Being able to securely shred documents is a need that many businesses have today, but they don’t have the internal capabilities to get the job done. This is where knowing how to start a paper shredding business can become a tremendous entrepreneurial asset. With the right equipment, a few shredding contracts, and the ability to complete a repetitive task or hire people to do it, it is possible to start a very lucrative business.
There are 3 Types of Paper Shredding Businesses
If you are thinking about beginning a paper shredding business, then your first choice must be to determine the structure of your business. There are 3 different business models from which you can choose.
1. Mobile shredding.
This business model would have you shredding documents, credit cards, CDs, and other materials in the back of a truck that you take to each contract site. The business would deliver the documents to you in the truck and you would shred them securely right there.
2. Pick up shredding.
This business model would have you going to your contracts to pick up the documents to be shredded from them. You would then return to your place of business to shred and then dispose of the destroyed paperwork.
3. Delivery shredding.
This business model would require your contracts to deliver the paperwork they need to have shredded directly to your commercial location.
Most paper shredding businesses will incorporate all 3 forms of service into their overall services, but there is one type of contract from these three that each business will focus upon. If you have a truck and equipment on hand already, then mobile shredding or pick up services would be the place to start. If you don’t have the transportation to pick up shredding or do the work on site and can’t secure the capital, then option #3 is going to be best for you.’
Make Sure To Secure All Necessary Permits
A paper shredding business is really in the safety and security field, so you may need to have certain permits or licenses from your community in order to operate legally. You will need to obtain these and decide on the structure of your business. It would be better to operate as an LLC or corporation to do document shredding because the liability of not properly shredding and disposing of confidential documents could wipe out your personal finances with just one mistake.
You may also need to collect sales tax from your contracts because you are providing them with a service. To do so, you will need to speak with the Department of Revenue or your local Labor and Industries division to determine how to qualify for tax collection. If you want to hire employees for your new business, then you will need to register for an identification number for taxing purposes.
You Will Also Need a Secure Location
Although document shredding seems like a basic task, if you are operating on a commercial level in this industry, your business location is going to need some specific features.
1. Proper venting.
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. This means you’ll also need ventilation installed to make sure the environment is safe. If there is no venting, you may be required to invest into respirators for yourself and your people.
2. Upgraded security.
If you have unshredded documents at your business location, then you have a security risk on your hands. You’ll need to upgrade the security of your building to show that you took every feasible measure to protect the unshredded papers from theft if something unforeseen happens. This typically means having an alarm system available, locks on all of your shredders, and your stored shredded work behind two locks.
3. Plenty of space.
Most shredding companies will take the final product, compact the shredded paper into bales, and then send them off to a recycling facility for some added revenue. Until the recycling facility can accept the bales, there will need to be adequate storage space for the work being completed. Stacking bales along the walls in your work room will not be a good idea.
The most important investment a paper shredding company can make, however, is into a vehicle that can handle at least one commercial shredder. This will expand your business opportunities. It will also speak to your ability to provide confidential and secure document shredding.
Don’t Forget About Your Insurance
As a paper shredding company, you’ll wind up spending more on general liability insurance than the average business. Not only is there 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 on fire. Shredded paper makes pretty good kindling for a spark.
You’ll also likely find that most businesses will be more likely to be interested in your services if you are bonded. A surety bond acts as a form of credit in case you make a mistake. You pay the insurance company a lump-sum payment at the beginning of your working year and this credit becomes available. If a payment comes out of your surety bond, then you may be required to replace those funds. Some bonds may require 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 securing work.
Starting a paper shredding business can be a lucrative opportunity, but it is one that has certain risks that must be tempered before beginning. By taking these steps and making sure you have the proper licensing and insurance on hand, you’ll be able to have a successful business that you will have fun working in and building up over time.
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