Do you want to start your own scrap metal business and make a great return? If so, you need to spend a lot of time preparing before you launch.

Get started by checking out the following key things you need to do to set up a scrap metal business and make it profitable. 

Create a Plan

Every successful business begins with a business plan.

You will need to do things like calculate startup and ongoing costs, decide on your target market, come up with a marketing plan, hire a marketing agency, and explore different ways of creating a profitable income.

Also, by looking at common errors in amateur scrapping before writing your plan, you can avoid the same pitfalls as a professional scrap metal business.

So, make sure you spend time looking at each key area of the business you want to launch before setting it all down in black and white in an effective plan that you will follow.

Calculate Buying and Selling Costs and Consider Your Local Market

One of the most important parts of the planning stage is working out how much you will pay for scrap metal and how much you will resell it for while taking your costs into consideration.

Getting the price right for buying and selling scrap metal and ensuring you have good margins is crucial for making a great profit.

Also, you need to decide which kinds of metals you will deal with and what the pricing will be for different types of metals.

For instance, you can make more money from selling copper than aluminum.

But that does not mean you should necessarily only buy and sell copper, as it could be more difficult to obtain in your local area, and you could potentially be able to buy and sell much more aluminum.

It is usually best to deal with all kinds of metals. Just make sure there is a market for different metals in your local area.

Create a Business Structure

Once you have worked out costs and come up with an effective business plan, you will need to choose a business structure and register your business.

Most scrap metal businesses are either sole proprietorships, partnerships, or limited liability companies.

Obtain the Relevant Licenses

Before you can legally start a scrap metal business, you will need to obtain the relevant licenses.

Almost every state in the U.S. requires scrap metal businesses to hold metal recycling licenses.

You will also need a certificate of occupancy.

Find the Right Premises

Having the right premises can make all the difference to the profitability of a scrap metal business.

You need your premises to be accessible to people who want to sell their scrap metal.

Your site also needs to be large enough for the quantity of metal you intend to store and for vehicles and equipment to operate.

Buy the Tools and Equipment You Need

You will need all kinds of tools and equipment to operate a scrap metal business, so make sure you include those costs in your business plan.

You will need things like vehicles for transporting the metal, power tools and hand tools like drills and wrenches, wire granulators for separating wires from their casing, and industrial magnets to separate ferrous metals from non-ferrous metals.

Market Your Business

With all of the groundwork out of the way, it is time to focus on your marketing strategies. 

The more effective your marketing is, the easier it will be to make a great profit. So, let people know that your new business exists.

You need to invest in diverse marketing strategies to attract both sellers and buyers of metal. For instance, cold emailing can be an effective way to directly reach potential clients, while online and offline channels can amplify your visibility.

You need to have a website and use SEO methods to get your site ranking high on search engines. You should also advertise your business locally on billboards, in newspapers and magazines, and via leaflet drops.

As long as you get your marketing right, you can create a scrap metal business that will nourish your mind and soul and enable you to make a great profit.