The most important question any prospective entrepreneur is going to have before starting a business or investing in a business system is… does it make money, and how much? We have found junk removal companies can be profitable in places all throughout the country in small or large markets.This piece will tell you what kind of money you can expect to make.
Note: The content in this post is not a guarantee of funds you can earn with your business. Rather, this is the author‘s view on what you might expect to make based on his results with Junk Doctors’ multiple locations and the partners JRA works with across the country.
We started as a truck-and-trailer operation. Now we have a dump trailer just to haul our Bobcat around.
One of the first things that will affect the amount of money you will make with your junk removal business is whether you are on the truck or not. Ideally, you can start your business mostly off the truck. That way, you can be making cold calls, attending meetings, knocking on doors, dropping off flyers, and building your business rather than just picking up junk. In order to do this, you must have money saved to cover expenses and potentially help fund your business operations. Being off the truck and working to grow your business as much as possible increases your upside and accelerates your growth, but can result in several months to a year of negative cash flow. If you are working on your truck, your growth will be slower but you will be a profitable junk removal company from day one.
These numbers anticipate a junk removal business model in which the owner is mostly NOT on the truck. If the owner is on the truck, your labor costs would be reduced by about 15-20 percent.
Example of what can be made on $250,000 of revenue, typical of a second or third year well-run junk removal company in which the owner is mostly NOT on the truck:
- Labor: $75,000 – 30%
- Disposal Fees: $17,500 – 7%
- Fuel: $12,500 – 5%
- Insurance: $15,000 – 6%
- Automobile Repairs and Loan/Lease Payments: $12.500 – 5%
- Advertising: $25,000 – 10%
- Credit Card Fees: $3,750 – 1.5%
- Tools: $3,750 – 1.5%
- Other Expenses (Office Supplies, Injury Reimb, Meals/Ent, rent, etc): $30,000 – 12%
TOTAL Expenses: $195,000 – 78%
NET PROFIT: $55,000 – 22%
The above numbers could vary a few percentage points here and there, but as long as you have set your prices appropriately for your market, have honest team members who are not stealing, are operating your jobs efficiently, and team members are quoting your jobs correctly, then you should expect to produce these kinds of numbers.
However, one piece is missing – the manager’s pay. The manager could be you or someone you hire to run the business for you. This post is going to assume that you are the manager. If you are the manager and salesperson of a junk removal company that brings in less than $500,000, you should be making at minimum $50,000 a year. If you are below $250,000 in revenue, you might not be able to pay yourself that amount from the funds of the business because the money isn’t there. You should still keep track of that amount so that as your business grows, you can make up the deficit.
When you wrap up your first $250,000 year, you should feel proud that you’ve gotten your business to that level. However, do note that you basically just have a $50,000-a-year job at that point, which is the AVERAGE income for a person in America. You didn’t start your business to be average. There’s still lots of work to do! And your business is worth virtually nothing. A junk removal business is typically worth about four times its annual profits AFTER the manager (you) has been paid. So keep selling like crazy, making sure your team members are doing great work, and patiently follow the process day in and day out, and your junk removal business will one day be profiting 15 percent, AFTER paying you. Then you will have a valuable business, whether you are looking to sell it or not.
Don’t want to give control away? Partner with JRA!
The Junk Removal Authority is here to help you with your junk removal business whether you are doing your initial research or you are a veteran in the market. With a complete business system that is second to none and support services you only pay for when you use them, there is no better option than JRA for Junk Removal Industry professionals. Call us today at 919-617-1975.