How To Start Your Own Junk Car Recycling Business

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Junk Car Recycling

A junkyard or also called an auto salvage business collects items from consumers that they no longer require. Later this scrap is converted into reusable items and then resold. A junkyard owner can get these scraps or raw materials from different objects like junked cars, appliances, furniture and demolished apartments. 

Junkyard owners dealing with vehicle parts get the totaled or damaged vehicles from individuals or companies. They may serve as a short-term service and storage facility for the cars on their way to other destinations or as the car’s ending place. For the second one, junkyard owners remove the car parts and recycle them into reusable items.

Steps to Start Your Junk Car Recycling Business

  • Develop a Business Plan

A clear written plan is important before stepping into the junk car business. It’ll help you to rule out the requirements and challenges. 

For a start, you need to make a budget. First, decide whether you require a small or large land with an extra upfront cost. When you get the land, there’re other costs like fencing, security, equipment, facilities, administration, store inventory etc.

But the biggest investment will be in the salvaging procedure. You need to buy proper tools, materials, a car crusher and, of course well skilled labor. Additionally, you need to make a separate budget for insurance, administrative works and advertising expenses to promote the business.

Finally, you need to understand your competitors and target market. Developing a proper plan will help you estimate market demands and identify niche markets that you’ll target.

  • Form a Legal Entity

The next step is to name the business and register it legally. You should give it a catchy name that’ll tell what the junkyard is about.

 To form the legal entity, you can contact the local administrator to learn the process and initiate the paperwork. There’re four common business structures you can choose from Sole Proprietorship, Corporation, Partnership and Limited Liability Company (LLC). Among which the LLC or Corporation will give you protection from being personally liable if any mishaps happen in the business.

  • Register for Business Taxes

The most important step to start a junk car recycling business is to register it under local and federal taxes. You can apply for an Employer Identification Number or EIN for business tax registration based on your business structure and location. This will give you tax benefits as well as personal liability security.

  • Open a Business Account

After finishing the paperwork, you can open a separate business account. This way, you can keep the funds for the junk car business separated from your personal expenses. If not, the bank might take possession of your personal assets, including the home, car, etc., in case the business is sued.

Furthermore, you can apply for a business credit card. Having this card is very helpful since this will build your credit score. So you can raise funds later and invest in the business.

  • Establish Business Accounting

Keeping a record of your different expenses and income sources is crucial to determine the financial state and economic position of the business. Additionally, recording a detailed and accurate account is also helpful during tax filing.

  • Buy Equipment

Suppose you went to junk your vehicle in a yard, but it couldn’t provide your desired services. The same thing can happen to you and this can ruin the business. So, your junkyard must be well equipped to provide service quickly.

There’re some common tool requirements like a standard toolbox, fork truck, wire strippers, sockets, extensions, engine-checking tool, battery power etc. Since people tend to search online for the best salvage yard, you need to provide the best tools and services to be successful.

In addition, you can offer free towing for old cars. Though it’s an extra cost, it will still make your business stand out in the market.

  • Get Advice from Expeirenced Business Owners

Once you study your compeititors and get all the equipment, it will be wise to contact some experienced entrepreneurs who are already in this same business. But it is completely unrealistic if you think the local junkyard owners will help you in the process. 

However, the junk car business owners from a different town or location are a good resource to get some advice. You can find many entrepreneurs willingly providing you with useful knowledge about the business.

  • Promote Your Business

Finally, it’s time to create a marketing strategy to run the business successfully. To promote the business, you can place a large billboard in a commercial area where people can see it.

Moreover, launching a business website with all details is extremely helpful. Thus, you can create a network and community from the same market and more people can reach you easily. You may also create a Facebook page to promothe junk car business.

Though it may take some time and effort to set the business, but once you set in, it’ll quickly take off. But make sure you have done all the legal formalities to avoid any issues later.