How to Start a Plastic Recycling Business
At one place there is a threat and catastrophe for the environment due to a continuous increase in the magnitude of plastic at a staggering rate. Global leaders are showing deep concern on this global munch and are trying to come up with the solution in various ways. The best way to cope with this problem is to Recycle the plastic waste and make waste as a wealth. This article guides in 6 steps to start a Plastic Recycling Business. The blog is written in the context of "How to Start a Plastic Recycling Business".
People will spend their energy, time, or money only when they can make a profit out of it. Once the Director-General of WWF Marco Lambertini said, “The wasteful & greedy nature of our consumerism has made plastic become a threat to the natural environment, our health and our society. We must reduce, recycle & substitute!”
Every business makes an effort to minimize its risk and maximize profit and to earn profit is the ultimate goal of any business entity.
Recycling of plastic will not only help to reshape and clean the environment and to form the circular economy, but you can earn a damn good amount of money. Because it has immense opportunity with least risk.
In this article, there is a step by step complete process of how to start a Plastic recycling business in a very low investment.
Steps Involved to Start a Plastic Recycling Business:
1. Market Research:
If you are new to any business, research your market well. Divide your research in primary and secondary. For secondary research, read reports, articles, research paper and analyze data. Note down its feasibility, pros and cons on paper.
Allocate your budget for primary research. Visit existing recycling business plants, prepare questionnaires, meet consultants and clear your doubts. During your research you will know the types of plastic and it’s selling price and market which are mentioned below.
TypeNameRecommendedPETPolyethylene TerephthalateYesHDPEHigh-Density PolyethyleneYesPVCPolyvinyl ChlorideNot reallyLDPELow-Density PolyethyleneNot ReallyPPPolypropyleneNoPSPolystyrene or StyrofoamNo
To Start a Plastic Recycling Business in Low Investment you must be aware of the sourcing point of raw materials and scrap and point of sale after recycling. Try to contact with municipality, Kabadiwala and ragpickers who can help you in getting Raw Materials.
Document and record all your information, contact numbers, details in an excel and word format during research. This will give you the exact idea, market feasibility, competition, opportunities and challenges in the plastic recycling business.
2. Prepare Business Plan:
Make a detailed project report which must consist of sourcing, funding, location, selling via online/offline, marketing, branding, promotion and sources of revenue.
Contact Kabadiwala, form an organized team of ragpickers, establish recycling bins in railway stations, educational institutions, bus stand, airport, and in the societies. Establish 2-3 collection centres in cities where the major city population can dump their waste and you can collect easily. Contact municipality and source scrap from there in the low cost i.e., (1-3)Rs/kg
Ready your market plan to start a plastic recycling business in terms of promotion, awareness, brand and sell. Contact NGO, volunteers and create online presence where you show your social participation. Allocate the budget for each operation and divide it in fixed and variable cost for labour, machinery, land, electricity, raw material, marketing, logistics, bank EMI etc.
Prepare simple and clear payment mode, by signing a letter of credit or likewise. Don’t get entangled with money. If you want to win, never lose your money.
Decide your market to sell with niche. Either you want to export or sell to corporates of domestic companies. Must understand your sales funnel, purchase funnel and marketing funnel.
3. Identify Location and Get License:
Now you are mentality set and prepared to start a plastic recycling business. Now in this step you need to decide your business location. Since location is crucial for any business, so identify it in the best possible manner.
Location and License:
The best location for your business will be industrial area or government land and outside the busy area, where you can take a lease for 15-25 years and rent on a monthly basis( ideally 20,000 Rs for 500 Sq. M). The reason for the recommendation of this location is you can connect with more industries where your sale will be easier. Secondly, you will get a continuous supply of electricity, water and transportation to run recycling plant smoothly.
Now get your license done by regularity bodies, environment and other local or government bodies. You will not face more bureaucratic red tape because the government is promoting this business with the great concerned.
You will get the tax benefits for 3 years and can take loan up to 2 Cr without putting any collateral in the bank as this business falls under SMEs and Manufacturing sector.
4. Machinery and Equipment:
If you want to make the entire operation smooth and increase production then the choice of machinery and equipment’s are very important. Search the best machines in the market by online or offline sources, check the electricity consumption and production capacity. Inspect it carefully, take feedback then make decision.
In a basic plant, for the best machinery and equipment, the prices are listed below:
- The grinder would cost you Rs 80000
- Aglo would cost you around Rs 80000
- And the granule maker would cost you Rs 9 lakhs including granule cutter.
- For electricity connection you will have to pay 2 to 3 lakhs.
- The building construction would cost you around 8 to 10 lakhs.
- For boring, 20 to 50 thousand depending on the water level.
- You will have to take permission from pollution control board for which they will take some fee.
- And weighing machine, sack stitcher, etc for 20000 and some other expenses.
(Note- it does not include land which is an important factor, it depends on you that you take land on lease or buy it also of what price it is.)
Thus overall it would cost you around 25 lakhs. You can buy on EMI basis, As far as transportation is concerned, don’t block your capital, if you have limited funding. Rent vehicle.
5. Value Chain:
If you want to start a plastic recycling business in low investment or in a high investment, you have to have a clear understanding of Value Chain for the entire business. It minimizes your risk and clear your objectives and priorities.
In this image, the entire value chain is mentioned with details.
From sourcing point of view, you can form an organized team of ragpickers and collect the waste in (5-7)Rs only. It will minimize your cost. If you want to collect from waste collectors, it will cost (14-15) Rs and after converting it into granules you can easily sell from (85-115) Rs. Your operation cost will be 15%, transportation and other expenses will be 10% more, but still you are making 35% profit.
6. Sources of Revenue and Conclusion:
While starting a plastic recycling business, if you are able to generate various sources for your revenue then it will multiply your profit and scale your business soon to the next level.
You can divide sources of revenue in two parts;
a) Core Products such as granules, new innovative or existing products
b) Convert it into energy and power i.e, fuels and gases
a) Social Media Channels by videos, blogs and other publications
b) Organizing Events, Social activities and getting money from sponsors
The selling price of different type plastics in the market is mentioned in detail after conducting insightful primary research. It will give you a brief of entire product segment, it’s demand and price in the market.
If you will put all the revenue sources together, you will make a profit of at least (16-22) %. With your online presence and by conducting social events and activities, a company can establish a strong brand image and earn a huge profit as well. You can expect your ROI in just 2 years. So these are the important guidelines to those who want to start a plastic recycling business in low investment or in a high investment.
You must not hesitate to start a plastic recycling business as it has a safe and bright future, supported by governments. Supply is excess and market is also huge. This business is viable, sustainable can generate recurring revenue model.