It will cost you at least $500,000 to start a demolition company. This is so because demolition companies invest in expensive equipment.
For example, a new mini bulldozer costs about $30,000 for the smallest models, and some of them can be as expensive as $100,000 for a more powerful model with more features.
Apart from the amount it will cost you to start a demolition company, there are other costs you should also consider. Hence, if you planning to start a standard demolition company that can take on several demolition projects at the same time, then you should create a budget in the range of millions of dollars.
There are certain factors that can determine the exact cost or an estimate of what it will cost you to start a demolition company, and that is what we will discuss in this article.
7 Factors That Determine the Cost of Opening a Demolition Company
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The Location of the Business
When we talk about the location of a business, we are talking of factors like regional demand, local regulations, and proximity to disposal facilities which are known to impact initial investments in business.
For example, starting a demolition company in areas with higher demand for demolition contracts or projects may require more expensive equipment, skilled labor, and compliance with strict environmental regulations, thus increasing startup costs.
We cannot also rule out the fact that local market conditions, competition, and access to resources in a location can also play important roles when it comes to determining the cost of establishing a successful demolition business.
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The Size of Your Parking or Storage Facility
You are not supposed to park your bulldozers, excavators, hydraulic breakers, demolition shears, skid-steer loaders, and dump trucks indiscriminately on the street.
By law, before you can get approval to start a demolition company, you should secure a parking or storage facility for your vehicles and equipment.
It will cost you between $2,000 to $10,000 per acre per year to lease a secured parking or storage facility in a suburban area, and between $10,000 to $100,000 or more per acre per year to lease a parking and storage facility in an urban or prime commercial area.
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The Cost of Registering the Business, and Obtaining the Necessary Licenses, and Permits
You cannot start a demolition company without first registering the business, and then going ahead to obtain the necessary licenses and permits.
Before you can start a demolition company, you need to have a business license, operating permit, commercial driver’s license (CDL), vehicle registration,
Hazardous materials transportation permit (if applicable), environmental permits (if applicable), solid waste hauling license, zoning permit, land use permit, fire department permit, health department permit,
Vehicle inspection certificate, insurance (liability, commercial auto, workers’ compensation), Federal Employer Identification Number (EIN), state sales tax permit, et al.
It might interest you to note that the amount it will cost you to obtain all the listed permits and licenses will form a significant portion of your budget.
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The Required Insurance Policy Coverage
No wise businessman or woman would establish a demolition company without having the necessary insurance policy coverage in place.
In essence, if you are planning to start a demolition company, you should at least have the following insurance policy coverage in place:
Commercial auto insurance, liability insurance, passenger liability insurance, workers’ compensation insurance, general liability insurance, property insurance (for your vehicles and premises),
Umbrella insurance (excess liability insurance), garage keepers’ insurance, business interruption insurance, and business owner’s policy (BOP).
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The Cost of Hiring and Training Your Employees
The fact that you cannot start and operate a demolition company alone means that you should make provisions in your budget for hiring and training your employees.
You should make plans for competent people to occupy the role of demolition project manager, demolition site supervisor, heavy equipment operator,
Safety officer, demolition laborer, environmental compliance specialist, accountant, administrative support staff, and marketing and sales officers.
Trust me, it will cost you a significant portion of your startup capital to recruit and train employees who can occupy all the roles listed above.
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The Equipment, and Tools Needed to Operate Your Demolition Company
As expected, you should plan and budget for bulldozers, excavators, hydraulic breakers, demolition shears, skid-steer loaders, dump trucks, high-reach excavators, cranes, concrete crushers, safety equipment,
Office equipment (computers, phones, etc.), accounting software, and invoicing and billing software. Trust me, the amount it will cost you to buy all that is listed above will form a significant portion of your start-up capital.
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Your Operational Cost, and Contingency
You cannot operate a demolition company without having a budget for operation and contingency. Basically, under your operational cost and contingency you should be able to budget for fueling your bulldozers, excavators,
Hydraulic breakers, demolition shears, skid-steer loaders, dump trucks and utility vehicles, servicing and maintenance, toll fees, parking fees, towing fees, emergency vehicle repairs, unforeseen maintenance costs, unplanned bulldozers, excavators,
Hydraulic breakers, demolition shears, skid-steer loaders, dump trucks downtime, legal fees (if facing any legal issues), accidents and collision repairs, and medical expenses (if injuries occur) et al.