Starting a new scrapyard

i have considered this myself, as i have had several people offer me venture capital to turn my one man operation into a full time career. i will be interested to see what some of the yard owners on this forum have to say about how to get started. obviously having a small yard to buy non ferrous items would be easy enough to set up with a little space and some startup money, but to be a truly successful operation, im sure theres a few more factors i should learn about.



Good luck Daw

Thank you for asking me this in open forum as I would want my answer to be seen by everyone else who may like to know.

I am going to go back to the time that I started all of this. It was shortly after I was laid off from a really nice job. So I took a few months relaxing as I had alot of money saved up..well I hate not doing anything so I went back to repairing people computers and messing around with Ubuntu (programming and bug hunting and testing). Well after repairing a few computers I had some "scrap" that I could not just toss away so I saved it and it got to a point that I had to do something with it. So I found a person on CL who was buying it...so I sold it to him.

After some time I had more and so I called him back up and went out to his yard this time and saw how much he had. I thought he buying it for parts/repair...not to sell as scrap so that got my mind turning and I started to just hang out there and he put me to work with out pay...i did not mind because I was picking up everything he told me and i saw everything he was doing from buying to selling, both vendors and customers coming and going. After some time and still sticking around there and buying his whole desktops and taking them apart and bring the parts back to him to make fuel money. I started to pick up "free" desktops from CL and brake them down and take them in pretty soon I had more and more and I alot of time to watch Netflix's as I did this in the living room.

It was a few months later some of his vendors just saw me there all the time but knew I was not a hired hand came over and talked to me to find out who I was...he was my first real vendor that I sold everything to. So now I am getting more and more e-waste and was making a few 100 a week. Then...I started buying the e-waste and my profit dropped...but the amount of money I was making sky rocketed as I had more e-waste. So about 8 to 9 months it was about this time and I said I will get my DBA on Jan first to make taxes easier for me. So thats whats that I did.

For the longest time I did this out of the backyard and in the garage/family room. That ended up filled up when I started to find weekly pick ups so I had to get a storage unit so I got one not far from my house and with in a month I had that one filled up so I got another one...shortly after that one was getting filled up so I started to send out weekly. I thought about getting a warehouse so I would have more space..but then it hit me..it would be cheaper to hire someone part time (day labor) to help me get the stuff broken down and moved out faster than getting a warehouse...so that's what I did...that was 4 months ago now I am up to 4 of there largest units and I have no space and I just sent out 8 pallets and that space is all ready taken up again. And with me having semi unloading more often its getting pretty bad that the storage place gave me the key to the unused units as over night I may need another one because I am unloaded a semi and they will come back to find a note in there drop box that unit number is now mine and to add it to my tab.

I will say networking and being able to do things like that as well many other things I left out of this post to TRY to make it shorter.

In from the time I started to now, here is a small list of things I have done for this company.
Setup a phone system,
programmed a program to run my invoicing system so it would work faster/smoother.
Setup my truck to run on bio fuels.
Networking...to hard to fully explain this. But I have recycled from State offices, schools, courts, cops, cities and so on.

Working for your self is great and can be alot of fun. But alot of people say this to me "You are lucky...you have no boss..its great working for your self." I tell them all the same thing...its not what you think...I have 20 bosses...they all want me to do blank on blank day....they don't care if you need to be across town or even in another city.

Anyway...I will end it there. Next post will address you questions better. This was more or less how I started and how I went about doing it.

So, how difficult is to start a "new" scrapyard\junkyard?
It can be hard based on your money needs. Don't think you will turn a profit real fast if you go "big" you will be better off to start small with alow amount of money and build ontop of that. I never had a bank loan or anything. It can be done..you just have to work hard at it.

Do you limit what scrap you will accept?
Sit down and look at it like this. How much will you offer to buy it for, what are your vendors offer to buy it at (make sure there is room for it to drop based on market) and how much time/labor will need to be invested into it. After all of that you will have a better idea.

Are permits difficult to obtain?
Some can be. Here in dallas I have a e-waste company, we do not buy CU or AL so we needed no permits for that as e-waste is like iron.

Should I skip "whole cars\vehicles"?
Never skip anything. If you can get it for the right price and you have a place to put it..take it. I buy trailers that need repair and I will have my welder/auto guy get them back up and running and sell them. I can get some of them dirt cheap at scrap steel price.

How is the smallest amount of space needed to start?
Backyard, living room. Sometimes you can run a very large yard by being a broker. You can move trucks/trailers by a phone call. If you are at joy blow and he has alot of steel...put the good things on the front of trailer and steel on the back..unload the stuff you do not want to mess with...you get fast cash back in your pocket and brake down the better items and take them in. Doing this is like a space multiplier

How much should I bite off at the start?
As big as you can. In the scrap field..the more you have..the more money you make. So do as much as you can but make sure you dont get your self to deep that you cant not do what you said you can.

How can I measure if there is room in the current market for another scrapyard?
If people are calling you to come pick up there scrap and or you see it all over the place and you can get your hands on it fairly easy...then you should be able to start a yard for the metals you want. Just do some "feeling" if you want to get into the CU, AL or e-waste market to make sure there is a good amount there.

How do I pick a location other than zoning requirements? Obviously, access (major roads and railroad) are a plus.
Just as you said...take a map and draw some circles each circle will be zoning, along large roads, where you live, not a ton of traffic...people hate to go to a yard that they know they will be sitting in traffic.

I hope I was able to cover everything and not having this post as long than what is needed. But this is topic would be a very long one if you want good info.

Just to build on something easyrecycle said - check the route in and out. There's a yard fairly close to me that I won't go to because of this. I usually pull an 18 ft trailer and there are two ways in/out. One is through a traffic circle and downtown traffic - the other involves a VERY sharp 30 degree right turn from a two lane street to a one lane driveway with a 20 ft drop-off. I'll drive a few extra miles to "easy in - easy out".

Easy is a champ!!!

Always happy to share info that some may think too precious to let out. Always happy to share success and failure.

Dude, you are one SMF member all should look up to!!

Originally Posted by fiat128

......I'm at sort of this point at the moment, operating out of my backyard. I run out of space alot but I've been trying to gather up larger amounts of material to get better pricing, which I've done in the past.

....I've always sold to a "yard" and I get the impression that you're only going to get so much of a good deal and then that's as far as you can go selling to a yard since they have to get their profit too......

Thing is...when dealing with steel its hard to mass up but if you mass CU and AL then you can sell those to yards and or refinery. Working with AL can be very simple with the low melting point, you can melt like AL items and make bars that you can stack alot easier than the raw metal, so soda cans with soda cans one car frame and or motor block and stack them up and sell them by the pallet.

With copper find someone who pays very good and work out a deal with them, there is one guy on here who buys copper (recycling company) look into them.

E-waste not much needs to be said here as I am someone who you can work with and I will try my best to have you grow...the more you get the more I get an we all go home happy.

And so on..I think you get the drift.


For everyone else thank you all for saying what you are about me I just try my best and do what I can. Here shortly I will ask for anyone who feels good and or bad about me to wright a letter to me (by e-mail) and I would like to add it to my website.

Anyway if I can be of anymore help please let me know.

Originally Posted by easyrecycle

With copper find someone who pays very good and work out a deal with them, there is one guy on here who buys copper (recycling company) look into them.

That would be me.

I would love to talk with you when you get up and running. Our orders have been expanding from the smelter and the buyer there is telling me they are going to be ramping up soon so I am going to be doing the same.

So, how difficult is to start a "new" scrapyard\junkyard? Difficult is a funny word. I know a lot of guys who own yards and they all say “I don’t want my kids to do this”. Not sure if that is an indication of the difficulty or just preference. In this market, starting a yard, ESPECIALLY from scratch even with a wealth of knowledge, will definitely stack the cards against you.

Do you limit what scrap you will accept? Identify a niche… sometimes your niche could be that you take everything! More than likely, just starting out you will want to find a specialty metal you can make a healthy margin on. If you get pushed and pulled in every direction battling several market factors you may be in over your head.

Are permits difficult to obtain? This will vary. There are restrictions typically by Cities requiring you to have licensing/permits, for example one may only apply for OUTDOOR scrap yards not indoor, so that is a work around.

Should I skip "whole cars\vehicles"? Depends what you niche is. It may be a wonderful compliment to what you plan on doing.
How is the smallest amount of space needed to start? This depends on what you want to do. I started in a 1500 sqft warehouse. How much should I bite off at the start? Snap it to a slim jim

How can I measure if there is room in the current market for another scrapyard? That is a tough one. This will depend on what your niche is… once you figure that out you can do your market research… scrap yards with in X miles around X prospective clients.

How do I pick a location other than zoning requirements? Obviously, access (major roads and railroad) are a plus This will relate to who your target market is… if it is retail/walk in business than a location with easy accessibility. If it is other recyclers, location is almost irrelevant.

My questions are:
1. What is your budget
2. What is your background in the recycling industry
3. What will the company mission be
4. Above all what is your passion

good stuff!!!

let me rephrase #1: How much money do you have available to make this work? Obviously the less you spend the better but is your budget $5,000 to get in or $200,000.00

If people know this, you may get some more accurate advice as to what your first steps would be.

Have you looked into financing the truck scale - lease to buy with a balloon payment at the end? Not sure about your local rules, but here we need NTEP certified scales to buy anything by weight. County comes out and has to certify it once a year. Our county does it for free but the catch is they only have the ability to certify up to a 2000 lb scale so a third part has to come out to certify it. We have 5000 lb floor scales in the warehouse (ohaus, bought them refurbished on their website for under $1,000!). I think we pay around 150 to 200 total to go through this annually. Now to certify the truck scales, i think it is well into the hundreds of dollars as they require special equipment to do it.... not to mention some time tieing it up.

My recommendation is to lease to finance the scale and open the scale to the public to "weigh" things... a friend of mine pulls in a couple hundred dollars cash a week doing this

Originally Posted by daw_green_clean

... I need to get out and measure some trucks\trailers.

You can do that online.