If you’re planning to start your own junk car recycling business, here’s a detailed guide for you.
A junkyard or auto salvage yard collects items and materials from customers that they don’t need anymore. Later these scraps are converted into reusable items and then resold. For example, a junkyard owner collects scrap metals from an old, broken or totaled car. Scrap metals like iron or copper are very expensive and hence, it’s a good business to make money from recycling junk cars.
So, follow the steps below to get started.
1. Make a Business Plan
Having a business plan is crucial before stepping into any business. It’ll help you to evaluate the benefits, requirements and hurdles and of course your competitors.
Initially, you need to set a budget first. Decide whether a small or large land you need to set up the junkyard. A large land can cost you an extra upfront amount. Additionally, there’re other costs along with the land like equipment, machines, fencing, security, administration, facilities, store inventory, workers, etc.
However, the largest investment will be in the junking process. You’ll require appropriate tools, materials, well-skilled labor and a car crusher. Not to mention, you need to make an additional budget for insurance, administrative operations and advertising expenses to market the business.
2. Choose a Business Structure and Form a Legal Entity
The next step is to choose your business structure. The four common business structures you can pick from are Sole Proprietorship, Corporation, Partnership and Limited Liability Company (LLC). The LLC or Corporation will give you protection from being personally liable in case anything wrong occur in your junkyard business.
You also need to name the business and register it legally. Think about a catchy name that’ll describe the business clearly. To get help in the process, contact the local administrator and start the paperwork.
3. Register Your Business
Registering your business under local or federal law for taxes is an important step for starting a junk car recycling business. To do that, apply for an Employer Identification Number (EIN) for tax registration. It will depend on your business location and the structure you chose. In this way, you’ll get tax benefits and personal liability protection.
4. Open a Separate Bank Account
Once you’ve completed the legal procedure, you need to create a business account separate from the personal account. This will help you to separate personal expenses from business ones. Otherwise, the bank may take possessions of your personal assets like the house or car.
You can also apply for a business credit card. It can build your credit score which will help you to take a further loan to grow the business.
5. Purchase Equipment and Materials
Setting up only a junkyard is not enough, you need to make sure that you’re able to provide services. If you can’t, this will ruin the business and customers may not visit your junkyard again. So, the junkyard must be equipped with the proper equipment, materials and machines.
The tools you require are a standard toolbox, engine-checking tool, fork truck, battery power, sockets, wire strippers, extensions, etc. Moreover, keep in mind that people prefer to search online for the best salvage yard. So, you need to provide the best tools and services to be successful.
Additionally, many junkers offer free towing for old or totaled cars. This makes the business stand out in the market. If you can do so, customers will be happy to sell their junk cars to you.
6. Talk to the Experts
It will be wise to talk to the experts about this business while you’re new to it. Contacting experienced entrepreneurs can help you develop decision-making skills and know the business opportunities.
However, local junkyard owners may not feel comfortable sharing their success tips with you. In that case, you can visit junkyard business owners outside the town and they’ll willingly provide you with some useful knowledge.
7. Promote the Junkyard Business
No business can be successful without promotion. It’s one of the important factors to run a business successfully.
In order to start the promotion, you can place a large billboard in a crowded area so people can see it often. The best tip is to create a business website. In this way, you will be able to meet different communities from the same business and more customers will visit you. Post your prices there and update them when needed. Additionally, make a Facebook business page to reach more potential customers.
The entire process may take a while to develop the business. But eventually, you will make it run successfully with proper planning.
