How to Start a Small Paper Shredding Business

Hands holding shredded paper
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Paper Shredding Offers Potential for Entrepreneurs and Sustainable Start-Ups

With increased regulations aiming to reduce the danger of identity theft, paper shredding offers a wonderful business opportunity for someone looking to establish a profitable small business. As in starting any recycling business, there are a number of considerations. This article describes all the basic steps for you to start a small paper shredding business, a segment of the paper recycling sector that offers entrepreneurial opportunities.

Step One: Understand the Opportunity by Doing Market Research

It’s never a good idea to start a business without knowing the current players in a market. Look around and try to find some paper shredding businesses operating in your locality. The market might be new and brimming 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 established operations. To ease your way into the market, you can always find a small niche that is not the main focus of the market leaders, or perhaps identify an activity that competitors may not be particularly well delivering, and offer to subcontract this service to them. At this initial stage, you can get many answers to the questions that you will need to run your business effectively. Try finding someone in the industry and ask him all the questions you have.

Step Two: Understand Investment Requirements

Veterans of paper shredding start-ups say it is always a 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 don’t even need a warehouse or office as all can be done from home. You will need at least a van or small truck, shredder, paper baler, pallets, paper bins, and pallet jack.

Prices for mobile shredding trucks vary by model and year, and you can save money by purchasing a used vehicle to get started. A pre-owned, 2000 International 4700 equipped with a Shred-Tech MDS-25 capable of shredding 3,000 pounds of paper an hour, costs around $56,000, while a smaller pre-owned 2002 Freedom Renault-equipped with a Shredfast MCTT costs around $27,000. However, a new truck is $200,000- $300,000. The job can be done using a plant based shredder. The cost is slightly less. Additionally, it is possible to utilize a 3rd party shredder and pay per ton.

Step Three: Decide on Possible Financing Options

When 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 for financing your small business. In that case, you need to have a complete business plan.  

Step Four: Have a Regular Business License

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.

Step Five: Start Your Business and Focus on Marketing

Marketing should be the key focus initially. Try letting your target customer know about your availability to meet their shredding needs. What works best for small paper shredding business is cold calling and making visits to potential customers. Make sure you offer something unique to your customers and target building long lasting relationship.

Helpful Tips: The overall US paper shredding market is very competitive with downward pressure on costs. So make sure you find ways to keep operating costs as low as possible to offer your customers competitive price yet generate a good profit. Security and Confidentiality are the keys to success in paper shredding business. In fact, these two words should be the main selling points. Make sure you know local laws relating to identity theft and deliver proper destruction certificate at the end of each shredding operation.