8 Things to Consider Before Starting a Junk Removal Business

••• Rick LeBlanc

Starting a junk removal business seems like a straightforward self-employment idea. People are looking to get rid of junk, and they pay you to do it. Better yet, in a time of affluent baby boomers reaching retirement and downsizing (or at least de-cluttering), there are more opportunities than ever before for household junk services. While junk removal can be a very successful small business, here are eight points that you might weigh while you are deciding whether or not to enter this line of work.

Perform Market Research in Your Area

Regarding competitor analysis, find out who the local junk haulers are, and try to determine which ones are successful, and why. This search should include not only independent junk removal providers, but also some of the larger junk removal franchise players such as 1-800-GOT-JUNK? and others. To be successful, you need to understand not only the prevailing rates charged but also your cost, including overhead, of properly disposing or recycling junk so that you can determine your profit. Call some of the local companies and ask for junk removal prices.

You will need to find out rates for various types of junk. Some will go straight to the landfill, while others might be sold to scrap dealers, donated to charities, or other uses, which will impact your cost of removal.

Check out the Regulatory Hurdles

There may be local, state, and federal laws applicable to the lawful disposal of junk—especially hazardous waste—and fines may be applied if the disposal is not carried out legally. For example, in Oregon, you will need a transportation certificate to transport scrap metal.

Take a Junk Removal Job

Another aspect of your market research might be to take a job with another junk removal company for an initial period to gain a better understanding of the business. If you are planning to invest in getting into a new enterprise, this will help you gain an understanding of the business before investing yourself.

Try Craigslist

If you have a pickup truck, you may wish to advertise on Craigslist or another listing, and take a few jobs for cash, just to see how you like it. With your initial market research already completed, you now have an idea of how much to charge.

Study Bigger Brands

The entrance of 1-800-Got-Junk? and others have raised the bar on customer expectations for appearance, professionalism, and price. Professional customer service is imperative; however, you have the opportunity to customize your business approach to help differentiate yourself from the big brands.

Know the Barriers to Entry

If it does not take you much research or financial investment to get into the junk hauling business, then it won’t take much time for others, either. This situation is known as a low barrier to entry, which means that new participants may be continuously cycling in and out of the industry. First, entering and possibly underpricing their services, because they do not have a realistic picture of the overhead costs they will have to meet to remain viable. Your best bet is to differentiate your services to make them extraordinary so that customers will rave about you.

Consider Seasonality

The spring and summer are the busy seasons when it comes to junk removal. Anticipate that these will be your most active seasons, with things slowing down in the fall and winter.

Put Together a Business Plan

After doing the research, you are ready to put together the business plan for your junk removal business. According to Susan Ward, “A business plan is a document that summarizes the operational and financial objectives of a business and contains the detailed plans and budgets showing how the objectives are to be realized." Because the business plan contains detailed financial projections, forecasts about your business's performance, and a marketing plan, it's an incredibly useful tool for business planning. Here is a business plan template to help you get started.