Do you want to start a paper shredding business? If YES, here’s a complete guide to starting a paper shredding business with NO money and no experience.
In this age, businesses have fallen victim to identity theft and scams due to information that someone picked up from a stolen document. This is why a company has to take great care in the way they destroy paperwork with information on it in order to protect their customers.
Document shredding gives company owners and customers peace knowing that their information has been destroyed the right way and it also gives people the option of having the process handled by a third party.
In some cases there is no need to buy expensive paper shredders if there is a company that can come to your job site and take care of the process for you. Indeed paper is one of the most used materials in circulation as just about every house and company throws out paper on daily basis.
Paper shredding is very important in this age as shredding of personal information keeps a company compliant with state and federal regulations about how to destroy or handle personal information. From an environmental standpoint, document shredding protects trees from being used for new paper products.
It also provides a safe and clean way of taking care of trash. After all, no one likes having a bunch of loose papers sitting around the office taking up space. Paper shredding is a process that gives you the joy of knowing that you are doing your part to protect the environment and the personal lives of your customers.
So, if you want to own a business that is lucrative, sustainable, and in high demand, this is an opportunity like no other. Note that the legal requirements and ethical responsibilities to safely destroy confidential information have fueled an explosive growth in the secure document destruction industry.
Have it in mind that offering both recurring container and scheduled purge services, entrepreneurs worldwide have embraced this lucrative industry that is growing by twenty to thirty percent a year.
Steps to Starting a Paper Shredding Business
1. Understand the Industry
First and foremost you need to understand that the paper shredder machine is used to shred or recycle a large amount of waste generated from packaging materials. Paper shredder machines can turn the waste product into raw material needed for revenue generating products.
Businesses in this industry provide shredding solutions for products such as cardboard, drink cartons, egg cartons, labels, folded carton packaging, etc. These machines perform size reduction of total material needed to be moved to recycling facilities.
Even though they come in different sizes, a paper shredder machine is simple to operate as it involves dumping the material into the hopper section or by attaching the conveyer belt with the hopper for continuous feeding. The use of Industrial paper shredder machine can significantly reduce the manufacturing cost by minimizing the use of resources.
Reports have it that the major driver for industry market is the rising need of protecting the environment and efficient utilization of resources. We believe that as more and more paper and cardboard is recycled, the need to introduce wood and wood pulp into the packaging industry will be minimized, consequently protecting the environment.
Experts believe that the ability of paper shredder businesses to reduce the cost of the overall production process enables the manufacturer to use cheaply available waste products consequently propelling industry market.
Have it in mind that the various applications of the shredded output produced by the paper shredder machine include providing cushioning to the delicate products or eatables and fruits, accordingly influencing the industry.
You need to know that the major restraint for this industry is the big footprint of industry machines and its incapability of separating the non-paper based products from the paper based product. Initial investment associated with the machine can keep small and medium scale packaging manufacturers from using industrial paper shredder machine.
But as businesses are striving to limit the carbon footprint of their production process, the use of paper shredders would increase and provide new opportunities for the industry. The support of the governmental authorities to promote sustainable packaging can increase the market attractiveness of the paper shredding industry.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Indeed this market might be new and glowing with potential, or it might be highly competitive. When the market is highly competitive, it might not be a good idea to start a small business that goes head to head with already existing operations.
So to ease your way into the market, you can always find a small niche that is not the main focus of market leaders, or perhaps identify an activity that competitors may not be particularly delivering, and offer to subcontract this service to them.
Report has it that more than 50 percent of North American companies practice paper shredding. Not all paper products and documents can simply be dropped into the blue bin for recycling. A lot must first be shredded as they may contain confidential business, employee, or customer information.
This is the main reason why a paper shredding business is very lucrative. Your clients in this business may include large corporations and organizations such as hospitals, law firms, manufacturers, and education facilities.
Once shredded, the paper is simply dropped off at any recycling depot. But don’t forget that this type of business needs detailed and careful planning, as the investment to get the business rolling is substantial.
3. Decide What Niche to Concentrate On
Before starting this business, you need to choose the services you hope to offer. Would you want to shred documents on-site before your clients in secure trucks, or would you take them away? Indeed businesses and governments are willing to pay to destroy confidential papers.
Unless the paperless office finally arrives, there’s a need for document-shredding services. There’s more than one way to run a shredding business, so consider your options:
- Mobile shredder. A truck with the equipment on board shows up at customers’ offices and shreds old paperwork right there.
- Pickup service. You pick up paperwork from the customers and shred it at your place of business.
- Customer drop-off. Customers bring their paperwork to your business.
The Level of Competition in the Industry
Report has it that this industry has gained from sustained demand for document storage and increased information security regulation. But then businesses in this industry have increasingly acquired smaller regional operators in order to achieve cost savings through economies of scale and nationwide expansion.
Reports also have it that within the five-year period to 2022, revenue for the industry is expected to grow. Experts believe that rising business formation will expand the scope of the industry’s commercial target market and benefit industry revenue over the next five years.
Research has also shown that industry businesses are highly concentrated in the Southeast, West, Mid-Atlantic and Great Lakes regions of the United States. These regions account for 23.4%, 19.1%, 17.3% and 12.1% of total industry establishments, respectively.
We believe that businesses in this industry are largely focused on levels of economic activity and proximity to complimentary industries which include healthcare, financial services, insurance, legal and other professional services industries. Meanwhile, the overall US paper shredding market is very competitive with downward pressure on costs.
This is why you have to make sure you find ways to keep operating costs as low as possible to offer your customers competitive prices yet generate good profit. Don’t forget that security and confidentiality are the keys to success in paper shredding business.
4. Know the Major Competitors in the Industry
- Vecoplan LLC
- Zhengzhou Huahong Machinery Equipment Co., Ltd.
- Widesky Machinery Co., Ltd
- Zhangjiagang Mooge Machinery Co., Ltd.
- Shredders and Shredding Company
- Zhangjiagang Sevenstars Machinery Co., Ltd.
- Franssons Recycling Machines AB
- WEIMA Maschinenvau GmbH
- Allegheny Shredders, Inc.
- Forrec srl Recycling Systems
- Dongguan Naser Machinery Co., Ltd.
- Dongguan Skyteck Machinery Co., Ltd.
Economic Analysis
Indeed shredding companies are changing the way most companies do business. Especially with the advent of computers and online storage and archiving systems, businesses are finding it much easier to store their important documents electronically.
Using electronic storage methods eliminates the need for keeping paper documents that can be lost, stolen or damaged. But then shredding companies remove the need for extra space needed to store paper documents.
Businesses in this industry operate in one of two ways. One way is to dispatch a truck with a built in shredder to a business location. Then the company’s documents are shredded onsite and the resulting materials are bagged and disposed of either by the paper shredding company or by the client.
While the second way is to pick up the company’s documents and transport them to an industrial shredder. But either way, the documents are secured and disposed of in accordance with both HIPAA and other regulatory laws that pertain to confidentiality.
Apart from helping companies to save space, paper shredding businesses also help them to save money. Space that was once used to store paper and documents can now be used to expand the business or can be leased out to another company.
Shredding documents also lessens the impact the company has on the environment by allowing the paper to be recycled and used again. Also note that a paper shredding company may also provide other services such as document storage through electronic means.
Cloud computing and other forms of electronic document storage can save both time and money and have a dramatically reduced effect on the environment.
5. Decide Whether to Buy a Franchise or Start from Scratch
Industry experts have often advised prospective entrepreneurs looking to venture into this business to pursue the franchise route. There are a lot of reasons why it makes sense to buy a business, but the most important reason may be capital.
Commercial lenders are usually more inclined to fund franchises other than start-ups. Note that the chances of surviving in business are hugely positive if you go the franchising route in lieu of doing everything yourself. Prior to starting a paper shredding service, a smart move is to investigate whether there are good franchise opportunities available that might help you avoid common entrepreneurial mistakes.
6. Know the Possible Threats and Challenges You Will Face
Indeed business school teaches you how to start your own business but it will seldom prepare you for the challenges in the real world of business. We believe that apart from convincing businesses and individuals to patronize your business, your first major threat will be to penetrate the current market.
Note that competition is very stiff in all areas of business. It may take quite a while before your first client approaches you. Note that the best way to overcome this challenge is by remodelling your services and aggressively marketing them.
Another challenge in this line of business is service delivery. In this business, your clients will expect you to be effective at very high speed. If a client is going to pay money for shredding services, they will expect you to do an impeccable job in just a short time. When starting this business, always take advice from other professionals in the business.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Making a decision on which legal entity to use from all the different business structures can be difficult and will rest on your preference and business size. For your paper shredding business, we suggest you form your business as an LLC.
LLCs or Limited Liability Companies is a very popular business form both overall and in the shredding business industry. This legal entity brings together the best aspects of a corporation and partnership while taking away some trouble these forms come with. Have it in mind that Limited Liability Companies practice flow through taxation.
To register an LLC, you’ll have to submit an operating agreement which will clearly state the purpose of the business, how revenue will be split among the owners, what happens if one partner leaves the company etc.
While LLCs are NOT corporations, they carry nearly the same weight to match the benefits. They are expensive to form and maintain and there are annual fees that need to be taken care of.
8. Choose a Catchy Business Name from the ideas Below
The name you choose for your business will go a long way in deciding how fast you develop brand awareness in the industry. We suggest you go for something interesting and catchy to draw the interest of prospective clients since the main task when starting a shredding company is securing customers.
- Paper Vault
- Diamond Paper Services
- Paper Ribbon
- Sky Shredding
- Fast Clean
- Zero trace
- Florox Co.
- Continental shredders
- Sustainable shredders
- Crystal Angel Shredding
- Dependable shredders
- Fenton Sew & Vac
- Paper shredders
9. Discuss With an Agent to Know the Best Insurance Policies for You
As a paper shredding company, note that you will end up spending more on general liability insurance than the average business. This is not because of the added security cost of what you’re doing, there is also the flammability of the paper being shredded that must be considered.
Commercial shredders that are not properly oiled can actually cause the papers to heat up and catch fire. Shredded paper makes pretty good kindling for a spark. Also remember that a surety bond acts as a form of credit in case you make a mistake.
Some bonds may need you to have specific contracts either already in place or ready to be signed in order to be granted, so be sure to speak with your insurance provider before deciding.
- Business liability insurance
- Property insurance
- Building coverage
- Business income and extra expense coverage
- Employee dishonesty coverage
- Employee Benefits Liability Coverage
- Hired and Non-Owned Auto Liability Coverage
- General liability insurance
- Product liability insurance
- Crime and Fidelity insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
First and foremost you need to understand that intellectual property comprises of many areas, from logos and corporate identity through to services and processes that differentiate your business offering.
We all can agree that modern businesses have gained from the internet where products, services and marketing communications can reach vast audiences at relatively low costs – but this has also increased the chances of intellectual property theft.
Companies of all sizes are at risk of having their unique ideas, products or services infringed upon, even if they are on the other side of the world, making intellectual property protection more important than ever.
Understand your ideas
Immediately you have a great idea for your service, there will always be people who will want to duplicate your success and sell your ideas as their own. But we believe that it all depends on individual circumstances.
You can use patents, trademarks or copyrights – all of which cover different areas of intellectual property. These can be used to prevent competitors or anyone else from using your ideas for their own profit without your consent.
Guide business growth
It’s your duty as an entrepreneur to protect the services that you own as competitors can use your success to take away market share, resulting in slow growth or loss of revenue. Letting go of market share early in a business’s development can be devastating and time consuming if trying to chase up the guilty party without any legal protection.
It’s important to remember that no one else will check to see if your intellectual property has been infringed; it’s your responsibility to ensure that no one else is using your assets.
11. Get the Necessary Professional Certification
Professional certifications project a higher level of competency in any particular field, and just as members of the American Medical Association and American Bar Association set themselves apart through training, experience and comprehensive examination, certification helps to immediately identify the shredding, restoration and inspection industries’ most skilled and dedicated businesses. Here are few certifications for shredding businesses
- NAID AAA Certification
- SWANA Certification
- Forest Stewardship Council® ( FSC®) certification
- ISO/IEC 27001:2005 certification
12. Get the Necessary Legal Documents You Need to Operate
We were able to note that the shredding business is still an unregulated industry, so you won’t have to invest in any special training or trade license apart from a regular business license.
But then even a general business license will need a license from your city or county clerk, a building permit for any major modifications on a property and a zoning permit from the local planning department.
Even if your business is small and you are starting as a sole proprietor, it is important to also register your business name; otherwise, businesses may use your trademark and cash-in on your good reputation or advertising campaigns. You also need;
- Business license
- Insurance policies
- Surety bonds
- Clients contracts
- Tax
- Heavy machine licenses
13. Raise the Needed Startup Capital
Once you know the amount you will need to kick off the business, you need to find a good source of financing. It’s good if you already have some money to invest, but you can always try the U.S. Small Business Administration.
Irrespective of what you do, no matter how simple or complex, funding is needed. So knowing your initial source of funding is very important. Will it be your own, from your family and friends, from government programs, partners (silent or active), or a traditional bank loan. Each source has its own set of requirements.
Once you have obtained initial funding, it is also crucial to understand how you will manage cash flow. A lot of businesses are successful sales-wise, but poor cash flow management leads to their demise. So it is very necessary to understand the pricing, billing practices, and even how you will respond to Request for Quotes (RFQ).
14. Choose a Suitable Location for your Business
You need to know that the price of leasing a warehouse or office for your shredding business will differ greatly depending on where you decide to place it. The cost of commercial real estate differs by state and city area. Storage space for shredded paper is only one of the things to think about when looking for your business base, other questions you need to ask may include…
- If you’re shredding material on-site, is the shredding area adequately ventilated?
- If you’re sorting through documents before shredding, you’ll need space for a sorting area.
- You’ll need space to hold pallets or carts for transporting the papers to the shredder
- Whether you or your customers are transporting the papers, you need a location as close as possible to your clients, not miles out of town.
- If your operation grows, will your facility be able to handle it?
We indeed agree that paper shredding is a basic task, but if you are operating on a commercial level in this industry, your business location is going to need some specific features.
Lots of space
A lot of shredding companies will take the final product, compact them into bales, and then send them off to a recycling facility for some added revenue. But until the recycling facility can accept the bales, there will be need for adequate storage space for the work.
Good venting
Note that if you have commercial grade shredders at your business location, then you’ll be using a lot of oil to keep the cutting mechanisms in good condition. It simply means you’ll also require ventilation installed to make sure the environment is safe. If there is no venting, you may be needed to invest into respirators for yourself and your people.
Excellent security
For instance, if you have papers that are not shredded at your business location, then you have a security risk on your hands. It’s your duty to upgrade the security of your building to show that you have taken every feasible measure to protect those papers from theft if something unforeseen happens.
15. Hire Employees for your Technical and Manpower Needs
Experts in the paper shredding industry believe that it is always good to start with at least two individuals doing all the activities. One can do the marketing and find new businesses looking for paper shredding services and the other can operate other activities.
You will need at least a van or small truck, shredder, paper baler, pallets, paper bins, and pallet Jack. Also deciding on the exact shredder to buy – grinder, shredder, pierce-and-tear, disintegrator – involves trade-offs. Shredders that reduce paper to particles offer your clients the utmost security.
They’re also much slower than a shredder that just strip-cuts paper, and are much more expensive. Don’t just look at the bottom line when you’re deciding what to buy. Other factors are important and they may include…
- What level of destruction will your clients want? Some customers have legal requirements governing how thoroughly paper must be shredded.
- How much material will you shred each day? Each week? The more paper you need to dispose of, the more a faster speed will matter.
The Service Delivery process of the Business
Businesses ordinarily will dump their waste or unused paper in a recycling site, but because of the content of the documents, it is usually crucial to employ the services of a paper shredding company to help them shred the papers. But then after shredding the paper, it is your responsibility to discard the waste.
If you don’t own your own paper recycling factory, you can partner with a paper recycling company where you will transfer or sell all shredded papers to. It is a means of making additional income. Note that collection is the very first stage in the on-site shredding process.
There are secure receptors which are designed to hold sensitive documents and keep them safe before collection so staff can simply and efficiently drop their waste paper inside. Note that the containers themselves come in a variety of colours to match the décor of the premises so that they don’t interrupt the day to day running of the client’s office.
Then at a pre-arranged date, someone who is in charge of collecting them will have to visit your clients’ office to empty the secure shredding container. Note that your staff should be vetted and trained not to disturb the working environment and to keep the documents secure and completely confidential until they have been destroyed.
Then the waste papers are now moved to the shredding vehicles. When the retrieved documents are on the vehicles they’re immediately shredded to an unrecognizable and safe state. Immediately the paper has been securely shredded, it’s moved to your warehouse to be pulped into cubes and recycled.
16. Write a Marketing Plan Packed With ideas & Strategies
Indeed marketing and advertising is a tricky business discipline, especially for inexperienced entrepreneurs who possess more enthusiasm than expertise. Have it in mind that the right market approach lets smaller paper shredding businesses stand toe-to-toe with the rest of the market. The key is to market smart through the consistent application of fundamental marketing concepts.
Measurement and Evaluation
With the proper knowledge and implementation, paper shredding businesses may be able to grow the effect of their marketing tactics. For even greater returns, you’ll need to explore ways to improve measurement and evaluation.
Note that a robust measurement and evaluation process should include metrics that can be analysed and monitored on a monthly, weekly or even daily basis. We believe that these metrics can be used as a baseline for strategic planning especially it’s designed to monitor marketing efforts on a campaign-by-campaign basis.
Broadcast Advertising
We all can agree that the internet has had a very huge impact on TV and radio advertising. Instead of tuning in for information, a lot of buyers now prefer to get their news and entertainment through online sources. Broadcast advertising is down – but it’s not out.
Research has shown that major paper shredding businesses in the industry are making use of broadcast media to perform specific aspects of their marketing strategies. Today’s broadcast marketing solutions have the ability to target a geographically concentrated sector of the marketplace. For instance, a lot of people limit their radio listening to their daily commute.
But when advertising a paper shredding businesses, local consumers may represent a sizeable portion of total revenues, making local radio and other broadcast media viable marketing channels, only to the point that you match the station’s audience to your customer base.
Why Branding Matters
Branding has in many ways helped businesses achieve their marketing goals. Since the average consumer doesn’t have time to thoroughly evaluate every product that crosses their path, they make buying decisions based on the brands they trust. You need to know that every paper shredding service has brand characteristics.
A lot of these brands struggle to achieve recognition with consumers while others seem to be quickly embraced by the marketplace. We believe that businesses that incorporate brand positioning into their normal marketing routines gradually accumulate higher brand values and are rewarded by consumers.
17. Develop Iron-clad Competitive Strategies to Help You Win
A lot of people understand the economics of this industry and they are diving into it. But then most of these individuals starting a shredding business will only end up as small fish in a big pond. The general shredding industry is fiercely competitive, so it pays to target a particular audience. Here’s how to stay strong and win competitors in the paper shredding business
- Develop your computer skills
- Track labour costs
- Invest in customer service
- Clean it like it’s your own
- Develop systems
- Be careful
- Don’t undersell yourself
- Take care of your employees
- Find a niche
- Keep your eye on the economy
- Don’t take every job
- Never stop learning
- Tap all your resources
18. Brainstorm Possible Ways to Retain Clients & Customers
In this age and with the growing needs of the business world, your brand is your customer service philosophy. A lot of shredding companies have room to improve when it comes to customer experience, so if you do a good job of this, you’ll be miles ahead.
- Pay attention
- Train your staff
- Give Small Gifts for Customer Appreciation
- Do Some Market Research – Hire Other Companies to Clean Your Home
- Hold yourself to high esteem
- Customize shredding for each client
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
From our research and the industry overview of the paper shredding business, its easy to note that the paper shredding industry is a lucrative option for small businesses. Even though the industry is relatively recession-proof, successful entrepreneurs know that marketing and growing a shredding business is critical to its survival.
To ensure your business gets the best visibility possible, consider a wide variety of marketing strategies and options like
- Don’t Give Up Knocking on Doors
- Network like crazy
- Get in Front of Clients Through the Back Door
- Picture the Kind of Shredding Business You Want
- Focus on customers in each marketing stage
- Be unique and different
- Repeat your marketing strategies