What You Need to Know to Start Your Own Scrap Metal Recycling Business

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The process of scrap metal recycling may seem complicated, but it doesn’t have to be. The steps involved are straightforward and manageable as long as you understand what you need to do and how to do it.

Before you decide to start your own scrap metal recycling business, it’s important that you fully understand what scrap metal recycling entails. For example, it may surprise you to learn that most people think of scrap metal as any old piece of garbage. While there are certainly many pieces of junk in every ton of metals recycled, there are also tons and tons of valuable items mixed in with all those soda cans and paper scraps.

It is an interesting process: A single car usually has around 100 pounds of recyclable material. So, if your goal is to recycle one car per day (which isn’t much at all), you’ll have five tons from which to extract usable materials each week! It is a very lucrative line of work for someone willing to put in the time and effort required to know exactly what they are doing.

Keep reading to learn more about the five main steps to starting your own scrap metal recycling business, including what you’ll need and how much it will cost you.

Get Certifications

It’s a good idea to get certified if you want your scrap metal recycling business to succeed. A certification from a trusted government agency will build your credibility with potential customers and lend you some protection against scammers. Some certifications may even come with tax incentives or funding opportunities. Here are a few of your options:

  • Responsible Recycling (RR) Certification
  • Gold Seal Certification from the Solid Waste Association of North America (SWANA)
  • Certification from The Institute of Scrap Recycling Industries (ISRI)

These are only a few of your options; there are numerous certification programs available, and it’s worth doing your research so you can find one that best suits your needs. When you’re looking into certifications, don’t forget to check with your state and local governments for any incentives they may offer.

Get A Company License

As a scrap metal recycling business owner, you’ll be hauling around and processing dangerous goods. And if you plan on accepting scrap metal from businesses or individuals, you will need a special business license. Check with your local city or county government for specific requirements.

In general, however, you will likely need both a commercial driver’s license (CDL) and an EPA identification number (EPA-ID). The latter can be obtained from your local environment agency office after completing an application form that costs around $100. This may seem like a lot of work upfront, but establishing yourself as legit helps protect both you and customers — and it also means less hassle when dealing with regulators in general down the road.

Apply For Insurance

Be sure to check with your insurance company regarding business coverage. If you’re starting a home-based business, you might need separate insurance from what you have in place for your personal property. Check with your agent or broker. Also, make sure that if you plan on using employees, even if it’s just part-time help, you get worker’s compensation insurance as well as disability and unemployment coverage for them. This is state-mandated in some states, but not all.

You’ll also want to purchase an insurance policy that covers lost profits if the equipment is stolen or destroyed; workers compensation insurance; general liability insurance; and commercial auto insurance.

Prepare the Supplies

To start your own scrap metal recycling business, you will need some basic supplies. These include a computer and internet access, a mobile phone with internet service, printer for documents, calculator or spreadsheet software, filing cabinets, and of course, heavy construction equipment such as a sweeper collector and articulated trucks for transporting materials. Although other items can be used to effectively run a scrap metal recycling business, these items are a must in any successful venture.

Think of Your Facility Layout

To get started, you’ll need a place to store your scrap metal. Consider renting a building — this way, you won’t have to worry about losing profit by having your material out in the elements while you hunt for a buyer. You can also purchase or rent a small land space for storage. This will be cheaper initially, but you’ll likely pay more in taxes and fees over time because it isn’t classified as an official business location. Set up your property according to guidelines from your state board of health; you should have all appropriate permits and licenses (including local zoning permits) before beginning operation as well.

Hire the Best Employees

Finding, hiring, and managing an employee is a big responsibility. Although business owners take on various roles, they can’t be everywhere at once. Choosing your first employee will be one of your most important decisions, so you must find someone who is both trustworthy and reliable. Be prepared for some tough conversations about work/life balance; employees who feel overworked are likely to make mistakes — or jump ship when something better comes along.

Don’t overlook the environmental and monetary benefits of becoming a scrap metal recycler. If you’re interested in starting your own business or want to add a profitable side-business to your existing operation, learn how recycling scrap metal can help you bring in additional revenue.

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