Recycling is a growing sector of waste management and promises to get even bigger as companies become more aware of the need to establish positive environmental credentials. However, it’s a highly volatile market and commodities prices can affect demand for recycled goods, which influences the amount you are paid.
What is a recycling business?
Recycling is a broad market and there are a number of avenues start-ups can take. The biggest choice will be between collection (collecting recyclable materials from businesses and consumers) and production (making new products from recycled goods).
Production is a difficult market for start-ups. The initial costs can be significant; the machinery necessary to process recyclable goods into new products can be expensive, and if the market dries up temporarily it will be a difficult for a start-up to weather the storm.
The first option is more practical for start-ups; initial costs are lower and there are a number of different angles to take e.g. the types of material collected or the frequency of collection.
With the green economy becoming more and more important, incentives for eco-friendly companies are increasing.
Bronwen Jameson of Knowaste, which specialises in the recycling of absorbent hygiene products (AHPs), told inspiresme.co.uk: “The national governments and EU are pursuing a waste strategy that encourages recycling and waste minimisation. This backdrop, coupled with escalating landfill taxes and the encouragement of small scale treatment facilities, has seen new green technologies grow exponentially.”
Entrepreneurs that want to move into the recycling sphere may well be doing so for ethical reasons. Bear in mind that recycling is often dominated by corporate companies who have the resources and supply chain to handle waste at all stages of the process for the lowest cost. That’s why it’s important to consider a gap in the market or niche in which you can quickly gain market share, or focus on a commodity with broad potential e.g. glass, which is used extensively in creating new products.
If the driving force behind setting up a recycling company is ethical, that’s not a bad thing – your business will no doubt benefit. But you will not always be competing against like-minded companies and may have to deal with competitors who will sacrifice environmental concerns to increase profit.
Likewise, the companies you target may not be ethically-minded and so you’ll need to ensure you can offer a USP that is not only based on eco-friendliness.
The future of business is likely to be rooted in low-carbon industries, and companies that provide ‘green’ services may find it easier to gain funding from investors looking for high potential growth.
Bronwen Jameson of Knowaste explains: “Organisations looking to secure investment would also be advised to stay ahead of developments in the ‘green economy’ as there is an increased understanding of the financial benefits environmentally-focused companies provide. A good example of this is Marks and Spencer’s Plan A, which has had significant cost and brand benefits.
“Generally in business, investors and shareholders need to be convinced that sustainable measures are not at the expense of short-term returns. However, good governance at board level is a major requirement to address sustainability aims that can provide financial payback in the future.”
And aside from the ‘green’ factor, recycling businesses also have significant expansion potential, which appeals to investors.
“Scale is also an important factor in this area, as many investors, whilst not taking ‘risks’, are looking for significant growth potential and the opportunity to maximise future returns,” adds Jameson.
Rules and regulations
Most people associate rules and regulations in waste management with hazardous collections but in fact much of the industry is regulated. And because of the diverse range of products you may encounter (glass, confidential material, fabrics, etc) the rules surrounding waste can be complex.
This is why the industry is typically dominated by heavyweights with the resources available to employ legal teams. If you decide to start a recycling company, ensure you maintain full compliance at all times, even if it is costly. Falling foul of environmental legislation can quickly ruin reputations.
The two main pieces of applicable legislation are the Environmental Protection Act and the Waste Framework Directive. The former defines the structure for waste management services and controls emissions released into the environment. It’s a very wide ranging piece of legislation that includes provisions for waste management licenses and duties of care with respect to waste.
The latter is more industry-specific, and provides the legislative framework for collecting, transporting, recovering and disposing of waste throughout Europe.
You must speak to a professional when setting up a recycling company; your local authority’s environmental department would be a good place to start.
The costs of starting a recycling business can vary widely depending on the services you wish to provide. Because many aspects of the waste management lifecycle, such as recycling, can be sub-contracted out, you can start off very small on little money and then grow organically. If you are involved predominantly in waste collection, buying a van will probably be your biggest expense.
If you plan to run a ‘production’ type business (see above), the initial costs will be far higher, as you’ll need to factor in equipment and premises.
Take a look at how you can turn industrial waste into must-have goods using new technologies.