Junk Removal Business Startup Cost: A Real Budget

The honest answer to "how much does it cost to start a junk removal business" is somewhere between $5,000 and $60,000, and almost all of the difference is the truck. Here is a real budget, line by line, for three common ways to start.

The three starting setups

Lean: pickup plus dump trailer. You already own a half ton or three quarter ton pickup and you buy a trailer. This is how most owner operators start.

Middle: used box truck or stake bed. You buy a dedicated truck with 15 to 20 cubic yards of space. It looks more professional and holds more, but costs more to buy, insure and fuel.

Franchise. You buy into a national brand. You get the name, a call center and training, and you pay for them.

Lean setup: about $8,000 to $20,000

• Dump trailer, 12 to 14 foot: $6,000 to $12,000 new, $4,000 to $8,000 used
• Hitch, brake controller, straps, tarps: $300 to $800
• Tools: two dollies, a furniture dolly, moving blankets, a sledgehammer, a pry bar, a reciprocating saw, rakes, shovels, a broom, contractor bags and gloves. Budget $500 to $1,200
• Business registration and EIN: $50 to $500, depending on the state
• General liability insurance: $500 to $1,500 a year
• Commercial auto insurance: $2,000 to $5,000 a year, often paid monthly
• Truck lettering or magnets: $200 to $1,500
• Website, phone number and Google Business Profile: $0 to $100 a month

If the truck you already own can tow 10,000 pounds, this is the cheapest way into a real junk hauling business. Watch the towing capacity: a full trailer of mixed junk can weigh 3,000 to 5,000 pounds plus the trailer itself.

Middle setup: about $25,000 to $60,000

• Used box truck or stake bed, 14 to 16 foot: $20,000 to $45,000. Look for a low deck height and a ramp or liftgate
• Commercial auto insurance for a box truck: $3,000 to $7,000 a year
• Everything else from the lean list: $3,000 to $6,000

A box truck holds more per trip, so you dump less often. But you unload it by hand at the dump, which takes 20 to 40 minutes, while a dump trailer tips in a few minutes. Read truck or trailer for a junk hauling business for the tradeoffs.

Franchise: often $100,000 to $250,000 or more

National junk removal franchises usually ask for a franchise fee of $25,000 to $60,000, a truck, a territory, a marketing budget and working capital. On top of that, royalties of 6 to 10 percent of revenue and a marketing fee every month. You get a recognized name and a call center. You also give away a big slice of every job for as long as you operate. Many owners start independent and never look back; some prefer the structure. Do the math with the real royalty numbers before you sign anything.

Costs people forget

• Dump fees for the first month. Expect $40 to $90 per ton in many counties, plus fees for mattresses, tires and appliances. You pay these before the customer's money clears, so keep $1,000 to $2,000 ready. Our junk removal dump fees guide explains how to price them in
• A second person. Most jobs need two people. A helper costs $15 to $25 an hour in most markets
• Fuel. A pickup towing a loaded trailer gets 8 to 12 miles per gallon. Five dump runs a week add up
• Repairs and tires. Trailers eat tires and bearings. Set aside $100 to $200 a month
• Card processing. About 3 percent of what customers pay by card. Worth it, because card customers pay on the spot

How much cash to start with

Plan for three months of fixed costs on top of the equipment: insurance, phone, software, fuel and a helper for the days you need one. For a lean setup that is about $3,000 to $6,000. You may not need it, but the first weeks are lumpy and a broken trailer axle should not end the business.

How fast you earn it back

Say your average job is $300 and your direct cost per job (dump, fuel, helper) is $110. That leaves $190 per job. A $15,000 lean setup pays for itself in about 80 jobs. At two jobs a day, five days a week, that is two months. At four jobs a week, it is about five months. That is why the first thing to spend on after the trailer is not a bigger truck. It is getting the phone to ring: a junk removal website with prices and a Google profile.

Where to save and where not to

Save on: a brand new truck, fancy uniforms, paid lead services that send the same lead to four companies.

Do not save on: insurance, straps and tarps (a load that blows onto the highway is a fine and a lawsuit), a dolly that can take a refrigerator, and answering the phone. Every missed call is a $200 to $500 job that went to someone else.