How to Start a Junk Removal Business

We all accumulate junk we really don’t need, which is why US waste removal is worth nearly $60 billion and growing. By starting your own junk removal business, you can haul away a chunk of that market and make a healthy profit.

Of course, starting a business requires hard work and determination. You should start by educating yourself on the ins and outs of the industry, and this step-by-step guide is full of information and insights to get you started on your entrepreneurial journey.

Step 1: Decide if the Business Is Right for You

Pros and Cons

A junk removal business has pros and cons that you should consider before deciding if the business is right for you.

Junk Removal Industry trends

Eco-friendly junk removal has been in greater demand of late, as people want their junk recycled or donated rather than in a landfill. The EPA reports that in 2018 over $145 million tons of solid waste went to landfills.((https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/national-overview-facts-and-figures-materials#Landfilling)) About 80% of that waste could have been recycled. The amount of solid waste that went to landfills no doubt increased in 2020 during the pandemic as most people stayed at home.

Industry size and growth 

• Industry size and past growth – The US waste collection industry is valued at nearly $60 billion. It has been growing steadily at almost one percent per year since 2017, according to market analyst IBISWorld.((https://www.ibisworld.com/industry-statistics/market-size/waste-collection-services-united-states/))
• Growth forecast – The market is expected to grow 3% in 2022.
• Number of businesses – There are roughly 8,000 waste collection services businesses in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/waste-collection-services-united-states/))
• Number of people employed – More than 230,000 people are employed in this industry.((https://www.ibisworld.com/industry-statistics/employment/waste-collection-services-united-states/))

Trends and challenges

Demand for junk removal services is rising due to these trends:

• Remote/work from home arrangements
• More home remodeling projects
• Steady growth in construction industry

The industry also faces challenges:

• Landfills in the US are nearing full capacity
• Risk of back strains, cuts, and abrasions

Consumer spending

• Average consumer spend – The average person in the US spends $230 per truck load for junk removal, according to moving expert move.org.((https://www.move.org/average-junk-removal-cost/))
• Potential customer base – The average American produces five pounds of solid waste per day, according to the Environmental Protection Agency (EPA). Only a third is recycled or composted.((https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/national-overview-facts-and-figures-materials))
• Average prices – Professional junk removal services cost $100 to $800 per truck load in 2019. The rates have probably increased.

How much does it cost to start a junk removal business?

Startup costs for a junk removal business range from $7,500 to $16,000 or more. The largest expense is the down payment on a vehicle, so your costs will depend on how large and how new a vehicle you want to start with. You can always get a larger truck later, once your business is up and running.

For more details on acquiring a truck in order to start a business, you could check out Step By Step’s articles on starting a dump truck business and on starting a box truck business.

How much can you earn from a junk removal business?

Totals vary by load size, but the average price of a junk removal job is $230. If you start out as a solopreneur, working out of your home, your profit margin should be about 80%.

In your first year or two, you could do three jobs a day six days a week and bring in $215,000 in annual revenue. This would mean about $170,000 in profit, assuming that 80% margin. As your brand gains recognition, you could rent an office and hire staff, reducing your margin to 40%. But if you and your crew can do 10 hauls a day, you’d see annual revenue of more than $700,000, and a tidy profit of $280,000.

What barriers to entry are there?

There are a few barriers to entry for a junk removal business. Your biggest challenges are:

• Expense of getting a large vehicle or truck and dollies
• Competition from junk removers in your area

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a junk removal business, it’s a good idea to hone your concept in preparation to enter a competitive market.

Why? Identify an opportunity

Research junk removal businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a green junk removal service, or one that operates 24/7 and offers emergency pick-up.

You might consider targeting a niche market by specializing in a certain aspect of your industry such as hazardous waste removal.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your products or services

You need to create a list of your offerings. You could offer:

• Garage and basement cleanouts
• Tree removal and yard clean-ups
• Hazardous waste removal
• Recycling and donation of removed items

How much should you charge for junk removal?

Junk removal jobs run from $100 to $800 per truck load, with a national average of $230. Your prices should be based on the size of the load and the time required. Your costs will be hired labor, overhead, and fuel. When you’re on your own you should aim for a profit margin of about 80%, but once you rent out a space and hire staff, you can expect a margin of 40%.

Once you know your costs, use the Step By Step profit margin calculator to determine your price points.

Who? Identify your target market

Your target market will probably be homeowners, but you could also do commercial junk removal. You can probably find both of those groups on Facebook or LinkedIn.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a sorting facility. Find commercial space to rent in your area on Loopnet, Craigslist, Crexi, and Commercial Cafe.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “junk removal” or “hauling”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to junk removal businesses.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your junk removal business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Bank and SBA loans are probably the best option, other than personal, for funding a junk removal business.

Step 8: Apply for Licenses/Permits

Starting a junk removal business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

If you have a box truck for hauling, you’ll need to obtain a commercial driver’s license from your state DMV. You’ll also need a Department of Transportation number and a Motor Carrier Authority number, both of which you can get by registering with the Federal Motor Carrier Safety Administration (FMCSA). Finally, you’ll need to complete a unified carrier’s registration.

You may also need state-level licenses and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your junk removal business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You can use industry-specific software, such as Soft-Pak, Trash Flow, or Jobber, to manage your scheduling, quoting, and invoicing.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual online visitors, but still you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Order Now”. This can sharply increase purchases.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as 20% off your first haul.
• Signage – Put up eye-catching signage on your website.
• Flyering – Distribute flyers in your neighborhood and at industry events.
• In-Person Sales – Offer your products/services at local markets, trade shows.
• Sponsor events – You can pay to be a sponsor at events that are relevant to your target market.
• Post a video – Post a video about your junk removal business. Use humor and maybe it will go viral!
• Seek out referrals – Offer incentives to new clients to generate customer referrals
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Webflow, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your junk removal business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Signature USPs for your junk removal business could be:

• Eco-friendly junk removal to stop landfilling
• Need junk hauled fast? Same-day service guaranteed
• We haul it all, just give us a call!

It’s also a good idea to optimize calls to action. Experiment with text, color, size, and position of calls to action such as “Schedule Now”. This can sharply increase purchases.

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a junk removal business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working as a junk removal operator for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in junk removal. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a junk removal business would include:

• Laborers – assist with junk removal and disposal
• Dispatcher – to take customer calls and dispatch drivers
• Sorters – to sort items for recycling or donation
• Marketing Lead – SEO strategies, social media, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Start Making Money!

Junk removal is a big industry with big opportunities! And at $230 a load you can bring in healthy revenue. Junk removal is a service that almost everyone needs at some point, so there’s no shortage of potential customers. You could eventually have a fleet of trucks and a large crew and make a very comfortable living as the master of junk!

You now have the knowledge you need, and should be ready to start hauling your way to entrepreneurial success.