How to Start A Pallet Recycling Business: Wooden Waste into Cash

by William Rogers
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Building Your Pallet Business: From Startup to Success

Starting a pallet business isn't easy - many new operators struggle with the same challenges you're probably facing right now. Whether you're running a small recycling operation out of your backyard or trying to expand your new pallet manufacturing business, this guide will help you grow step by step.

Understanding The Pallet Market

The most important part of running a pallet business is to understand and learn everything about how it works. You will need to learn the different types of pallets(used, grade b, grade a, new, heat treated, ect), the different sizes and how much they cost.

To do this you can join Facebook groups dedicated to pallet recycling which have many other pallet yards in them. You can also look into pricing from larger companies in the industry like Kamps or 48 Forty to see how much they are currently selling pallets for.

Resources for Learning About Pallets

Pallet Pricing Info

Websites

Pallet Podcasts

Facebook Groups

Essential Steps to Start Your Pallet Business

Legal Setup Basics

  • Choose a business structure (most choose LLC for liability protection)
  • Register your business with the state
  • Get an EIN (tax ID) from IRS website
  • Get business licenses and permits for your area
  • Set up business insurance (liability and commercial auto at minimum)

Business Banking

  • Open a business bank account
  • Get a business credit card
  • Set up simple accounting system (like QuickBooks)

Professional Image

Business Phone

  • Get a dedicated business number
  • Set up professional voicemail

Online Presence

  • Buy domain name (yourcompany.com)
  • Create business email
  • Build simple website with:
    • Services offered
    • Contact info
    • Service area
    • Request quote form

Location Setup

  • Check zoning laws
  • Get required permits
  • Set up storage yard
  • Install security (fencing, lights)

Record Keeping

Start simple systems for tracking:

  • Customers
  • Inventory
  • Deliveries
  • Expenses

You can use a CRM like salesforce or Hubspot to do this

Remember: You don't need everything perfect to start. Get the legal and safety basics in place, then improve as you grow.

What Equipment Do You Need to Get Started?

When you're just starting, it's tempting to buy every piece of equipment you see. Don't. Start with the essentials:

  • A reliable truck for deliveries
  • Basic repair tools
  • A forklift (used is fine)
  • Space to store your inventory(preferably with a loading dock )

You can expand your equipment as you grow. Many successful pallet businesses started with just a pickup truck and basic tools. Focus on reinvesting profits into equipment that will directly increase your capacity or efficiency.

How to Source Your Pallets

One of the biggest challenges for new pallet businesses is managing inventory. Start by focusing on the most common pallet size in your area (usually 48" x 40"). Don't try to stock every size and grade at first , just focus on pallet that you can directly sell without making many repairs.

What to Pay for Pallets?

Try to get pallet for free or a cheap price. Many companies will be happy to give you their pallets if you offer a free and reliable pick up service Do not over pay for pallets unless you need them and can sell them to a customer quickly. This relates back to knowing the pallet market and how much people are paying for pallet cores

What types of businesses to target?

Work with local businesses to establish a steady supply of used pallets. Build relationships with:

  • Retail stores
  • Small factories
  • Food distributors
  • Construction sites

Pricing Your Pallets

Find out how much other pallet companies in your area are selling pallets for and try to price yourself competitively. It does not matter how many pallets you have if you cant sell them. One of the most common issues is smaller local pallet yards being under cut by larger national pallet companies.

Pricing is tricky when you're starting out. You need to be competitive but can't afford to lose money. Research local prices but don't try to be the cheapest. Instead, compete on reliability and service. Many customers will pay a bit more for a supplier who:

  • Always answers the phone
  • Delivers when promised
  • Communicates clearly
  • Responds quickly to problems

That being said they will NOT pay a lot more, regardless of the service you offer. I still see companies trying to sell pallets for 10 dollars a piece when national pallet companies are selling them for 4 dollars delivered

Getting Your First Customers

Those first customers are the hardest to get. Start with smaller local businesses that larger pallet companies might overlook. Local manufacturers, small warehouses, and agricultural businesses often need pallets but don't have massive contracts with national suppliers. Most larger pallet companies prefer to only do full truckload bulk orders of 500+ pallets. There are a lot of companies that may only need 50 or a few hundred that struggle to find pallets

Walk into these businesses personally or give them a call. Ask to speak with the warehouse manager or facility supervisor. These are the people who deal with pallets daily and understand the pain points. Find out how much they are currently paying and if they are happy with their supplier. At the very least they will be happy to get a quote from you.

How to give a quote

  • Get their email
  • Give a price per pallet
  • Quantity
  • Pallet Size & Type
  • Total Price
  • Delivery Cost or Delivered Pricing

Setting Up Delivery

This depends on the order size buy typically this can be done by pick up truck, box truck, flatbed, or dry van.

You can use your own equipment or look into getting set up with a freight company such as JB Hunt or CH Robinson that offer delivery across the USA.

Collecting Payment

There are many google payment processors out their for small business. Find something simple where you can generate invoice and send them to your customer

Growing Beyond Your First Customers

Once you have a few steady customers, it's time to grow strategically. Ask your current customers for referrals - they're your best marketing tool. Offer a small discount or credit for successful referrals. Their word-of-mouth carries more weight than any advertising you could buy.

Keep a close eye on your capacity. It's better to turn down business than to take on more than you can handle and damage your reputation. Growth should be steady and manageable.

Common Early Mistakes to Avoid

Poor Cash Management: Keep enough cash reserved for repairs and unexpected expenses. This business has lots of surprise costs.

Ignoring Quality Control: Even when busy, check every pallet. One bad load can ruin a customer relationship and a rejected load can cost you a lot of money. Make sure to understand what type of pallet your customer needs. For example if they need a Grade A pallet and and you Deliver a Grade B pallet they will send it right back to you and not pay

Not Keeping Records: Start tracking your inventory, deliveries, and costs from day one. Good records help you make better decisions as you grow.

Payment Terms: If you want to grow you need to understand that larger companies will not pay upfront or on delivery. It is standard in this industry to give NET 30 (they can pay 30 days after delivery) terms. Which means you need to factor this into your cash flow and operations

Not Keeping Records: Start tracking your inventory, deliveries, and costs from day one. Good records help you make better decisions as you grow.

Next Steps in Growth

As your business stabilizes, consider:

  • Adding new services like pallet removal or repair
  • Expanding your delivery area
  • Investing in more efficient equipment
  • Hiring help for deliveries or repairs
  • Take these steps one at a time, making sure each addition to your business is profitable before moving to the next.

Final Advice

Remember, every successful pallet business started somewhere. Focus on doing the basics and grow with time.

Don't get discouraged by setbacks - they happen to everyone in this business. Stay focused on building relationships and providing reliable service. Your business will grow naturally from there.

Most importantly, learn from your mistakes and keep adapting. The pallet industry changes constantly, and flexibility is key to long-term success.

The path from startup to success in the pallet business isn't easy, but it's definitely possible with dedication, smart planning, and consistent effort. Focus on building a solid foundation first, and growth will follow.

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