How to start a waste and recycling business
Looking to set up a waste and recycling sector? Check out our step-by-step business guide here...
When thinking about how to start a recycling business or waste removal business, consider:
- 01 | The industry
- 02 | Opportunities
- 03 | Regulations
- 04 | Costs
- 05 | Useful tips
- 06 | Key recycling contacts
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What is a waste and recycling business?
On the face of it, it doesn't look like the best time to set up in the waste and recycling sector. Despite lots of green talk, local councils across the UK are stockpiling sorted household waste in warehouses. People are more environmentally aware than ever, but recycling companies are just sitting on their waste paper, scrap metal and plastic bottles. Not processing anything, mind, simply …waiting for the market to bounce.
The whole market for recycled output is in a state of flux. This is mostly because commodity prices have been bitten by the credit crunch: a sharp fall in demand from markets in the Far East has put a once booming sector in a tough spot.
Jason from AnyJunk.co.uk, an eco-friendly waste removal company based in London, explains the situation: “When I started this business around four years ago, we were getting about £50 a ton for mixed metal. Up to around three or four months ago it was £200 a ton. And then not too long ago it was down to £5. Most people who don't have large accounts and stuff were being paid nothing.”
So, from the perspective of a company involved in pure recycling, things are bad.
That's not to say that it's not a good time to start up in waste or recycling, however.
With governmental and Europe-led policies such as the Waste Framework Directive making green targets concrete, and pressure rising on commercial organisations to manage their waste responsibly, demand is set to grow in the waste and recycling sector. Even now, all boroughs are subject to considerable fines if they exceed their quota of waste sent to landfill and until very recently, such was the extent of demand that most of the waste collected for recycling was sent abroad for processing.
But demand or none, times are tough: to be successful, you'll probably have to be a bit inventive in the type of waste or recycling business you set up.
What is it?
In the start ups league, a recycling company is most likely to be either a service, collecting recyclable waste from businesses and consumers for instance; or a small scale niche processor, using recyclable and recycled material to make new products. As generally low income, high growth vehicles, start-ups aren't all that suited to mainstream recycling. Setting up your own glass recycling plant backed by millions in debt is not really an option.
The waste and recycling sector is a broad one though, and there are lots of areas that remain unexploited — often because big recycling companies and waste management outfits believe the market value is too small. You could focus on collecting materials that are difficult to retrieve or tricky to recycle, like certain plastics, carpets, and synthetic fabrics. And there are many examples of small glass companies and recycling-focused companies that come up with innovative ways of using glass for instance.
Who is the recycling business suited to?
But there are niche opportunities in the way that services are offered too: new companies can innovate and tailor-make waste solutions for individual producers of waste. Think: how might you cater for a business' particular waste needs? Are there materials that local councils do not take? Are perfectly retrievable items going from households to landfill because it is too difficult for people to do anything else with them? Service-centric waste and recycling firms need to focus on the hassle factor and exploit it.
Our case studies are service-led companies which think this way: AnyJunk.co.uk is a waste removal service which sends 70% of collected content away from landfill and Green Works collects, reuses and recycles quality second-hand office furniture.
Colin Crooks from Green Works believes service is key to small scale waste and recycling ventures: “The people who will survive in recycling are those who provide an excellent service. The material is not of any value to the person who's sitting on a load of it: they just want it gone out of their premises.”
Colin is confident the market is ready for fresh waste and recycling startups, and says there are a lot of things that could be recycled better or recycled more. Equally there are a lot of things that are being recycled currently where there are opportunities to provide a higher level of service and win contracts: you could decide to start up a man-and-a-van enterprise tomorrow and do pretty well if your service was good; you could become a dealer in scrap metal (though really, now's probably not the best time); or you could try something different, as Jason from AnyJunk.co.uk suggests. Think niche and you could be on to a winner: “Crockery, for example,” he suggests “I'm sure there's quite a niche market for it. It could be used for road building if it was crushed up.”
It's worth bearing in mind though, that even if you find a great recycling idea, recycling itself is not the main battle. Getting the material in the first place is a lot more difficult, Jason warns: “One of the big challenges of recycling is not the processing of the materials once you've got them. It's trying to get the materials out of the waste you get from various organisations.”
You should also bear in mind when sourcing your clients: if you are making money at the producer end, they are also your suppliers. The service you offer at collection point should be at the top of your list.
At the end of the day, the trade in waste is motivated by profits, not ideals of sustainability and it's not only do-gooder hippie types that get into the recycling game. It's not all milk bottles and good intentions – or even mobile phones and toner cartridges: there is a lot of money to be made in waste, and the recycling sector is generally dominated by very large corporates.
However, if green thinking is your motivation, don't despair. There are plenty of successful, ethically minded companies out there. Colin Crooks of socially-motivated enterprise, Green Works, tells us that while the recycling sector has a corporate culture, a lot of companies are socially motivated too. He explains: “It's fifty-fifty: a lot of people look at recycling as a tremendous investment opportunity, and there are certainly fields wide open in which they can make some money.
“But it's also something that people feel passionate about and want to take part in. A lot of these companies will do it even though it's not financially viable in the material sense. They're driven by other factors – by passion for the environment.”
It's important to remember, however, that just because you're a green enterprise, it doesn't mean that your competition is limited to other green organisations. You may have to compete with large corporates and well-established medium-sized firms who will be out to make a profit – even if you aren't.
Rules and regulations
Legal issues really must be top priority if you decide to go into waste and recycling. All kinds of waste disposal and recycling initiatives are subject to stringent rules and regulatory requirements — even if the material your organisation deals with is not hazardous.
It is a very complicated area and different rules apply depending on what type of business you plan to run, what materials you're handling and the volumes you're dealing with as well as how long you're keeping them for. A number of health and safety laws only become relevant when you start to grow and have a certain number of staff members too. Small or large, though, legislation is not something that you can neglect. Jason of AnyJunk.co.uk explains:
“What tends to happen is that people go into waste and recycling without ticking all the health and safety boxes. They don't get the licenses and then they realise that they're in breach of everything. And it's all over.”
Falling foul of legislation is very easy for a start up to do, and likely one of the reasons why waste management and recycling companies tend to be quite large, with dedicated departments for such things as legal compliance.
In overview, there are four areas that you should consider: waste legislation; planning consent; legislation dealing with the carrying of waste and transporting it; and health and safety.
The heavy hitters regarding waste legislation are: the Waste Framework Directive and the Environmental Protection Act. And if you plan to run a waste removal service for businesses, you must also be aware that all businesses you work with:
- Have a ‘Duty of Care' requiring them to ensure their waste is disposed of safely and properly even after it has been passed on to another party such as a waste contractor, or recycler. This ‘Duty of Care' has no time limit and extends until the waste has either been disposed of or fully recovered;
- Must ensure waste is transferred only to an authorised person or to a person for authorised transport purposes;
- Must transfer a written description of the waste that will enable other persons to avoid the unauthorised or harmful disposal of the waste and to comply with their own ‘Duty of Care'.
Although at present, there are no legal requirements on the waste industry to enforce health, social and environmental standards for exported recyclable materials, waste and recycling companies in the UK are under great pressure to supply all licenses and literature documenting and proving their good practice.
Planning consent – which every waste company needs to get from their local authority or council – is often difficult to get. Your ideal site or waste transfer centre may be in a central location within an urban environment, but it likely won't happen. Local residents often object to and even block waste projects.
To find out exactly what your legal obligations are regarding licensing, registration, and operation, the Department for Environment, Food and Rural Affairs and its public body, the Environment Agency should be your first port of call. It can also be difficult to get relevant licensing from the Environment Agency, as specifications are quite particular.
For licensing of vehicles you should contact the Driver and Vehicle Licensing Agency. These bodies will be able to tell you exactly what your company's responsibilities are, depending on your specialty.
The Chartered Institute of Wastes Management and the Environmental Services Association offer training courses on everything from waste carriers and related controls to Duty of Care and environmental permitting and exemptions.
It's worth noting that if your company has overlooked legislation, but has made every effort to comply, you'll most likely get your knuckles rapped and get a fine, but no more. A lot of authorities are understanding if you can provide evidence that you're trying your best.
However, as Jason says, you should try to get things right from the start: “People should definitely not factor in fining! They should try get it right the first time round. The Environment Agency is happy to help.”
How much does it cost to start a waste and recycling company?
Depending on what area you are going into, start-up costs for waste and recycling can vary. According to Colin of Green Works, it has become more expensive of late – possibly as a result of the drop in commodity prices:
“Startup costs were initially very low, and there was relatively easy access. Those costs have risen quite considerably, but it's still not as expensive as the cost of entry into other forms of business like financial services for instance – because the quality of the staff you need is quite different.”
There's a degree of investment, and just how great this investment is may depend on your focus; i.e. whether you'll need space for storage or a workshop; machinery for processing or manufacturing; a fleet of vehicles; or skilled staff.
If you require a large square-footage for a warehouse most of your money will go into premises.
A vehicle fleet can cost a lot too, depending on what kind of product you're picking up, and exactly what model you go for. Trucks can vary from £30,000 to £10,000, to just a few hundred in the waste business, depending on your specification.
You also need to factor in costs for applying for planning consent, licensing your service and your fleet.
Remember however that you can subcontract out a lot of these things: you don't necessarily have to have a fleet, machinery and premises yourself, particularly when first starting out.
Tips and advice for a waste disposal business
1. Do your homework before jumping in to anything. Contact all the industry bodies and government agencies and research your proposition thoroughly: get as much advice as you can. The legislative side really is the main challenge in waste. Jason of AnyJunk.co.uk suggests that for particularly tricky pieces of law, it may even be worth it to bring in a consultant.
“For health and safety, we struggled. So we just used a consultant to come in and review our processes and help us. For any business that involves manual handling or moving parts and that employs lots of people, it's definitely an investment worth making.”
2. Like with any startup, it's important to have a very focused service offering. People need to know exactly what you do.
This is a bugbear of AnyJunk.co.uk's Jason, who says: “An awful lot of people in waste talk about ‘waste disposal' as their thing, or ‘waste recycling', but they don't actually talk about the service.”
He advises that you focus on the front end, on what the customer is getting, or how they're going to order it. You also need to consider who's going to help your customer effect their order as well as how they're going to be invoiced and what information they're going to get.
3. The waste and recycling sector is very tough, and much of your competition will be larger and more established. When you're starting out, it's worth taking the time to find bigger brands to sit beside. If appropriate, look for big clients – even if they do not necessarily use you very often, it will give you more credibility.
Useful waste and recycling industry contacts
08708 506 506
Department for Environment, Food and Rural Affairs
08459 33 55 77
Driver and Vehicle Licensing Agency
0870 240 0009
Chartered Institute of Waste Management
The Environmental Services Association
0207 8248 8882