There's never been a better time to start your own dumpster rental business. There is a significant opportunity to make good money if you can provide a service that meshes well with the demand for environmentally friendly waste disposal.
Starting a successful dumpster rental business requires a lot of planning, administrative work, and a considerable initial investment of capital. However, if you set up your company right, you can expect a very tidy ROI from this recession-proof business.
Depending on their size, you can rent a dumpster out for an average of $400 (10-yard) to $630 (40-yard). Other common factors affecting the rental price are location and landfill and disposal fees. The standard rental period of a dumpster is 7-10 days. Extending the rental period is, therefore, a common source of additional sales in the dumpster rental industry.
Dumpster rentals are a $1.1 bn global industry. With a compound annual growth rate (CAGR) of 6%, the sector is set to double over the next decade.
However, before you rush in, there are a few things you need to know. For example, your business is responsible for disposing of the waste. That means you need to establish relationships with local recycling plants and landfills. What’s more, you’ll need to secure licenses and permits depending on local laws.
Let’s explore the ins and outs of starting a dumpster business.
Create a dumpster rental business plan
If you want your dumpster rental company to succeed, you'll need a solid business plan. The first thing to consider is what sector to serve.
Your options are commercial, residential, industrial, or all three. Basically, anyone with significant waste disposal needs can use dumpster rental services.
Some of your potential customers are:
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Private contractors and construction firms
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Businesses that generate a lot of waste
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Private individuals that are moving or decluttering their home
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Industrial businesses
A business plan is more than just a rough guide. It's a detailed document that is needed to turn your rental business idea into reality. It lays out your vision, services, market research, competitor analysis, marketing strategy, and costs.
Before jumping into anything, ensure you do your homework and ensure your dumpster rental company is financially viable.
Market research and competitor analysis
The first thing most people want to know is, "is a dumpster rental business profitable?" The answer is yes, but a lot depends on your area and the services you can offer.
An important part of your research is to look at other dumpster rental businesses in your area. Find out what markets they serve and see if you can find an edge. One thing you can consider is offering an environmentally-friendly service that promises to manage waste responsibly. That can be enough to differentiate your offer.
Additionally, many dumpster rental companies don't have transparent pricing. You can stand out by offering clear pricing with no surprise surcharges and add-ons.
Another thing to consider is location. Casting a wide net will give you access to customers. However, if your service area is too broad, you’ll spend a lot of time in traffic.
So be realistic about what you can do at the start. Once you’ve got the hang of things, you can think about adding more trucks and widening the areas you serve.
Budgeting and financial planning
Starting a dumpster rental business needs a lot of capital. The three main expenses you need to consider are:
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Dumpster bins: Depending on size and quality, dumpsters can cost between $4000 and $10,000. Typical sizes are between 4 and 20 yards. Buying good quality is important. You want the product to last.
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Storage space: You'll need a warehouse or storage space for your dumpsters. Depending on your area, that could run you about $2000 a month.
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Roll-off truck: Those bins won't collect themselves. You'll need a roll-off truck to do the job. Brand new, these vehicles cost around $160,000. Financing or leasing is a good option. However, you'll still need a downpayment of around $10,000.
Throw in permits, insurance, business licenses and permits, a website, and marketing costs, and you could be looking at around $40,000 to get your dumpster business going.
Once you know your initial outlay, it’s time to consider your potential income. If you understand your market and where you can position your brand, you can determine a pricing strategy.
For a deep dive into financial planning and budgeting, read this article.
Establish a legal entity for your business
Choose a name for your business
You'll need a name for your new dumpster rental business. Look for something that is memorable but also makes it clear what business you are in.
Before you settle on a name, check local registries, and see if the website domain is free. Check that there aren’t any similar names on social media sites, either. You don’t want customers to mix you up with other services.
Finally, ensure your name isn’t infringing on any copyrighted names. You don’t need that hassle.
Form a business entity
There are several different business entities to choose from. Each of them has advantages and disadvantages.
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Sole proprietorship: The simplest business type to incorporate. This structure doesn't legally differentiate between you and the business. However, it doesn't offer protection of your assets in the event of debts or legal action.
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General partnership: A partnership has many similarities to a sole proprietorship. However, this structure is suitable for situations where you start a business with one or more partners. Be careful when you select a business partner because you'll be liable and responsible for any decisions they make.
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Limited Liability Company (LLC): An LLC recognizes you and the company as different entities. As a result, your assets are protected if you get sued or go bankrupt. Additionally, this structure allows pass-through taxation, which means you aren't taxed on your business and your salary.
Overall, the LLC is a great option because of the liability protection and ability to avoid double taxation.
Register for taxes
You'll also need to register for taxes. Thankfully, the process is fairly straightforward. Just contact the IRS and get an Employer Identification Number (EIN).
However, if you choose the sole proprietorship business structure, your social security number will do.
Set up a business bank account
Setting up a business bank account is essential. Without one, you can lose liability protection afforded by your choosing to structure your business as an LLC. On top of that, it’s a bad business practice to commingle funds.
There are lots of other advantages, too, like building credit and getting a business credit card. These products can help with cash flow, which you might need from time to time as you wait for invoices to be paid.
Necessary permits and licenses
Setting up a dumpster rental business means you'll need to apply for a few different licenses. For starters, you'll need a commercial driver's license for your roll-off truck. Additionally, depending on your local laws, you’ll need a business license. That’s the straightforward part.
The next thing you need to consider is dumpster permits. If you want to sit a dumpster somewhere, you need to get permission. However, the rules are not standardized and change from location to location.
In some areas, you’ll need to apply for a permit. In others, it’s the property owner's responsibility. There are further complications based on the precise location of the dumpster. For example, some areas waive the need for permits if the dumpster is inside a private property but demand one if it’s placed on a sidewalk or near a commercial unit.
Depending on local rules, you can request permits from your local public works or building department. But beware, sometimes you need to get the homeowners association involved.
The best course of action is to research your state or local government's policies.
Buy dumpster rental insurance
Dumpster rentals are a heavy-duty job with lots of hazards. As such, you need to have insurance. Some of the insurance you need is:
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Commercial automobile insurance
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Workers’ compensation insurance
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General liability insurance
However, it's important to remember that some firms offer a business owner’s policy (BOP), with all the insurance you might need rolled into one. Shop around and get several quotes before you commit to an insurance broker.
Inventory management
Your dumpsters are a big investment. Keeping track of them is essential. Thankfully, there is software that can help you manage your inventory and maximize efficiency.
Sourcing dumpsters and equipment
While starting out with a fleet of shiny new rental dumpsters is appealing, you can save a lot of money when you buy used ones. The same principle goes for your roll-off truck. So, explore the market and see if you can find some goods that are in good condition.
Other equipment that you will need are things like steel toe-capped boots, hard hats, and hi-vis vests. Quite often, this gear will be compulsory if you want to enter a construction site. Straps, tools, and loading planks are also worth buying. You can get all these items at your local hardware store.
Another thing to remember is that flat tires are common with roll-off trucks due to the consistent carrying of heavy weights. An air pump, a jack, and some wheel chocks could really get you out of a jam. You can find these online or from a truck garage or showroom.
Tips for maintaining and organizing inventory
Rental Inventory management is significantly easier with software built for the purpose. Another thing to consider is an online booking facility. These two are essential investments to take your dumpster business from the ground up and running. Customers are moving towards frictionless online experiences, and dumpster rental software will give them all the information need to book from your website while keeping your availabilities up to date.
Keeping these systems up to date is essential. Double bookings are a sure way to lose trust. A good inventory management system will help you schedule the availability of dumpsters and ensure you can meet your customer's needs.
Marketing and customer acquisition
You need a solid marketing strategy if you want to make it in the dumpster rental industry. Your go-to-market strategy will depend on several factors. Here are a few things to consider.
Identifying the target market and most effective marketing channels for them
As we mentioned above, the three main target markets for dumpster rentals are:
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Commercial
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Industrial
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Residential
Once you know which market you want to target, you'll have a better idea of how to reach them. There are a few different ways you can think about this. Commercial and industrial clients are business-to-business (B2B). On the other hand, residential clients are business-to-consumer (B2C).
Whatever you do, you’ll need a website. And preferably one that allows clients to book and pay for their dumpster. Read this article for tips on how to make a rental website.
Here are a few channels that you can use to connect with prospective customers.
SEO marketing: Search engine optimization marketing is an excellent strategy. It's cost-effective, and a good, helpful piece of content can deliver organic traffic for years. However, it takes time to rank. So, get started early, but make sure you focus on more short-term methods too.
Read these tips on local SEO strategies that will get you noticed.
PPC ads: PPC ads are an excellent way to get your brand in front of interested audiences. Meta, Google, and Bing all offer precise targeting based on demographics, interests, and search engine intent.
Social media: An active social media account can help you connect with prospects. While it may not be the most important customer acquisition channel in the dumpster rental industry, social media offers you the opportunity to communicate more closely with your customers and educate your clientele on proper waste recycling.
Community involvement: Do charity work, sponsor local events, or do local clean-ups. Get your name out by being an active and helpful community member. In this way, you create goodwill and get your name remembered when people in the area have a need for your service.
Network: Network in person, where possible. Reach out to local businesses and make connections. People tend to trust the people they know, which makes selling easy.
Reviews: Encourage happy clients to leave online reviews. Additionally, put testimonials on your website. Word of mouth is a powerful marketing tool.
Creating a brand and messaging that resonates with your audience
Research your target market. Find out what they want from a dumpster rental business. It could be dependability, transparency, environmental responsibility, all three, or more.
Remember that the people you deal with could be going through stressful times. They could be moving home, clearing out a property after a bereavement, or working on a high-pressure remodeling job. Position your brand as a professional and competent presence that they can rely on.
Tips for building a loyal customer base
There is no shortcut to building a loyal customer base. You need to provide excellent service. In many situations, renting a dumpster is part of a larger project for your customers. Quite often, this means that time is of the essence. Get your dumpsters in and out on time, and you’ll soon build up regular customers and referrals.
Operations and growth strategies
In some ways, starting a dumpster rental business is the easy part. It's what happens after that will determine your success.
Best practices for managing daily operations and logistics
Proper scheduling is key to running a successful dumpster business. When you start your company, you’ll most likely have a limited number of bins and one truck. You need to maximize the return from each dumpster. The only way to do that is to ensure they’re not sitting around gathering dust.
Rental Contracts and Policies
One of the big challenges of running a dumpster business is ensuring your clients know which materials they can put in your bins. You need to clarify this on your website and in your rental contracts.
You also need to consider your collections. You’ll probably have a limited number of bins when you start out. However, construction work frequently overruns. So expect clients to ask to extend collections days.
While this will provide extra revenue, it could also hit your availability and lead to disappointment for your other customers. Implement clear charging policies to cover you in these events.
Strategies for scaling the business and increasing revenue
Renting dumpsters is your bread and butter. However, there are other ways that you can generate extra income.
Cleanup crews: Many dumpster businesses also offer cleanup crews to help dispose of waste. For example, you can send a two-person team to load the waste from a home or site. Cross-selling different services is an effective way to increase not only sales but also customer value.
Hazardous waste disposal: While you need to restrict items like electronics, paints, oils, and more, that’s not to say that you can’t offer additional services that take hazardous materials. Of course, there are regulations around the transport of these materials. For starters, you’ll need to get a permit. But it could be a profitable addition to your business.
Partnerships: Striking a partnership with a local construction team could provide you with a steady stream of work and income. Be on the lookout for these kinds of opportunities. Networking and community involvement are at the heart of building partnerships and getting your name out in relevant circles.
Conclusion
Starting a dumpster rental business could be the best decision you’ve ever made. If you set up near a commercial area or a location with lots of construction or remodeling work, you’ll never be short of potential clients.
Customers increasingly want to work with businesses that care about the environment and dispose of waste responsibly. This trend is only set to increase. Starting a green dumpster rental business is your chance to do something for your community.
While the ROI on dumpsters is excellent, startup costs are high. You’ll need to buy dumpsters, a roll-off truck, and adequate storage space.
However, once you’ve made the investment and got your marketing right, you’ll have a steady and recession-proof business that you can scale by offering excellent service.
