new here with new business venture

[Onmy6]

Hello all,
My name is Ryan Tombs and I am from the NJ area. Recently I have been debating on purchasing a scrap yard. A little background on myself. First off I am 21 who graduated with an associates in diesel mechanics and HVAC from OSU and had a job right out of school. During middle school and my highschool career I owned a landscaping/ lawn service. I also did some scrapping. I remember 10 years ago running into the office to collect the money and seeing the owner's retirement clock. Anyways, I am extremely unhappy with my job as a mechanic (even though it is great money for a 21 year old). My father, a funeral director has always talked about buying a scrap yard. I hate the big business feel and being a mechanic and working for someone else. I grew up in a small business household and was always told, "if you are going to work 90 hours 7 days a week do it for yourself". Since I finally stopped traveling for work, I am going back to school for a major in Business.
I have enough money saved up/ invested to live on a smaller income to maybe try and work at a local yard to "learn the business" (good idea?, the owner still recognizes me when we come in with our little scrap that we do now)
I am very fortunate to have a supporting family. Between my father, and my grandfather who helped my uncle start up a steel business and my uncle who was a nobody but through hard work has made a great name for himself and is now retired from the steel industry.
I plan on doing more research and then going to talk to the family/ business accountant about the feasibility of it all. The accountant talked about the funeral home getting into another business so this would be an option.
-Ryan

[alloy2]

Hello all,
My name is Ryan Tombs and I am from the NJ area. Recently I have been debating on purchasing a scrap yard. A little background on myself. First off I am 21 who graduated with an associates in diesel mechanics and HVAC from OSU and had a job right out of school. During middle school and my highschool career I owned a landscaping/ lawn service. I also did some scrapping. I remember 10 years ago running into the office to collect the money and seeing the owner's retirement clock. Anyways, I am extremely unhappy with my job as a mechanic (even though it is great money for a 21 year old). My father, a funeral director has always talked about buying a scrap yard. I hate the big business feel and being a mechanic and working for someone else. I grew up in a small business household and was always told, "if you are going to work 90 hours 7 days a week do it for yourself". Since I finally stopped traveling for work, I am going back to school for a major in Business.
I have enough money saved up/ invested to live on a smaller income to maybe try and work at a local yard to "learn the business" (good idea?, the owner still recognizes me when we come in with our little scrap that we do now)
I am very fortunate to have a supporting family. Between my father, and my grandfather who helped my uncle start up a steel business and my uncle who was a nobody but through hard work has made a great name for himself and is now retired from the steel industry.
I plan on doing more research and then going to talk to the family/ business accountant about the feasibility of it all. The accountant talked about the funeral home getting into another business so this would be an option.
-Ryan

Good idea since you have a family connection with the funeral home, artificial joints and dental implants and hip joints from cremations would be a good start.

[matador]

All joking aside about stealing metal plates and gold teeth....

Commodities prices are absolutely terrible. Crude oil has crashed, and is still coming down. Grain prices are terrible- one of the local barley companies has reduced it's contracts from between 15-50% for all growers. That means that if you grew 100 acres annually for them, the most they'd let you grow for them is now 85. The prices are that low. Animal prices (Beef, pork,...) are down too, and the big one here- scrap prices are completely crashed. I can remember when shred (Your average "junk"- washing machines, old farm equipment, that metal plate mentioned by alloy2,....) was paying close to $200 a ton. Today, the yard is paying $0/Ton. You bring it in, and they'll tell you "have a nice day!" The problem isn't high supply, it's low demand.

The economy is in a terrible mess right now. Half of our main street is available for rent, and the rest of the businesses are struggling or for sale. I judge how businesses are doing based on their equipment. If they're doing well, they'll buy a new truck, computer, or something of the like. If they're having a rough year, the older truck lasts another year. Things are so bad right now that I'm seeing businesses replacing trucks with older ones. That's right- they're going backwards! What does that mean? Simple- they used the old truck until it was done. But, they then couldn't afford a newer one, so they bought what they could. That's not a good sign. There are a fair amount of 30 year old trucks doing daily service out here. I can't remember seeing this many 1980s trucks 10 years ago.

We had two scrapyards in our town. One closed completely. The other one is only open, because they're owned by a construction/trucking outfit that has the equipment and land already. They've reallocated most of their workers, though. It's an absolute ghost town now. They're at $0, and charging for metal is unfeasible if you're a scrapyard (Out here, the old farm equipment will just sit another decade), so the prices are cutting into margins. That's not good.

I'm the same way as you are, though- I worked for myself when I was still in High School- I was the only one at the school who had a sign on the side of my truck advertising computer repairs (They were next to the highway, so why not?). I've worked for other places and have done contract work- I hate it. I love working for myself. I work with the great people of this forum every day, but if that opportunity wasn't there, I'd be doing something else for myself.

I don't know anything about New Jersey- I've never been any farther east than Kansas City, MO. But, out here, there are demands for mechanics and HVAC technicians. Maybe there's a future in that. I drove around in an F150 for a few years repairing computers- it wasn't bad. There are less than 50k people in the two counties I serviced, so that was the issue.

Talking with an accountant is a great plan. I'd also recommend the SBA. Even though they're more known for loans, they have people that you can talk to about your business plans and receive feedback from. Five years ago, I wasn't aware that my career even existed. Who knows what's out there.

Scrapping can be a great business, but I think I'd wait the storm out. With costs of starting a yard in the millions, and prices of all commodities this deflated, I'd wait this cycle out. Maybe there's another edge for you, though- E-Waste for example. Instead of millions in equipment, you need a warehouse and a reliable truck. It's worked pretty well for me!

Best of luck!

[Onmy6]

Good idea since you have a family connection with the funeral home, artificial joints and dental implants and hip joints from cremations would be a good start.

not sure on the legalities of all that... but I guess it is good, I was more looking at a finance backer.

[Onmy6]

All joking aside about stealing metal plates and gold teeth....

Commodities prices are absolutely terrible. Crude oil has crashed, and is still coming down. Grain prices are terrible- one of the local barley companies has reduced it's contracts from between 15-50% for all growers. That means that if you grew 100 acres annually for them, the most they'd let you grow for them is now 85. The prices are that low. Animal prices (Beef, pork,...) are down too, and the big one here- scrap prices are completely crashed. I can remember when shred (Your average "junk"- washing machines, old farm equipment, that metal plate mentioned by alloy2,....) was paying close to $200 a ton. Today, the yard is paying $0/Ton. You bring it in, and they'll tell you "have a nice day!" The problem isn't high supply, it's low demand.

The economy is in a terrible mess right now. Half of our main street is available for rent, and the rest of the businesses are struggling or for sale. I judge how businesses are doing based on their equipment. If they're doing well, they'll buy a new truck, computer, or something of the like. If they're having a rough year, the older truck lasts another year. Things are so bad right now that I'm seeing businesses replacing trucks with older ones. That's right- they're going backwards! What does that mean? Simple- they used the old truck until it was done. But, they then couldn't afford a newer one, so they bought what they could. That's not a good sign. There are a fair amount of 30 year old trucks doing daily service out here. I can't remember seeing this many 1980s trucks 10 years ago.

We had two scrapyards in our town. One closed completely. The other one is only open, because they're owned by a construction/trucking outfit that has the equipment and land already. They've reallocated most of their workers, though. It's an absolute ghost town now. They're at $0, and charging for metal is unfeasible if you're a scrapyard (Out here, the old farm equipment will just sit another decade), so the prices are cutting into margins. That's not good.

I'm the same way as you are, though- I worked for myself when I was still in High School- I was the only one at the school who had a sign on the side of my truck advertising computer repairs (They were next to the highway, so why not?). I've worked for other places and have done contract work- I hate it. I love working for myself. I work with the great people of this forum every day, but if that opportunity wasn't there, I'd be doing something else for myself.

I don't know anything about New Jersey- I've never been any farther east than Kansas City, MO. But, out here, there are demands for mechanics and HVAC technicians. Maybe there's a future in that. I drove around in an F150 for a few years repairing computers- it wasn't bad. There are less than 50k people in the two counties I serviced, so that was the issue.

Talking with an accountant is a great plan. I'd also recommend the SBA. Even though they're more known for loans, they have people that you can talk to about your business plans and receive feedback from. Five years ago, I wasn't aware that my career even existed. Who knows what's out there.

Scrapping can be a great business, but I think I'd wait the storm out. With costs of starting a yard in the millions, and prices of all commodities this deflated, I'd wait this cycle out. Maybe there's another edge for you, though- E-Waste for example. Instead of millions in equipment, you need a warehouse and a reliable truck. It's worked pretty well for me!

Best of luck!

First, thank you for the very informative post! Fortunately, there are a few in the area for sale as of now... Cash in on Scrap Yard: Business For Sale in Union, Union County, New Jersey, United States on BizBuySell.com


I would not do a start up business but look into purchasing one. I have to do a further analysis on the market because judging by what everyone is saying it is like record level low. But, how I look at it (at the most basic form) everything has some sort of metal in it. There is a finite amount of raw material we can get from the earth. I feel the metal industry will never truly go away.
This is not a 2 week plan BUT it is not a 5 year plan to get into a business.
The accountant is really pushing for my dad and the owner to get into another business and pretty much goes by, if the numbers work why not.
This is the first time I heard of e waste (no joke). I am certainly looking into this as well.

[ItAllAddsUp]

Good ole NJ, where every govt entity will have its hand in your pocket. I can only imagine the regulations and NIMBY attitude a new yard will encounter. Working at an existing yard would be wise. Knowing which families you will have to make donations to also wise (only half joking here). You might have better luck starting an auto salvage yard with your background and work your way into a wider salvage operation. I will say there is a need for a yard along the western half of rt78. Good luck. I've owned several businesses in this state, and it is always tough to get going.

[junkfreak]

If I listen to everyone's negative opinions, I would never have started my business over 20 years ago.

Sounds like you're doing your research, and have adequate counsel.
Go for your dream ! Endeavor to persevere!

[pjost]

Just my .02, but have you thought about starting up a diesel repair shop? The few diesel repair shops that I have visited have always been busy.

From reading this post and your other post it sounds like you don't like working for "the man" or maybe it is all the travel (13 states). But you got into diesel repair on your own free will, so you must have a passion for the work.

I think if you could start up a nice clean and friendly shop you could make a killing. The four or five shops I have been to are always dirty and crappy looking, and the guy that greets you is usually gruff and grumpy about all the work they have To do before they can get my measily little project in. Lol. A cute girl in the office never hurts either.

Just a thought. Why get into a business that is determined by volatile markets?

Whatever direction you go, good luck to you Ryan.

[HipoGear]

All fortunes are made during times of chaos!

As Matador suggested, get some free help from the SBA. You can get a mentor through SCORE, which is their retired executives that donate their time to helping young startups.

Working for another yard while you shop for your dream business is a great idea.

Good luck. Sounds like you are on an exciting journey.

[alloy2]

not sure on the legalities of all that... but I guess it is good, I was more looking at a finance backer.

For financial backing try Fund Me.

[alloy2]

Today, 01:12 AM

#1

Onmy6 read this before you invest your finacial backers money History

[Onmy6]

Just my .02, but have you thought about starting up a diesel repair shop? The few diesel repair shops that I have visited have always been busy.

From reading this post and your other post it sounds like you don't like working for "the man" or maybe it is all the travel (13 states). But you got into diesel repair on your own free will, so you must have a passion for the work.

I think if you could start up a nice clean and friendly shop you could make a killing. The four or five shops I have been to are always dirty and crappy looking, and the guy that greets you is usually gruff and grumpy about all the work they have To do before they can get my measily little project in. Lol. A cute girl in the office never hurts either.

Just a thought. Why get into a business that is determined by volatile markets?

Whatever direction you go, good luck to you Ryan.

Short story:
I went to Academy for information technology (top 500 highschool in the country). I learned computers, rebuilding, troubleshooting, programming (was not good in this area, was good in the rebuilding and troubleshooting). As a senior perk we could take a technical class in the vo tech school on campus. So I did auto mechanics as I wanted something useful. Well, since I was an "outsider" I was placed in auto 2 (never took 1) and I missed either the lecture or practical side since my classes were 80 minutes where these kids spent 160 or so in the technical classes. So I missed a lot and the teachers let me skate by and basically do/ mess with what I wanted. One, day I walked into class and no one was there. I happened to find them in an auditorium in another building listening to a potential career path in what I did. Basically a company sends you to school for two years at a severely reduced rate and you work during those two years around the country and come out with a guaranteed job somewhere in the country. This was january of my senior year. Up until that point I planned on being a funeral director by going to community college and then going to mourtary school. Well, after talking to my parents (mostly my dad), we decided to give this a shot, since of how good it seemed... I was always a tinkerer, never a mechanic, even my lawn business, I purchased back up equipment so I could send my equipment to the lawn shop to be repaired. I like to mess with cars, computers etc.
As for a mechanic shop I did not like doing what I did and would hate to work on machinery day in and day out. The company I worked for was a rental company. For the most part I set generators, chillers, air compressors up. And if it was to big to repair we would swap the machine (i feel most techs at my company were not really true mechanics). I have way more experience operating 10k fork lifts in NYC streets, 36k fork lifts, yard mules, sky jacks etc.

All fortunes are made during times of chaos!

As Matador suggested, get some free help from the SBA. You can get a mentor through SCORE, which is their retired executives that donate their time to helping young startups.

Working for another yard while you shop for your dream business is a great idea.

Good luck. Sounds like you are on an exciting journey.

Thank you very much for the support and for those ideas (SCORE). I am so excited for that and am working on the website as we speak.

Today, 01:12 AM

#1

Onmy6 read this before you invest your finacial backers money History

Thank you will take a look in a little bit!

[matador]

Thinking outside the box always works well. There are options other than E-Waste, but going into something specialized like that may be a better option. I don't know what the cost of a scrap yard is, but I know that the cost to do E-Waste or something like that is less.

There was a member on here a while back that had a business of granulating copper for scrap yards out of the back of a school bus.

Give it some thought- there may be viable options that we haven't thought of yet....

[Onmy6]

specializing is a good idea. I realize you have to separate yourself from others to become a niche business owner. I am thinking just off the top of my head due to me just starting to seriously think about this business venture, but I would do ferrous, non ferrous and e waste (which seems to be the rage today)... The one in my area is not that expensive (i have never scrapped there) but I saw it is for sale at 550k, cash flow is 105k... Thats all that is really available with out the membership to the businesses for sale site... I know a guy who works next to the scrap place so might talk to him. I passed by today and saw 2 big 50ft dump trailers outside.
I also want to say thank you! It is great how everyone here is in business and is willing to share/ help a new comer into the market!