brand promotion and marketing, your pricing, your customer relationships, and many other factors. The goal of the entrepreneur himself in relation to his brand is to gain recognition both nationally and in the region in which he operates.
Here are some of the well-known American brands of wood pallet recycling;
- Kamps pallets
- PALNET USA
- Recover USA
- Pallet management group
- Smart Way Recycling
- Central Coast Pallets
Pallets usually have their peak periods, and therefore in the normal pallet cycle, companies who usually buy used pallets always increase their inventory, especially during high supply seasons by purchasing new pallets. for processing next year.
However, the economy is the primary determinant of businesses purchasing new pallets, because instead of spending money on new pallets, businesses in economic crisis are more likely to choose to purchase remanufactured pallets. Not purchasing new pallets will affect the pallet pool which is already considered depleted, especially during a period of used pallet shortage.
High demand and low supply in the industry could lead to disaster as producers will be forced to keep used pallets much longer in the general pool and continue to remanufacture them to make up for the shortage, which will result in a timber of inferior quality.
Palletizing companies in some cities are starting to seek certification to prove that the wood they sell does not come from illegal sources, especially as there is growing awareness that the wood is used to manufacture these pallets.
Starting a wood pallet recycling business from scratch vs buying a franchise
If you are looking to start a business, one of the important decisions you will need to make is to start your business from scratch or buy a franchise. While any of these options may work depending on the industry, you need to make sure that any decisions you make are aligned with your primary goals and objectives.
The wood pallet business is a highly regionalized business and in that sense there was no national brand or franchise opportunities as you can start this business from home as long as you have a constant flow of customers. looking to buy your pallets. recycled wood.
The only option available is to start a business from scratch or to partner with another wood pallet store in your area. If starting from scratch isn’t easy for you, take a close look at the wood pallet stores around you to determine which ones will be most likely to partner up that will benefit your business in the long run.
Threats and potential challenges you will face when starting a wood pallet recycling plant
Every start-up company, regardless of its monopoly, will always have its share of threats and challenges. Therefore, as an entrepreneur, you need to be prepared to face the threats and challenges you are likely to face in your industry and beyond with strategies in place.
It’s important to note that while some of these threats and challenges can be easily resolved, not all of them will, and when they do occur the best thing you can do is stay optimistic and wait for the time to pass.
Some of the threats and challenges you are likely to face when starting your own business; the need to compete with other existing wood pallet recycling companies by being an unknown brand, having a reliable source to get your pallets and finding customers for your business so that you can meet your goals and objectives.
Getting started Legal issues related to recycling wooden pallets
- The best legal entity to use for this type of business
Any entrepreneur starting a business in the United States often has to deal with which legal entity to use for the business, as the wrong legal entity can limit the growth of the business and the achievement of its goals and objectives. That’s why it’s often best to seek professional advice when it comes to legal matters, especially those that will affect the business.
There are no dominant companies in this market, and it pretty much shows that the industry in which the companies thrive in the region in which they are located can also be taken into account when choosing a legal entity. for use in your business. Another factor that you may need to consider when choosing a legal entity for your business is the scale of the business you plan to operate and whether you intend to expand beyond that. of this scale in the future.
It is important to note that while you may choose some legal entities and then change as the business grows, you may not be able to change some legal entities when you choose them which can result in the loss of many. silver.
There are five legal entities available to entrepreneurs looking to start a business in the United States, and there are; Sole Proprietorship, Limited Liability Company (LLC), S Company, and C Company. The choice of legal entity can be determined by the subject’s attributes. Therefore, when using attributes, you need to consider flexibility, ease of ownership, customization and control, tax structure, liability issues and other entities that will be used as the determining factors. .
Each of these legal entities is chosen by entrepreneurs because of the type of business they run with sole proprietorship, and LLC is one of the most common legal entities chosen by entrepreneurs in the United States. If you meet with a lawyer or talk to people who work at these companies, you can determine which legal entity is likely to be right for you.
Attractive business name ideas suitable for wood pallet recycling business
Just as names are important to the individual, they are important to the business because they are easily identifiable and, in essence, enable you to achieve your goals and objectives. A business name doesn’t just have to be memorable, it has to be memorable and define for which. the type of business you are.
Some of the most appropriate eye-catching company names for your wood pallet recycling business include:
- Fina Pallets Group
- Tampy wooden pallets
- Group of ecological wooden pallets
- Vrood wooden pallet
- WOPALETS, Inc
There are several disasters – natural or man-made – that can force you to close the door of your business, especially if you don’t have adequate insurance coverage for your business. According to available statistics, when a disaster strikes, more than a quarter of affected businesses that don’t have insurance don’t reopen due to the difficulty of payback, especially if you devastated your savings in the first place.
Therefore, it is very important to have insurance to protect your investment and your profits. However, the main challenge you may face will be deciding which insurance policy is best for your business, you may need to seek advice from an insurance agent or broker to find out which insurance policies are suitable. best.
Some of the insurance policies that you will need to purchase for a wood pallet recycling business are:
- Accident insurance
- Workers’ compensation insurance
- General liability insurance
- Commercial property insurance
- Business auto insurance
- Umbrella fonts
- Mechanical failure
- Burglary and theft
Protection of intellectual property / registered trademark
In the wood pallet recycling business, you get wooden pallets and then resell them after making sure that they are clean and pest free. For this type of business, which is physical in nature, you don’t need to seek intellectual property protection.
Although the protection of intellectual property is not seen as a priority, some entrepreneurs, especially those who have become famous nationally or have achieved a certain level of success, are nevertheless asking for intellectual property protection for the name. of their company, their logo or any other material considered important.
Do i need professional certification to run a wood pallet recycling business?
Some businesses require an entrepreneur to have certain types of certifications before they can start a business; however, this is not the case for the wood pallet recycling business.
While entrepreneurs in this business don’t have to worry about getting professional certification, that doesn’t mean you can’t get relevant certifications that will make you stand out from the crowd, especially if you are looking to offer huge customers and intend to set yourself apart from the competition.
List of legal documents required to run a wood pallet recycling business
Having the legal paperwork is very important so that you can run your wood pallet recycling business without any hassle from regulatory authorities. You may need to contact other wood pallet recyclers to find out what important documents they have, or visit city council to determine what documents you need.
No business can be launched in the United States without legal paperwork and those who try to do so usually face the wrath of the law.
- Doing Business as a (DBA)
- Registration certificate
- Operating Agreements for LLC
- Business plan
- Business license
- Insurance policy
- Seller authorization
- Agreement documents
- Employer Identification Number (EIN)
- Tax identification number (TIN)
Finance a wood pallet recycling company
While the wood pallet recycling business may seem quite simple, like any other business, it does require capital. You will need capital to buy or rent the tools you intend to use, promote your business, and cover other general and operating costs.
This is why a business plan is very useful, because you not only study the business thoroughly, but you will also find out how much it will take to start a business, and if you don’t have enough capital, you will can use this business plan to convince investors to lend you. the money you need to start a business.
Some of the financing options available for your wood pallet recycling startup are:
- Obtain part of the start-up capital from your own savings or from the sale of a property
- Find a low rate loan from friends and family
- Apply for an equipment lease
- Investor loan request in exchange for capital
Choosing the right location for your wood pallet converting plant
One of the most important decisions that will have a big impact on your business is when you decide: find your business. The wood pallet recycling business thrives depending on the location of the plant, so common sense requires careful research to determine where your business can generate the most revenue in order for the business to be located. develop and maintain.
According to statistics, most of the wood pallet recycling companies that hit it are those located near or in urban areas, and this is due to the fact that most of the big customers such as manufacturing companies, recycling companies and local stores usually located in urban areas.
If you are starting a small business, it might not be a bad idea for you to start a home business first, especially if you live on your property and there is enough space to start your own business. business. All you need are customers for your business as you will need to advertise more to get customers to know about your business.
However, before you decide to start your home business, you should check how many competitors you have, and if there are enough, it is best to rent a formal establishment so that potential customers can see your business.
When looking for a location, hire a real estate agent, especially one who has extensive knowledge of the area and can work within your budget.
Start of recycling of wooden pallets Technical and personal data
Even though the wood pallet business is very profitable and seems fairly straightforward, it can be quite expensive to get started, especially if you don’t have the specific tools you need to make your task more efficient. To keep your start-up costs low, you may need to rent the necessary equipment; however, you must also be qualified to rent equipment.
While leasing can lower your start-up costs, you still need to factor in the cost of maintaining the equipment, which is why wooden pallets from some recycling plants are usually bundled together so that you can fight costs and other factors.
It is often best to locate a wood pallet recycler near an urban area or with a large number of manufacturing plants or distribution centers. When you start a business, you will need to purchase cores (empty pallets), and the price of the core will depend on the type of competition you face and the sales prospects. After purchasing pallets, they are usually sorted into common sizes and qualities, repair pallets, tear down pallets, and unwanted wood fiber chipper pallets.
A wood pallet recycling business is a business that requires a lot of equipment to be effective, so if you don’t already have one, you will need to purchase different types of equipment, such as automatic sorting lines, forklifts, dismantling and stacking equipment. dismantling equipment for pallets, fins, pneumatic nail tools and wood sanding systems. Large wood pallet recycling companies also usually purchase spray booths and auxiliary elevator equipment to achieve a certain level of efficiency.
If you plan to use a small scale wooden pallet, you might not need to hire so many people to help you. However, if you want to run a medium to large sized business, you will need to hire others, creating a great business structure that will allow you to become more efficient.
Some of the ones you will need to run a wood pallet recycling business include; logistics manager, HR and administration manager, marketing and sales department managers, administrator, cleaner, driver and security guard.
Therefore, from the above analysis, you will need at least 7 key people to help you achieve your goals and
Service process of a wood pallet recycler
Depending on the scale at which you start your business, the process of starting that business begins with finding recycled wood pallets in the area where you intend to work or in any retail store, factory or mall. You will have to make arrangements with the manager of these points of sale so that they allow you to come every day to collect the remaining pallets.
Make sure that all the pallets you assemble are clean and cleanable. do not contain parasites, then sort them by size. Remove any nails you can find and fix any that look old before contacting potential customers. Once you have agreed on the number of wooden pallets to deliver and deliver, you will receive payment for your services.
Start-up of a wood pallet recycling business. Marketing plan
- Marketing ideas and strategies
A sure-fire way to promote your products and services is through marketing, which is why this is an aspect of the business that no serious and passionate entrepreneur takes seriously. Marketing is all about anticipating the needs of your target market and then developing plans to ensure those needs are met or better. This allows you to compete favorably with your competitors while seeking to gain market share for your business.
To identify the needs of your target market, it is important that you conduct market research first, as this will provide a credible and clear account of what your business is doing, who your target market is and what they expect. of you, and how you can justify and even exceed their expectations. Market research will also allow you to determine which of your existing competitors are and how you can improve them.
Location plays an important role in marketing because your location can allow you to spend less on other marketing activities and campaigns. and hence, if you are located where most of the target market can see you, it can also be considered marketing your business.
The more visible your business is, the less effort your customers will need, especially if manufacturing companies need fast delivery of wood pallets and therefore can turn to a nearby wood pallet recycler. than one that is far away or not at all visible.
Here are some ideas and marketing strategies suitable for your wood pallet recycling business;
- Be sure to send an official letter with your contact details, services and rates to the shipping companies and distribution services notifying them of your wood pallet recycling business
- Place flexi banners at various strategic locations in the center of your target market
- Promote your business in local newspapers and industry publications, as well as on radio and television stations
- Find a professional web developer to build a website for you so that you can sell your products and services
- Make sure your wooden pallets are recycled.
- Use your social media platforms like Facebook, Twitter and Instagram to promote your business
Boost your wooden pallet recycling business strategies d Create your corporate identity
Having strategies to promote your business is very important because boosting your brand awareness and building a corporate identity not only helps your business gain recognition, but also ensures that a percentage of that recognition occurs. turns into business income.
One thing related to advertising is that not all promotional activity requires huge sums of money, as just wearing a personalized t-shirt or branding your car can be a good way to promote your business.
However, as with all major decisions you will make in your business, it is important that you do your research, checking out what others are doing, knowing which strategies work and which will work when there is a change.
Here are some strategies you can use to increase your brand awareness and create a corporate identity for your business;
- Be sure to use the services of a search engine optimization (SEO) consultant to help you. make sure your site ranks well on search engines
- Distribute flyers and display flyers at various strategic points in your target market
- Join associations and attend seminars and events to network and promote your business
- Use your social media platforms like Facebook and Twitter to promote your brand
- Participate in environmental and local events to raise awareness in your business
- Encourage your loyal customers to market your business