Tire recycling is more than just doing what’s right for the environment. A well-run recycling facility can turn a profit by transforming waste into valuable resources. There is no “one best way” to make tire recycling into a money tree. However, there are key principles to setting up and running a lucrative recycling operation that are worth knowing.
Return on Investment (ROI)
A fundamental concept that will help you make the best decisions for your business is return on investment or ROI. To calculate ROI, all you need to do is divide the net profit from your investment by the initial cost. This gives you a percentage that represents how much of your initial investment you have made back. The higher the percentage, the better your returns. It gives you a facts-and-figures way to optimize your equipment costs and other business expenses.
ROI of Your Business
You can calculate the ROI of your entire recycling business after one year by dividing how much income the recycling plant made by the cumulative costs of running the site. It’s important to understand that the first year or two, might have a small ROI. This is due to set-up costs including:
- Recycling plant land
- Recycling line construction
- Tire recycling equipment
- Time finding employees, consumers, and organizing workflow
Eventually, the outset costs will slow down and be replaced by gains. Focusing on the long game is essential. Now, with the concept of ROI tucked into the tool belt, let’s explore the areas of a recycling business that affect total ROI, especially in those critical years of starting a business.
Reducing Input Costs
You should be able to obtain end-of-life tires at a minimal cost. After all, most people see them as garbage.
Maybe you are already in cahoots with an auto mechanic. They receive loads of worn-out tires and are happy to offload them to the most convenient source, often for free. Auto shops are everywhere, so it’s worth reaching out to all of the ones in your local area.
Sourcing the input material for free can be a major win for your business ROI. However, unless the providers drop off the tires on your back porch, you will still incur the cost of transporting the tires from the source to your recycling center. Reduce transportation costs by collecting large loads with trailers and choosing a central location for the recycling plant.
Storing tires sounds simple enough. However, it is vital that you understand rules and regulations in your area to avoid creating a hazardous situation. Find a compromise between a convenient location for your tire recycling plant and affordable land. Getting this combination right can be a balancing act.
Once you’ve organized the source, transportation, and storage of tires, you can calculate the total costs of your raw material input. Compared to many industries’ input costs, this stage of tire recycling can be exceptionally inexpensive.
Optimizing Tire Processing
The next stage of recycling and tire processing comes with its own costs and money-saving opportunities.
1. Equipment Quality
ROI hinges on choosing the right tire recycling equipment. Quality tire shredding and assembly line machines automate most of the tire recycling process. Automation creates a highly efficient workflow with fewer employees to train, pay, and organize. After all, machines don’t call in sick to work very often.
ECO Green has specialized in creating the best tire recycling machines in the industry. We make shredders fit for purpose, designing every piece to achieve its job consistently and efficiently. Financing options are available in the USA to help manage the price of a tire recycling plant.
Consider how much maintenance your tire recycling equipment requires. Quality shredders only need their teeth sharpened periodically to keep munching tires night and day. Some tire recycling equipment manufacturers, such as ECO Green, offer on-call personal assistance built into their product models. If you want to increase ROI on your equipment, it’s vital to consider future maintenance costs and not get carried away by the cheapest initial purchase price.
3. Growth Mindset
A crucial part of successfully jumping into tire recycling is starting small and growing into opportunities. A vast range of tire recycling equipment is available, from rubber mulch machines, tire powder machines, and shredders designed for specific types of tires or end products.
Every recycling plant doesn’t need every piece of equipment. Some companies start out shredding tires for use as tire-derived fuel (TDF). Once established in the industry, investing in more specific machines to make more products is a great way to expand your business.
Selling Tire Recycling End Products
Finally, we’ve reached the metaphorical tire recycling harvest. With your system optimized for ROI, you can stop sending money out and start seeing the cash flow back in.
Industries such as cement manufacturing and paper mills pay tire recycling companies for Tire Derived Fuel (TDF). Turf companies and asphalt production will spend money sourcing crumb rubber to make their products. Recycling companies can also make money by creating an end product, such as rubber caps, toys, or shoes, and connecting directly with consumers.
Find your niche in the recycling industry. Spend time networking with potential buyers and researching other recycling companies’ stories. Use rejections as valuable learning experiences, like the rungs helping you climb higher up the ladder to success. In the end, you’re doing right by the environment, and to top it all off, you’re earning money too.