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How to Start a Paper Recycling Business

Do you want to start a paper recycling business? If YES, here is a complete guide to starting a paper recycling business with NO money and no experience.

Paper recycling started on a large scale in the first world war in the United States and it also received a significant boost during World War II due to the urgent need for materials. With the passage of time however, the rate at which paper was recycled increased, with about 75 percent of paperboard mills in the United States making use of recovered paper to produce new paper.

Also, about 40 percent of these paper mills heavily depend on recycled paper, which is a great advantage for those in this business especially as nearly all kinds of paper can be recycled.

The process by which paper is recycled might sound complex to a newbie but it is actually very straight forward. If you are therefore an innovative entrepreneur looking to rake in cash, then this is a business for you especially as you can make use of several discarded paper materials.

The first step in recycling paper is to grade the collected paper and in grade levels. The newspaper is in the lower grade because of how many times it has been recycled. Printer paper on the other hand is the higher grade paper.

The grade of the paper is usually determined by the fiber length which shortens each time it goes through a recycling process. There are five basic paper grade categories – old corrugated containers, mixed paper, old newspapers, high grade deinked paper, pulp substitutes – and it is important that you have a thorough knowledge about all the various grades.

As with any other business, it is important that you have conducted a thorough research about this business before going into it so that you don’t end up making avoidable mistakes.

The research will ensure that you do not only have an idea about the grades of paper that can be recycled, but you will also get to know how others who have been in the business before you have fared and who your target market and likely competitors are.

Having a business plan in place is very important because the business plan will help in acting as a guide to the business that you are looking to start and also help you know when you are close to achieving your set milestones. The business plan is a document that lays out in grand details all the necessary aspects of the business – from finances, marketing to setting of goals and its implementation.

Writing a business plan can be overwhelming especially for an entrepreneur who is starting a business for the first time and so you can either hire a professional to help you out or check online for sample templates to use.

Steps to Starting a Paper Recycling Business

1. Understand the Industry

In 2014, the production of paper and cardboard on a global level was nearly 407 million metric tons with more than half of the production attributed to packaging paper and one third attributed to graphic paper.

The three major paper producing countries are the United States, China and Japan and these countries account for half of the global total paper production. Only two countries are however leaders in paper importing and exporting and they are, Germany and the United States.

The paper industry in the United States in 2015 earned about $96.1 billion in annual revenue. Globally, the consumption of paper is nearly equal to the amount of paper that is produced annually. China is the largest consumer of paper and cardboard as they use more than 103 million metric tons on an annual basis.

The United States is the second largest consumer as it has an annual consumption rate of more than 71 million metric tons. The highest per capita consumption of paper in any region is North America as it consumes 221kg per capita than the regular global average of 57kg per annum.

Paper material is regarded as a renewable resource and so recovery within the industry is very crucial. Paper has one of the highest recycling rates amongst many other recycling materials and in 2013 alone, nearly 233 million metric tons of paper was collected globally. The United States recovers more than 52 million tons of paper and cardboard on an annual basis.

The recovery rate for paper and paperboard in 2015 was more than 66 percent, which when compared to the 1990 recovery rate is double. The total printing and writing paper supply in the United States is more than 19 million tons.

The United States has practiced paper recycling for a long time and in 2012, the tons of solid waste generated by paper and paperboard amounted to 68 million tons, which according to the Environmental Protection Agency (EPA) was lower than the 87 million tons that was obtainable in 2000.

Paper, however, accounts for more than half of all the recycled materials collected in the United States. More than half of all the paper that is being used in the United States is recycled. Regardless of being the most popular material to be recycled, paper products still account for the largest component of solid waste and constitute more than 40 percent of what is composed in landfills.

In 2006, about 54 percent of the paper used in the United States was recovered for recycling, which was a great improvement on the nearly 34 percent recovery rate that was used in 1990.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic compositions of those that buy recycled paper are manufacturing companies, packaging companies and the end user. However, paper mills are the primary users of recovered paper as they process and recycle the paper for other manufacturers.

If you are looking to start a paper recycling business, then you should concentrate solely on paper mills except you are also looking to recycle the paper yourself, in which case you should look towards manufacturing companies and the end user.

3. Decide What Niche to Concentrate On

The paper recycling industry is not only capital intensive but it is also well established as well. Paper recycling leads to a useful extension of other services especially for companies that are into recycling of other materials.

There are various niche ideas that an innovative entrepreneur can choose to specialize in so as to generate more revenue. However, it should be noted that large scale paper recycling businesses are more likely to offer more niche ideas than smaller paper recycling companies due to economies of scale and availability of capital.

Below are some of the niche ideas within this particular business that one can specialize in;

  • Paper Collection
  • Paper Transportation
  • Paper Sorting
  • Paper Shredding
The Level of Competition in the Industry

The paper recycling business is huge one and has seen a lot of influx into the industry leading to an intensive level of competition amongst operators as they seek to gain a fair market share for themselves.

Proper grading, sorting and collection is a very important part of the paper recycling business and so what most paper mills and manufacturers are concerned with is that what they are getting is of good quality.

If you are therefore going to start a paper recycling business in the United States, you should be prepared by having laid plans that will enable you have the required advantage over your competitors. You should also note that you will be competing with a lot of small and large scale paper recycling businesses both within and outside the United States of America.

4. Know the Major Competitors in the Industry

In every industry, there are brands that stand out and the paper recycling industry is no different. Most of the well-known brands are large scale companies and it is best that the entrepreneur knows these companies so that he might be able to use them as a benchmark when looking to measure the success of his own company.

Below are some of the well-known paper recycling brands in the United States of America and also all over the world as well;

  • International Paper
  • Kimberly-Clark
  • Nippon paper Group
  • Oji Paper
  • Asia Pulp and Paper
  • Stora Enso
Economic Analysis

Nearly 67 percent of the paper consumed in the United States in 2011 was recycled and so the economic impact cannot be overemphasized because paper is recovered for recycling more than aluminum and glass and every ton of recycled paper helps to save more than 3.3 cubic yards of landfill space. Paper is therefore a common material for recycling as more than 85 percent of Americans have access to curbside recycling.

On an industrial scale, paper recycling helps the country save up on both energy and resources, because one ton of paper, according to the EPA is equivalent to 17 trees, 7,000 gallons of water and 463 gallons of oil. The paper recycling rate has increased to 65.4 percent from the 33.5 percent rate that it was at in 1990. It has however been predicted that the paper recycling rate will reach 70 percent by 2022.

Even though the recycling rate for newspapers and magazines increased from 67.5 percent in 2013 to 68.9 percent in 2014, the total volume of the material recovered is however declining due to decline in newsprint consumption. The paper recycling rate has continued to improve even though the industry has been hit by the negative impact of global economic downturn as well as contamination challenges experienced especially during the curbside recycling process.

A positive development has however been an increase in curbside generation of paper which is due to activities such as e-commerce and home delivery.

5. Decide Whether to Buy a Franchise or Start from Scratch

When looking to start a business, one of the most important decisions that you will need to make is whether you should start your business from scratch or buy a franchise. While none of the options is totally bad, your final decision should depend on which option is likely to help you attain all your goals and objectives.

The paper recycling business however has no franchise opportunities as the business is highly fragmented and so starting your business from scratch is the only option.

When starting your business from the scratch, it is important that you have thorough idea about the business because it will help you overcome certain challenges that you will face whilst running the business.

Regardless of how much research you might have carried out, starting a business from scratch will always be a bit overwhelming which is why having a business plan in place will help guide you in achieving your goals and objectives.

6. Know the Possible Threats and Challenges You Will Face

When starting any business, an entrepreneur will face certain threats and challenges and therefore plans must be on ground regarding these. Some of these threats and challenges cannot easily be handled, and when they occur, the best that the entrepreneur can do is to remain focused and optimistic regarding the outcome.

Some of the threats and challenges that you will likely face when looking to start a paper recycling business are competition from already existing paper recycling businesses, government regulations, change in local and global trends as well as the challenge of having to break through the market as a new business.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

If you are an entrepreneur looking to start your business in the United States of America, then one serious decision that you will need to make is what legal entity would be most appropriate for your business. This is because choosing the wrong legal entity can cause a limit to how you can achieve your goals and objectives.

The legal entities available for entrepreneurs looking to start their business in the United States include; sole proprietorship, partnership, Limited Liability Company (LLC) and corporation. Most paper recycling businesses in the United States are usually on a small scale and so start off as sole proprietors; it is only after they have grown to a certain scale that they change to a more appropriate legal entity.

There are several attributes that the entrepreneur can use as a deciding factor when it comes to making a choice. Some of the attributes include; ease of ownership and control, flexibility, taxation structure, extent of liability and expectations of the owners.

The sole proprietor is one of the most common forms of legal entity for entrepreneurs in this sector because many of the paper recycling businesses are usually on a small scale and regionalized. If you aren’t sure of what legal entity might be appropriate for your paper recycling business, then you must engage the services of an attorney or accountant to help you out.

8. Choose a Catchy Business Name from the ideas Below

One of the most important aspects of a business that must be handled is what the business will be called. A business name is important because it is what sets the business apart from other similar businesses and so in choosing a business name, it is best that you choose something that is not only catchy and unique but that can be memorable and easily pronounceable as well.

Some of the catchy business name ideas that is suitable for a paper recycling business include;

  • Zozi Paper
  • Green Coo Paper
  • Elle Paper Corp
  • Nikki Paper
  • Swiss Paper

9. Discuss With an Agent to Know the Best Insurance Policies for You

Most times as an entrepreneur, you might sink all the resources you have into starting a new venture and then without properly insuring the venture, something happens that causes the business to crash and then you have to lose your business.

Therefore, it is very important that you protect your business by choosing insurance policies that will protect your business, your employees and your bottom line. Choosing an insurance policy might seem overwhelming which is why you should engage the services of a professional to help you out.

Some of the insurance policies that you should consider purchasing for your paper recycling business are;

  • General Liability Insurance
  • Casualty Insurance
  • Workers’ Compensation Insurance
  • Commercial Property Insurance
  • Umbrella Policies
  • Business Auto Insurance
  • Mechanical Breakdown
  • Burglary and Robbery

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

In the paper recycling business, paper of different grades are collected and sorted in order that they might be used for further production and therefore applying for intellectual property protection is not totally necessary.

If however you intend to protect certain aspects of the business such as the name of your company, your logo and any other part that you deem worth protecting; then you can consider applying for one.

11. Get the Necessary Professional Certification

Even though there are certain businesses where the entrepreneur is required to possess professional certifications before he or she can start or run the business successfully, this is not so for the paper recycling business.

Different states however have different regulations against running this kind of business which you must find out before going into the business but overall you won’t need any form of professional certification.

12. Get the Necessary Legal Documents You Need to Operate

When looking to start a business in the United States, it is important that you know what documents are required from you before starting so that you don’t end up getting into trouble with the constituted authorities, where the penalty for running a business not properly registered could range from being banned from running the business or being heavily fined.

The list of legal documents that you will need to run your paper recycling business properly includes;

  • Certificate of Incorporation
  • Operating Agreements for LLCs
  • Business Plan
  • Business License
  • Insurance Policy
  • Doing Business As (DBA) Certificate
  • Seller’s Permit
  • Contract Documents
  • Employer Identification Number (EIN)
  • Tax Identification Number (TIN)

13. Raise the Needed Startup Capital

The paper recycling business might not be complicated but it requires substantial capital before it can be started and so if you do not have all the capital needed, you might need to source from it from investors.

Sourcing for start-up capital is not always an easy task and so if you are looking to external sources, then you will require a business plan that will help convince the investors of how serious you are with the business.

Some of the financing options that are therefore available when you are looking to start your paper recycling business include;

  • Generating part of your start-up capital from your personal savings or sale of property
  • Sourcing for soft loan from friends and family members
  • Applying for loan from a commercial bank
  • Approaching an investor for loan

14. Choose a Suitable Location for your Business

One important decision that you will need to take when starting your business is where your business will be located. If you want your business to strive, you will need to research which location will enable you generate enough revenue that will enable you grow and sustain your business.

You will need to be visible to your intended target market and so it is therefore important that you are located within the hub of your target market. Most publishing houses and office complexes are your ideal area of paper collection and so you might need to locate your business in such an area.

The niche you also intend to offer will have a huge impact on the location for your paper recycling business. If you are going to be collecting, sorting and recycling; then you might need to just have collection points while your recycling factory is located somewhere within the regulated zone for your kind of business.

If you are new or confused as regards the dynamics of choosing a location, you need to engage the services of a real estate agent to help you out.

15. Hire Employees for your Technical and Manpower Needs

The paper recycling business might look like a very complicated business but it is very straightforward and lucrative; however it can be a little frustrating especially if you do not have the required tools and equipment to enable you run your business effectively.

Even though everyone uses paper, it is best that you set your collection points in offices and publishing houses as these are the places where a lot of paper is likely to be used. You need to know the different grades of paper in order to properly sort out the papers you collect.

Depending on the niches you intend to offer, you might need little or large equipment. If you intend to offer as many niches as possible, then you should have an idea of what sort of equipment will be involved and how much you would need.

Building a solid business structure no matter the scale of your business is very important because even though you intend to employ just one person, it must be someone that is competent and that is fully committed to helping you achieve your goals and objectives.

Depending on the scale of your business, you might need to employ from between 1 to 7 persons in order to help you achieve your intended goals and objectives.

The Service Delivery Process of the Business

It is important to understand the process of recycling paper so as to ensure that it is correctly done. Once paper has been put in the recycling bin, it is taken to a recycling center to be sorted out from other contaminants such as trash, glass or plastic and then the paper is then sorted out into different grades.

After sorting, the paper is then stored in bales until it is needed by a paper mill for processing. At the paper mill, the paper is shredded by large machines (pulpers) into small pieces and then mixed with water and chemicals to be heated so that the pieces of paper can break down into fibers. The mixture is then presses through a screen so that adhesives and other remaining contaminants might still be removed.

The paper is then spun in a cylinder to thoroughly clean it and the pulp sent through a machine where it is sprayed into a conveyor belt. Water is then dripped through the screen of the belt which will cause the paper fibers to start bonding. Once this is achieved, heated metal rollers will dry the paper and they will then be put into large rolls and made into new paper products.

16. Write a Marketing Plan Packed With ideas & Strategies

Marketing is the process of anticipating the needs and wants of your target market and then ensuring that they are met. It is through marketing that you will be able to get your target market to be aware of your paper recycling business.

Before you can know who your target market is and what their needs might be, you will need to conduct a thorough market research. A thorough market research not only identifies your intended target market, it also helps you identify your competitors so that you can know their strengths and weaknesses.

Once you have conducted your market research, it is then very easy to draw up a good marketing plan that you can follow. A good marketing plan should be modified and adapted to prevailing situations because no strategy should be static if the company intends to remain proactive.

One important factor that must be taken into consideration when you are looking to ensure the effective marketing of your products and or services is the location of your business. If you are located in an area that is quite visible to your intended target market, then the less marketing you would need to carry out.

Some of the marketing ideas and strategies that can be adopted for your paper recycling business include;

  • Engage in physical marketing by visiting your target market and telling them about your business
  • Join associations and participate in activities in order to increase awareness for your business
  • Create a website and using this to  promote your business
  • Ensure that you are listed in reputable yellow pages and online directories
  • Make use of social media platforms such as Facebook, Twitter and LinkedIn in order to promote your business

17. Develop Iron-clad Competitive Strategies to Help You Win

The paper recycling business might be a lucrative one but it is also in a competitive industry and so if you intend to start and succeed in this business, you will need to have competitive strategies in place that will not only allow you to have an edge but also compete fairly against your competitors. Any entrepreneur that does not adequately prepare for competitors isn’t serious about the business.

Some of the competitive strategies that you should therefore have in place when looking to win over your competitors include; ensuring that you sell your recovered paper at competitive prices, offering other services in order to attract a larger target market and having the best customer support system in place.

18. Brainstorm Possible Ways to Retain Clients & Customers

Customers help to sustain and also grow a business and so every entrepreneur prepares well in order to attract the customers that will be needed to generate revenue to grow the business.

It is therefore important to make a thorough research about the business you are looking to go into so that you will first have an idea of who your target market is and then what strategies can be used in making them stick to your company.

While customer attraction might be very important for the growth of a business, customer retention is equally more important because it helps in ensuring the sustainability of the business.

According to research, companies that retained a high number of their customers usually ended up achieving more than those that kept losing their customers and had to keep attracting new ones.

There are several ways you can increase customer retention for your business and one of them is in ensuring that you offer consistency when it comes to your products and services. Customers will always patronize the business whose consistency they are sure of than the one who varies every now and then.

Customers also love it when the company shows that they are being valued by being in constant communication. Also, customers love it when their issues are quickly resolved and when feedbacks are acknowledged. Therefore, it is important that you take customer service very seriously.

19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

When starting any business, having strategies in place that will enable you boost awareness for your brand as well as create positive corporate identity for your business is very important because the more awareness you are able to create for your business, the closer you will be to achieving your true goals and objectives.

If you have no plans at all to boost awareness for your business, then it might take you a long time before you can penetrate your intended target market.

Before the advent of the internet, promotional activities usually cost a lot especially for businesses that were just starting out or were on a small scale but the advent of the internet has made things easier as the internet has enabled various scale of businesses reach their target market effectively without overreaching their budget.

Before you can however choose your promotional and advertisement strategies, you must ensure that you understand your target market and where they are likely to visit so that your strategies can be very effective.

Some of the strategies that you can therefore use to boost awareness for your brand and create a corporate identity for your paper recycling business are;

  • Distribute handbills and fliers in various strategic locations in order to create awareness for your paper recycling business
  • Make use of social media platforms such as Facebook, Twitter and LinkedIn in order to be able to promote your paper recycling business
  • Encourage your loyal customers to help spread the word about your paper recycling business
  • Participate in local events in the community so as to network and increase awareness for your business
  • Advertise your paper recycling business in the local newspapers as well as environmental and related magazines
  • Create awareness for your paper recycling business by joining related forums and blogs