In the junk removal industry, many entrepreneurial-minded people come to a crossroads during the early planning stages: is it better to start your own junk removal business from scratch, or is it better to become a franchisee with one of the big national junk haulers?
Well, it’s a big decision that will significantly affect the way you do business. At a fundamental level, both structures are worlds apart, even if both franchisees and independent junk hauling businesses haul away junk from properties at the end of the day.
What’s the difference between starting your own junk removal business and franchising?
Within the context of this article, a junk removal business is defined as an independent business whereas a junk removal franchise is a business franchise subsidiary to a junk hauling corporation.
Most junk haulers in the United States operate either under a sole proprietorship or an LLC formation rather than as a corporation. Most junk removal franchises are structured as corporations, so the franchisee will need to abide by the franchisor’s desired business structure as per the franchise agreement.
Below, we’ll compare the two different options and let you determine for yourself which route seems like the best fit for your junk hauling operation:
Starting an independent junk removal business
Want to call the shots and be your own boss in the junk removal industry? Starting your own business is one of the best ways to get physically active while earning potentially big bucks from satisfied customers.
The junk removal industry in the United States is booming, with estimates from 2020 exceeding $50 billion in value. It seems that the industry is expected to thrive going forward, so it’s certainly a highly profitable industry at the moment in 2022.
If you’re wondering whether or not you should you start a junk removal business, we’ve put together some helpful information below to help you decide.
Put together a business plan
If you’ve been asking on Google “do I need a license to haul junk,” we’re assuming that you’re either thinking of starting a junk removal business or are in the early planning stages. It’s important to put together a business plan to help you along the way; it’s also important if you need to ask for a loan from the bank for some startup capital.
Your business plan should contain the following:
- Company vision: write down where you’re at with your business so far and where you plan to be (think of the old “where do you see yourself in five years” question).
- Company mission: why does your business exist and what is the purpose of your business?
- Company name: pick a catchy name for your business. Most junk haulers tend to use the word ‘junk’ in their name, which gets the point across, but don’t be afraid to be a little creative. Also consider that the name of your business will matter when it comes to registering a Doing Business As (DBA) name (sometimes called fictitious or legal name).
- Logo & branding: either design a logo and choose colors and fonts that help you with branding, or hire a freelancer or graphic design firm to create one for you. You’ll want to use this on any business cards, vinyl wrap for your vehicle, and any correspondence you send to customers.
- Choose your business model: many junk haulers start out as independent small businesses, but some people prefer becoming franchisees of big national brands.
- Define your market: do you plan to be a jack-of-all-trades junk hauler, or do you want to specialize in residential cleanouts, commercial properties, or job site cleanups?
- Financials: estimate how much your expenses are going to be for the initial months, how much you need to earn in revenue to break even, and put together a pricing model that can achieve this with some profits.
How to start a junk removal business in the United States
Starting your very own junk removal business can be exciting, but also overwhelming in terms of all the things you need to do. Getting business licenses, permits, and registering your business are all important, just like getting all of the equipment and supplies needed for your daily operations.
Putting together a business plan should always be your first step, but if you want to know more about how to start a junk removal business in the United States, our blog contains lots of helpful information to help you become your own boss and run a junk removal business that your customers will love.
Keep in mind that starting your own business instead of going with franchising comes with some advantages and disadvantages you should consider:
Benefits of starting your own junk hauling business
- Cost: starting a junk hauling business can cost as little as perhaps $1,000 (if you’ve already got a truck and trailer) to as high as you want to go. It all depends on you, and you don’t need to prove any net worth or hold a certain amount of liquid assets. Having good credit can help if you need a loan from the bank, however.
- Freedom: owning and operating your very own independent junk removal business gives you complete freedom to do things your way. It’s your business, so you can design your own logo and branding, offer a wide range of services, and generally just do things the way you do them best!
- Flexibility: choose your own operating hours, vacation time, service area, and just about any other detail related to your business. You’ve got the flexibility to offer customers services that they want, in the way that they want and not in the same-old corporate way that a lot of big companies do. Give customers a personal touch and give them great services from genuine local junk haulers.
- Competitiveness: as a small business owner, you can be as razor-thin with prices as you want to be. The good news is that the big franchises simply cannot offer customers rock-bottom prices, so you’ll often be able to outbid them on jobs in your area while still making a decent profit. You’ll also have far fewer overhead costs and you won’t need to pay any fees or commissions to the franchisor.
- Scalability: want to start a business out small and perhaps grow it over time? Being a small business owner lets you scale up as needed. If you can’t handle the growing number of calls for business, maybe you need to hire a few people. Small junk removal businesses can be scaled up whenever you want, according to your terms.
Disadvantages of starting your own junk hauling business
- Reputation: when first starting out, you won’t have the reputation that the big national brands have. In order to compete, you’ll need to clearly demonstrate to customers that your business is genuine and honest.
- Support: as the owner of a junk removal business, you won’t have access to telephone or online chat support in case anything goes wrong – you’ll need to handle it yourself.
- Complexity: starting your very own junk removal business doesn’t need to be complex, but in some cities or states you’ll need a business license and permits to operate. Forming an LLC can also be complex, which often requires the assistance of an attorney to file on your behalf.
- Marketing: Aside from maybe a few supportive friends and family members willing to put in a good word, the only way to get your junk removal business off the ground is to put in the effort to build a positive reputation by providing excellent services.
Starting out as a junk hauler franchisee: facts and figures
Some individuals that want to get started in junk removal go the route of becoming a franchisee. There are many benefits and some big disadvantages to operating a franchise, but it may be helpful to first get an impression of how much it costs to start operating as a franchisee:
|Junk Hauler Franchise||Franchise Fee||Liquid Capital Required||Investment||Net Worth Required|
|1-800-GOT-JUNK?||$30,000||$90,000||$107,400 – $300,000||$150,000|
|College Hunks Hauling Junk||$40,000 – $60,000||$75,000||$200,000||$100,000|
|The Junkluggers||$45,000||$75,000||$85,000 – $154,000||$200,000|
|Junk King||$40,000||$100,000||$73,700 – $137,900||$250,000|
|Big Haul||$30,000||$30,000||$83,800 – $150,800||N/A|
Source: Franchise Help (accessed 11 August 2022)
The above junk removal franchises in the United States are among the most popular and well-known, many of which operate nationwide in cities and counties from coast to coast. What they all tend to have in common is that the initial startup capital requirements can be very high, meaning that franchisees will need to have large amounts of capital already saved up (net worth requirements) and a sizeable investment will need to be made from the get-go.
Let’s take a look at some of the advantages and disadvantages of becoming a franchisee. Keep in mind that the below information is quite general:
Benefits of becoming a junk hauler franchisee
- Simplicity: starting a junk removal franchise is relatively simple, since many franchisors will assist you in becoming a franchisee. You’ll still need to form a business entity and do some paperwork, but you don’t need to worry about a lot of the details like a small business owner needs to.
- Reputation: as a franchisee for a big national brand, you benefit immediately from the reputation of these brands. There’s no need to build a strong reputation if the corporation already has one, although you must ensure that your employees (or you, if none) provide customer service in accordance with the expectations of corporate office and in line with the franchise agreement.
- Support: if anything goes wrong with your franchise, you can typically avail yourself of the free 24/7 telephone and/or chat support of corporate. The support network can help ease any of the complexities you may face along the way and resolve issues and/or disputes without needing to do so all on your own.
- Marketing: you don’t have to create a website, manage social media, or hand out flyers at the local laundromat. Franchisers will normally do all of the marketing for junk haulers near you, so getting new leads takes no effort on your part.
Disadvantages of starting a junk hauling franchise
- Cost: as shown in the above table, starting your own junk hauling franchise requires quite a bit of money. Not only do you need to pay an initial franchising fee averaging about $30,000 but you’ll also need to invest upwards of $135,000 and also have about $75,000 in liquid assets. This puts the financial entry barrier to franchising out of reach of many.
- Freedom: as a franchisee, you don’t have much freedom at all in business operations. You’ll need to abide strictly by the franchise agreement, which can include fixed prices, operating hours, service areas, and more.
- Scalability: since a franchisee does not have any ownership over business operations, there are no opportunities for scaling up the business aside from purchasing another franchise elsewhere.
- Competitiveness: big corporate junk haulers all claim to offer competitive prices, but the bottom line is that they simply can’t outcompete small ‘ma and pa’ junk haulers who have far lower overheads and flexible prices. Moreover, your franchise will also be facing competition from other big national junk haulers.
- Flexibility: franchisees must adhere to the franchise agreement, which can stipulate many aspects of day-to-day business operations. Your vehicle liveries and branding, for example, must be in compliance with corporate office policy. You simply cannot offer the same flexibility in your services as a small junk hauler can.
Starting an independent junk removal business vs franchising: which is better?
For most individuals that want to be their own boss, find their own financial freedom, and develop a robust set of entrepreneurial skills while providing a much-needed service for Americans, the answer should be clear: starting your own junk removal business as a sole proprietor or under an LLC structure is the way to go.
Franchising can be lucrative and can potentially carry fewer risks, fewer responsibilities, and even a more ‘hands-off’ approach to business investors that intend to outsource all operations. On the flip side, the large capital outlay and net worth requirements create a high entry barrier in terms of budget. If you are an investor looking to own a profitable junk hauling business with perhaps no interest in doing the job yourself, becoming a franchisee may be ideal.
In summary, starting a junk removal business from scratch and not relying on a franchise can be a rewarding experience, both professionally as well as financially. Keep in mind, however, that you’ll have a lot more work cut out for you in terms of branding and marketing, which is why you’ll greatly benefit from becoming a member of JunkGator to build quality leads and increase your business revenue.
Become a JunkGator member today
Want to build junk removal leads from customers near you? Why not become a JunkGator member today? Our platform allows individuals across the United States to find genuine, honest junk removal businesses quickly and easily. Get in touch with us today.