The junk removal business is booming. More people and businesses are looking to professionals to clear out unwanted bulk. As of 2019, the global industry was evaluated at $208 billion. With an estimated compound annual growth rate (CAGR) of 5.3%, the market could reach $230 billion in 2027.
The low barriers to entry and opportunity to scale make junk removal an attractive business model. Providing excellent customer service and utilizing technology to optimize routes can help new junk removal businesses stand out. With proper planning and execution, there is potential to build a highly profitable and scalable junk removal operation.
This guide offers insight on how to start a junk removal business. Topics include market research, competitive analysis, registering an EIN, obtaining junk removal business insurance, and more. Here’s everything you need to know about opening your own junk removal business.
1. Conduct Junk Removal Market Research
Market research is essential as you start your junk removal business. Make sure your junk removal business plan includes details on your target market, the cost to start, competitors in the junk hauling business industry, and more.
Here are some of the details you’ll learn as you get started with your market research.
- Decluttering trends – Shows like Tidying Up with Marie Kondo have popularized decluttering. 39% of American households plan to declutter in 2023. This fuels the demand for junk removal.
- Home sales – When people move, they often need help clearing out the old home. Junk removal bookings spike 25-30% during peak home-buying season.
- Construction and renovation boom – Remodeling spending is expected to reach $430 billion by 2023. Construction and renovation projects generate junk that needs disposal.
- Higher incomes and busier schedules – More disposable income and busier lives mean people are willing to pay for convenience services like junk hauling.
- The industry has low barriers to entry. Initial investment ranges from $20,000 to $150,000 depending on trucks, equipment and location.
- Profit margins are attractive, averaging 35% before taxes. Most providers charge by volume, typically $100-$350 per truckload.
- The market is highly fragmented. The top 50 junk removal companies control just 8% of the market.
- The growing senior population also presents an opportunity.
- 27% of junk removal customers are over age 60. Providers who offer concierge-style services to help seniors declutter and downsize can capture greater wallet share.
- While the junk removal market is mature in the U.S., international markets remain largely untapped. Europe, Asia, Latin America, and the Middle East present expansion opportunities for junk-hauling brands.
Market research will help you start your own junk removal company with all the facts you need to be successful.
2. Analyze the Competition
Understanding the competitive landscape is critical for any new junk removal business. It offers information on pricing, market saturation, and service trends.
Here are some tips to analyze key competitors:
- For brick-and-mortar operations, identify local providers and visit their facilities.
- Note their location, fleet size, facility condition, and any retail components.
- Talk to employees to gain insights into their operations.
- Search permit databases to see their registered service area and volume. This will give a sense of their size and market share.
- Research their web presence. Review services, pricing, customer reviews, and marketing messaging.
- Set up Google Alerts and monitor review sites to track new competitors and monitor sentiment. 78% of customers read reviews before booking junk removal.
- Search industry association directories like the National Waste and Recycling Association to find registered businesses. Association membership indicates more established operations.
- Drive around the service area to map out trucks, branding, and advertising. This shows marketing saturation and where competitors are physically located.
- Search public databases for company registration details, leadership teams, trademarks, and regulatory filings. This provides insight into experience, funding, and growth plans.
Evaluating the competitive landscape helps new junk removal businesses identify service gaps, set realistic goals, and craft differentiation strategies. Regular competitive monitoring is key, as the fragmented nature of junk removal means new competitors frequently enter the market.
3. Costs to Start a Junk Removal Business
Starting a junk removal business requires an upfront investment to purchase equipment, establish operations, and cover initial expenses until revenue begins coming in.
Trucks – The biggest start-up investment is purchasing the truck(s). New trucks customized for junk hauling can cost $60,000-$100,000 each. Opting for used trucks in the $25,000-$35,000 range helps lower the initial capital required. Plan for 1-2 trucks initially.
- Equipment – Dump trailers ($5,000), toolbox hitches ($500-$2,000), straps, and bungee cords ($300) help secure loads. Shovels, brooms, and gloves ($500) keep teams equipped. Cameras ($300-$1,000) are useful for before/after documentation.
- Licensing and Permits – Business license fees average $50-$500 depending on location. Hauling permits, vehicle registrations, and other regulatory costs tally around $1,500.
- Insurance – General liability and commercial auto insurance provide necessary protection from risks. Expect annual premiums of $10,000-$30,000. Workman’s comp adds $5,000-$20,000 depending on payroll size.
- Facilities – Some opt to rent warehouse space starting around $1,000/month. Others operate from home initially to minimize overhead.
- Staff – Many launch with 1-2 crew members at $15-$20/hr. Expect $60,000-$80,000 in annual payroll expenses as staff is added.
- Professional Services – A lawyer can guide entity formation, licenses, and contracts for around $1,500. Accounting may cost $200-$500 monthly.
- Misc Supplies – Uniforms, office supplies, cleaning products, and other tools add up to around $2,000.
In total, $50,000-$150,000 in start-up capital covers the key basics needed to get up and running. Funding options include savings, loans, and investors.
Ongoing costs continue through the life of your junk removal job. Starting your own business comes with perpetual financial responsibilities, including:
- Facilities – If renting, plan on $12,000-$24,000 annually for a small warehouse space. If purchasing property, factor in mortgage payments.
- Fuel – With today’s gas prices, budget $6,000+ annually per truck.
- Maintenance – Expect $5,000+ per truck annually for routine repairs and maintenance.
- Insurance – Renew commercial policies annually.
- Marketing – Paid search, print/radio ads, direct mailers, promotions – budget around 5-10% of revenue.
- Technology – Dispatching and routing software, point-of-sale systems, and other solutions incur SaaS fees starting around $100/month per user.
- Taxes – Federal and state taxes represent real financial obligations. Factor in 15-30% of profits.
Understanding the full scope of costs involved provides realistic assumptions to build a financially viable junk removal operation. Proper planning and capitalization prevent shortfalls that could threaten the sustainability of a new business. With frugality and scale over time, overhead costs can be optimized.
4. Form a Legal Business Entity
When starting a junk removal business, the legal structure you choose impacts taxes, liability, and operational flexibility. The main options are:
Simple and inexpensive to establish. No formal business registration is required – you and the business are one entity. However, you assume unlimited personal liability for debts and legal actions against the business. Income and losses are reported on your tax return. Best suited for side businesses with low legal and financial risks.
Two or more owners divide management responsibilities, skills, and investment. Shared liability incentivizes partners to monitor each other. Income passes through to partners to report on personal tax returns. Requires a formal partnership agreement outlining profit/loss distributions and partner exits. Disputes can disrupt operations. May make sense for spouses or very trusted partners co-investing.
Limited Liability Company (LLC)
Provides personal liability protection for business debts and suits. Only owner assets invested in the business are at risk. Considered a pass-through entity where income/losses flow to members’ returns.
Owners have flexibility in structuring management and distribution of profits. Relatively easy to establish and maintain. The preferable initial choice for most small business owners, including junk removal companies.
A more complex and formalized structure. Requires articles of incorporation, annual meetings, and corporate formalities. Shareholders have limited liability. Corporations file their tax returns and pay taxes on profits. Owners pay taxes on dividends. Additional recordkeeping and accounting requirements add costs.
5. Register Your Business For Taxes
Every business, including a junk removal company, needs to obtain an Employer Identification Number (EIN) from the IRS. This unique number identifies your business for tax and reporting purposes.
Registering for an EIN is free and easy to do online. Simply follow these steps:
- Go to IRS.gov and search “apply for an EIN” to find the application page.
- Determine if you need an EIN. Sole proprietors can use SSN, but best to get EIN.
- Choose your business structure. For junk removal, select LLC or corporation.
- Complete the online application with your personal and business info.
- Submit the form and your EIN will be provided immediately.
The EIN registration process takes less than 15 minutes. The EIN serves as your business’s tax ID number for important tasks like opening a bank account, applying for licenses, and hiring employees. It’s a key foundational step when starting any small business.
You’ll also need to register with your state to collect and remit sales tax. Every state has slightly different requirements. A good starting point is the business wizard on your state government’s website. This will walk through if you need a sales tax permit, seller’s license, or consumer use tax account depending on your operations.
Registration fees are usually minimal – $10-$50 in most states. You’ll use your sales tax ID on invoices and collecting sales tax from junk removal customers. This revenue gets paid to the state through quarterly or annual tax filings.
6. Setup Your Accounting
Operating a junk removal business generates various bookkeeping and accounting obligations. Handling finances cleanly from the start prevents issues down the road with the IRS and supports smart business decisions.
Using accounting software like QuickBooks simplifies tracking income and expenses. Quickbooks connects to business bank accounts and credit cards to automatically import transaction data. This eliminates manual entry and reduces errors. Reports provide real-time visibility into profitability. Software like QuickBooks typically costs $10-$50 per month.
Hire an Accountant
Hiring an accountant is wise for periodic tasks like payroll, reconciling bank statements, and compiling financial reports. Expect to invest $100-$200 monthly for basic bookkeeping assistance. Come tax time, an accountant can handle completing and filing returns starting at around $500. Having an accountant review your books and taxes adds an expert layer of oversight in case of an audit.
Open a Business Bank Account
Keeping business and personal finances separate is crucial. Open a dedicated business checking account and credit card. This cleanly segregates transactions and keeps expenses organized. Business credit cards also help build a business credit history. Limits are based on time in business and estimated revenues.
7. Obtain Licenses and Permits
Operating a junk removal company requires various federal, state, and local licenses and permits. You can learn about federal licenses through the U.S. Small Business Administration. The SBA also provides a local search tool for state licenses.
At the federal level, you may need a DOT number for interstate junk hauling operations. This identifies your business and authorizes transporting regulated materials across state lines. The application process takes 2-3 weeks and costs $300.
Most states require a standard business license to legally operate. Fees are generally $50-$100 annually after submitting proof of business registration. Specific junk hauling licenses may also be mandated depending on your state and the services offered. These verify compliance with regulations around waste transportation and disposal.
You’ll need commercial auto insurance coverage meeting state minimums. Expect to provide proof of insurance to obtain state vehicle registrations and license plates for your removal trucks. Registration fees vary by location and vehicle weight class but expect $500+ per truck annually.
Your trucks will require commercial vehicle inspections and permits to operate legally. Inspections verify they meet federal safety standards. Permits are specific to the vehicle size and weight. Expect costs of $100 per truck. Renewals are annual.
8. Get Business Insurance
Carrying proper business insurance is crucial to protect a junk removal company from financial ruin. The right policies safeguard against liability risks and losses.
For example, a customer could trip over debris at a job site and sue for injury. Without liability coverage, the lawsuit could bankrupt the business. Or a removal truck is totaled in an accident. No commercial auto insurance means paying huge costs out of pocket. Another example is a thief stealing expensive equipment from the warehouse. Without coverage, replacing it could be impossible.
The consequences of being underinsured demonstrate why securing policies early is vital. Here is an overview of getting insured:
- Determine risks needing coverage. Liability for injuries, truck accidents, property damage, and theft are common needs.
- Research different business insurance types that apply. Common policies are general liability, commercial auto, property, and umbrella.
- Speak to agents and get quotes from various providers. Ask about discounts like bundling policies.
- Choose adequate coverage limits that hedge potential risks without excessive premiums.
- Complete applications and go through underwriting. Be prepared to provide business details.
- Get policies bound before operations begin. Pay premiums when billed to maintain active coverage.
Having proper insurance gives junk hauling businesses financial security to keep running if the unexpected happens. Protect your livelihood by taking the time to implement policies tailored to the specific risks your business faces before trucks hit the road.
9. Create an Office Space
Having a dedicated office provides a professional home base for managing a junk removal operation. It allows meeting with customers, handling scheduling/dispatching, storing documents securely, and conducting other administrative tasks. While a home office works initially, consider these options as your business grows:
A convenient and low-cost way to start. A spare bedroom or basement works well. Provides separation of work and personal life. The downsides are the lack of a professional atmosphere for meetings and distractions from household activities. Costs are minimal – just furniture and supplies.
A flexible and affordable option starting around $200/month per desk. Shared amenities like WiFi, meeting rooms, kitchens, and lounges in locations like WeWork enable a professional workplace without the cost of leasing an entire office.
Leasing dedicated office space provides full control over layout, signage, meeting areas, and amenities. No neighbors to disturb with trucks or equipment. Owners can shape the space to their needs. Leases average $15-$30 per square foot monthly in low-cost areas. Must furnish and equip the space as well. Often requires 3-5 year leases.
10. Source Your Equipment
Launching a junk removal operation requires acquiring essential equipment like trucks and tools. Savvy entrepreneurs explore these sourcing options to secure necessary items at the best values:
Purchasing brand-new trucks and gear from dealers provides warranty coverage and no wear and tear. However, costs are highest going this route. New customizable trucks run $60,000. New tools and supplies add thousands more.
Financing options like secured loans help defray upfront capital needed to buy outright. Balance acquisition costs with projected revenues to avoid overspending.
Buying used trucks, dump trailers, and tools provides huge cost savings over new ones. Search used dealers, auctions, and listing sites like Craigslist and Facebook Marketplace to find deals. Older models with some miles and cosmetic defects can function fine while slashing acquisition costs in half.
Thoroughly inspect any used equipment and factor in future maintenance and repairs. Have a mechanic evaluate used vehicles before purchasing.
Renting trucks and other gear provides flexibility for occasional large projects without requiring ownership. Sites like Penske Truck Rental offer cargo vans, pickups, and box trucks. Rates range from $50-$150 per day.
Short-term rental works for handling overflow jobs without buying more trucks or as a temporary solution after a vehicle breakdown.
Leasing trucks over 3-5 years can make payments more affordable instead of large lump-sum purchases. At lease-end, you return the vehicle instead of owning it outright. Leasing expenses for equipment acquisition over time.
11. Establish Your Brand Assets
Creating a strong brand presence elevates a junk removal business and drives recognition. Essential steps include:
Getting a Business Phone Number
A dedicated business phone number published across online listings and marketing materials gives a professional impression. Using a modern cloud-based service like RingCentral routes calls seamlessly from a single number to any employee device.
Sophisticated call handling, voicemail, and analytics provide efficiency. Expect to invest $20-$50 monthly for a business line.
Creating a Logo and Brand Assets
A polished logo crystallizes your brand image. Simple and iconic designs are the most memorable. A graphic designer from a site like Fiverr can create custom options starting under $100.
Services like Looka offer logo maker tools to DIY professional logos in minutes. Expanding your visual identity with letterheads, truck decals, employee shirts, and website imagery creates cohesion.
Creating Business Cards and Signage
Business cards convey credibility when meeting customers, networking, and promoting your services. Expect to pay $20-$50 for 250 quality cards from providers like Vistaprint. Use cards to share your phone, website, and emails.
Signage on your truck, office, and job sites boosts visibility. Prices range from $50 for magnets to hundreds for lighted signs.
Purchasing a Domain Name
Secure a domain name that matches your junk removal brand. Keep it short and simple. Expect to pay $15-$20 annually from registrars like Namecheap. Use it consistently across the web, email, and marketing.
Building a Website
Every business needs a website to publish services, contact info, and bookings. User-friendly DIY website builders like Wix make creating one easy. Or you can hire web developers on freelance sites like Fiverr for custom designs. Plan $100-$5,000 for your website investment.
12. Join Associations and Groups
Connecting with industry peers provides invaluable insights when launching a junk removal company. Local associations, meetups, and Facebook groups offer networking and knowledge sharing.
Joining associations like the National Waste and Recycling Association gives access to events, advocacy, and training programs. Local chapters create ties in your geographic area. Annual dues start around $300.
You also gain visibility and referrals by joining your Chamber of Commerce. Fees are based on business size.
Attend gatherings like “Trash Talks” happy hours where regional waste and recycling companies mingle. Sites like Meetup.com simplify finding these events.
Tradeshows enable connecting with numerous industry peers at once. These provide visibility for your emerging brand.
Facebook offers niche communities to glean insights. Join groups like Junk Removal Business Owners Discussion Group to discuss challenges, solutions, and marketing tactics.
Interacting locally and online helps build relationships with fellow independent junk haulers. Learning best practices helps avoid pitfalls when starting. Share your tips once established to pay it forward.
13. How to Market a Junk Removal Business
Implementing marketing initiatives is essential for any junk removal company to gain visibility and attract customers. A multifaceted approach utilizes digital promotions and traditional techniques to build awareness.
Tap into your personal and professional network first. Satisfied family, friends, and existing business contacts provide powerful word-of-mouth referrals. Make it easy for happy customers to endorse your business on review sites and social media. Offering $20 referral bonuses encourages sharing.
- Search engine ads target customers searching for junk removal. Google Ads and Bing Ads allow granular targeting by service area and keywords. Expect to invest $100-$500 monthly as you test and optimize ads.
- Facebook/Instagram ads showcase your brand visually on the world’s largest social media platform. Target by location, interests, behaviors, and more. Budget $300-$1,000 monthly for paid social.
- Submit your business to online directories like Yelp, BBB, YellowPages, and industry-specific platforms. Completing detailed profiles with photos and services boosts visibility in local searches.
- Produce a branded YouTube channel with vehicle tours, service overviews, job sites, and company culture videos. Educational and “day in the life” content builds authority.
- Start a company blog discussing decluttering tips, local events, employee spotlights, and industry topics to attract website visitors. Promote content across social media.
- Print mailers and flyers with current promotions dropped off at local businesses and houses generate calls. Offer coupons to incentivize hiring your company.
- Place ads in community newspapers and penny savers to reach neighborhood demographics. Expect costs of $200-$500 for small multi-week campaigns.
- Invest in company shirts, truck signage, and decals to act as rolling billboards around your service area.
- Sponsor community events, teams, and causes to get involved locally while promoting your brand.
- Explore radio ad campaigns on local stations for mass reach. Often more cost-effective than television.
Budgeting 10-20% of monthly revenues for marketing provides sufficient capital to test and refine an optimal mix of digital and traditional tactics over time. This ongoing brand exposure converts prospects into paying junk removal customers.
14. Focus on the Customer
Providing excellent customer service is pivotal for any junk removal company to gain referrals, boost reputation, and ensure repeat business. Going the extra mile sets your brand apart. Some ways to improve customer focus when starting your junk removal jobs include:
- Arrive promptly at appointments dressed professionally with friendly staff.
- Take time to listen to customer needs and walk the property to customize the best solution, instead of quick unreliable quotes.
- Explain your process clearly and set proper expectations on what items you’ll haul, what cleanup entails, where materials go, and anticipated timelines.
- Leave the property cleaner than when you arrived.
- Follow up after the job to check satisfaction and remedy any concerns.
- Asking for reviews on Google and Facebook provides visibility to prospects.
- Offering small referral rewards incentivizes happy customers to recommend your business.
- Surprise and delight with special touches like a branded water bottle with a business card or company t-shirt as a parting gift.
- Send thank you cards or discounts after completing large projects.
Working efficiently yet compassionately must permeate your brand’s culture. Hire and train employees committed to going the extra mile. Stellar customer service creates vocal fans that drive referrals, reviews, and repeat customers to fuel your junk-hauling growth.