If you’re looking for a growth industry, look no further than waste management. Americans generate a lot of trash, and as the population grows, so do the heaps of waste that need to be hauled away, disposed of, or recycled. Growing a waste management business can be highly lucrative, but this industry also presents some special challenges.
A Growth Industry
As an industry, waste management—defined as “the collection, treatment, and disposal of waste materials”—has grown an average of 2.5 percent annually since 2000, the Bureau of Labor Statistics reports. The first thing you think of when you think of waste management is probably trash collectors hauling away residential garbage. However, there are many other opportunities in this industry:
- Medical waste management: Healthcare is a booming industry, and strict regulations regarding disposal of medical waste make this a growth area for entrepreneurs.
- Food waste management: Restaurants and grocers need to dispose of food waste in a sanitary, efficient manner.
- Commercial/Industrial waste management: Office buildings, manufacturing plants, and other commercial enterprises generate massive amounts of waste that needs to be removed.
- E-waste: There’s a growing need for safe and secure disposal of used electronic devices.
- Green waste: Natural waste such as grass clippings, leaves, and tree branches has its own disposal requirements.
- Construction waste: When new construction surges, so do the opportunities for waste management businesses to haul away the waste at the end of each day.
- Hazardous waste management: This niche of the industry is expected to grow by 6.6 percent annually through 2022, according to Credence Research.
Growing a Waste Management Business
Focusing on a specific niche like those above is one secret to growing a waste management company. Waste management is a highly regulated industry, so offering services to different types of clients is extremely complex and costly. Instead, hone in on a particular market and become an expert in that field.
Another way to grow is by offering environmentally friendly services. Businesses and local governments are seeking to reduce their environmental footprints by reducing and/or recycling the waste they produce. In 2014, over 89 million tons of municipal solid waste—34.6 percent of all MSW produced—was recycled, the EPA Show potential clients how a “reduce/reuse/recycle” approach to waste management can help them comply with regulations, save money, benefit the planet, boost their images, or all of the above, and you’ll have an edge on your competition.
From software to help you manage and maintain your truck fleet and GPS tools to plan the most efficient routes to self-driving trucks currently under development, technology is revolutionizing the waste management industry. Staying up-to-date and implementing the right technology is key to growing a waste management business.
The waste management industry is price-driven but also subject to sudden changes that can drastically affect costs. Since anything from fuel shortages to regulatory changes can cut into your profit margins, it’s important to keep a close eye on operating costs. For instance, consider using contract drivers who don’t require benefits instead of or in addition to full-time employees.
Monitor threats and opportunities
A waste management business owner must keep up with economic trends and government regulations. For instance, growth in construction or infrastructure projects would increase demand for industrial and construction waste management. Changes to regulations can provide new opportunities for your business—or reduce the market for your services. Be nimble and ready to switch your focus as the market directs.
Be adequately financed
Starting and growing a waste management business is capital-intensive. Working with commercial and government clients can mean long waits to get paid. Do careful financial planning and keep a close eye on cash flow. (Here are some financial indicators you should review regularly.) Be prepared with a backup plan to get the cash you need in a hurry. For example, with invoice financing from Fundbox, you can advance 100 percent of an outstanding invoice’s value and get the money in your account as soon as the next business day. (Learn more about invoice financing.)
As the saying goes, “One man’s trash is another man’s treasure.” With the right approach, growing a waste management business will truly turn trash into treasure.