The scrap metal recycling business not only keeps the environment clean by reducing landfills, but it can also provide a steady income for an entrepreneur. In general, scrap metal dealers turn thrown away metal pieces into reusable items via recycling. In addition to making money, scrap metal dealers also help to keep the environment clean by collecting the metallic litter.

If scrap metal recycling is something you would consider doing, here is a simple procedure on how to start your own business.

Compile a good business plan

The first step is to write a business plan that includes the capital you require to start, the equipment you need to purchase, potential profits and losses you may experience as well as business expenses and information on additional employees and expansion costs.

You may opt to consult a small business administrator for advice on how to formulate and execute the business plan.

Find a suitable business premises, and commence equipment purchases

A small sole proprietorship scrap metal business can start with a single truck or Ute, and the operation can get based in the owner's home. Such a start-up enables an entrepreneur to reinvest their profits in expanding the business.

However, if you want a large scrap metal recycling operation, you will need to get several trucks for transport in addition to a large warehouse space for storing the collected metals. You may also require procuring of a backhoe for loading large amounts of scrap metal.

Obtain the necessary permits, licenses and insurance for the business

Depending on the local or state government regulations, before you can operate your scrap metal dealership, there may be some registration and specified operation permits required.

Hence, first register your scrap metal business with the Australian Business Register (ABR), so that you get an Australian Business Number (ABN). The ABN will enable you to keep track of all the licenses, permits and registration status for the business.

Additionally, you need an insurance policy for the scrap metal business vehicles because the materials they ferry around pose potential danger.

Start making money

There are two ways a scrap metal business makes money.

One is by collecting scrap metal and recycling it to make usable items. The items are them sold to consumers at a price that incorporates the collection and recycling costs as well as the business's profit in the sale.

The second method of making money involves collecting, sorting and selling the scrap metal to recycling plants. Scrap metal recycling plants often buy scrap metals based on the type, e.g., copper, iron or aluminum. When the scrap gets weighed, recyclers usually pay a fixed sum per kilogram of metal.