Maybe you’ve found a source of waste materials that aren’t yet being recycled, or you’ve identified demand for specific waste products that can be re-used. Either way, there’s an opportunity to build a business if you can develop and execute the right plan.
In our experience, the “recycling business” we’re talking about here usually means:
- Collecting various waste materials
- Sorting and transforming them into a state that’s cheaper to transport and easier to re-use
- Selling them on for re-use in new products and applications.
So you’re probably going to be in the “waste collection, sorting, transformation and delivery” business. Here are the top six things you need to consider to plan and create a successful recycling business.
1. What waste materials are you going to recycle?
The first step is to identify the waste materials you’re going to work with.
Be guided by demand as well as supply
Although your raw materials are generally considered waste, the basic conditions for success are the same as any manufacturing business.
- Look for waste materials that are readily available in significant volumes and have growing demand for re-use.
- Understand that the availability of your raw materials (waste) and the true market demand for your products (re-usable materials) are key factors in determining the size and profit potential of your new business.
- Make sure you can match the supply and demand volumes of the waste materials, and size your business accordingly.
- Look carefully at historical and projected price data for the materials you’re considering.
2. How are you going to make money?
Your revenue will likely come from two sources:
a) selling your sorted and transformed waste materials
b) incentives and subsidies offered by governments, stewards and possibly producers. For example:
Your costs will likely include:
- Transport, handling and storage of the waste materials
- Premises, equipment, electricity, staff
- The usual business management, marketing and administration overheads.
Cost savings may be achievable if you’re able to charge for collecting the waste materials. Also, you may be able to get government subsidies towards capital equipment purchases and creation of new jobs. Examples:
3. Where can you get the waste materials?
- Who produces the waste you’ve identified?
- How much of the material is available? You need to make sure that you can get a steady supply of sufficient volumes now and over the longer term.
- What state will the waste material be in at the producer’s facility, and what will it cost to transport it to your facility?
4. Who will buy your output?
- What types of industries can use your output?
- What will they pay for it?
- What state (e.g. baled, shredded, ground) does your product need to be in to get the highest price?
- Does this state also allow for the cheapest transportation?
5. Design the most efficient operation
The recycling business is only going to get more competitive as demand for recyclable materials increases. You need to optimize every step in your business process, to maximize efficiency and stay ahead of the competition in profitable growth.
- Every time you have to transport, handle or store the material you’re recycling, you’ll incur additional costs. Think about how you can make your end-to-end process as efficient as possible.
- For example, when the material arrives at your facility, can you get the material right into your production line rather than into storage?
- Similarly, when the output comes off your processing line, think about how you can get the product right onto a truck instead of storing it again.
- Explore the latest innovations in equipment design so you can maximize automation.
- Electricity will likely be one of your biggest costs. Look for equipment that uses power efficiently.
- Consider putting equipment at your supplier’s premises if it’ll reduce storage and transportation costs sufficiently.
6. Develop your business plan
Once you’ve gone through the five steps above, you’re ready to develop a realistic business plan. Topics you’ll need to address include:
- Waste material supply contracts
- Output sales contracts with buyers
- Application and acceptance in government and stewardship programs
- Premises size and design
- Equipment types and specifications
- Marketing and sales strategy
- Leadership and management roles
- Staff roles and responsibilities
- Initial capital investment
- Working capital requirement
- Cash flow management.
The right recycling equipment supplier should be ready to help you with these considerations and work with you to develop and implement your new recycling business. To find out what factors you should consider when purchasing your next recycling machine, we invite you to contact us.