How Profitable is a Waste Management Business (2024 Stats)?

The waste management industry plays a pivotal role in maintaining environmental sustainability. In the U.S., the average turnover for a waste management business stands at a notable $376,000 annually. But with such a figure, what are the underlying costs and profits associated with running such a business?

Delving into the specifics, this article presents a comprehensive financial overview of the waste management sector.

From the average revenues of over 570 franchised businesses to the startup costs and profitability metrics, we provide a data-driven snapshot of the industry in its current state.

Whether you’re considering entering the waste management arena or seeking insights into its financial dynamics, this article offers a clear picture of the opportunities and challenges within. Let’s dive in!

What is the average turnover for a Waste Management business?

Using the same source earlier, it’s safe to assume that the average turnover for a waste management business

Now, using data from more than 570 franchised businesses, a waste management business earns $376,000 in gross revenue per year on average. This number is the average gross revenue per business from 570 waste management businesses of the largest 6 waste management franchises in the U.S.

Most waste management companies charge on a monthly basis. With an average monthly waste disposal per customer of $130, that’s a total of ~2,900 customers per year. With 12 months in a year, that’s on average 242 customers monthly per business.

Yet, not all waste management businesses have the same yearly revenue. Logically, some will earn more than others because of many factors like

How much does it cost to start a waste management business?

You would have to invest on average anywhere from $324,000 to $456,000 to open a waste management business.

The upfront investment covers costs like rent, leasehold improvements, licenses and permits, trucks and equipment, furniture and fixtures, insurance, utilities, marketing, etc.

• Initial marketing (2%): covering expenses for the promotion and advertising of waste management services during the business’s early stages.
• Furniture, fixtures, equipment, computer system, and software (2%): allocating funds for necessary items like office furniture, computer systems, and specialized software to streamline operations like scheduling and record-keeping, waste containers, sorting equipment, etc.
• Insurance (1%): cost of essential insurance coverage, including liability, vehicle, and workers’ compensation insurance.
• Trucks (80%): a substantial portion dedicated to acquiring waste management trucks for efficient collection and transportation.
• Training expenses (1%): funds for employee training in waste management procedures and safety protocols.
• Working capital (12%): covering day-to-day operational expenses for the first three months, such as salaries and utilities
• Other costs (2%): allotting resources for miscellaneous expenses like permit fees, legal costs, dues and subscriptions, rent and leasehold improvement, and unforeseen expenditures.

How profitable is a waste management business?

Waste management businesses make on average ~25% operating profit margin (EBITDA margin) after operating costs (salaries, etc).

Indeed, there are various recurring costs involved in running a waste management business. The major expenses include costs of services, followed by salaries.

• Cost of services (~10% of revenue): sum of the variable costs directly related to providing waste management services. This can include fuel and transportation costs, landfill fees, processing and sorting costs, recycling costs, maintenance costs, etc.
• Salaries (~40% of revenue): includes salaries, bonuses, and other taxes and benefits you must pay to your employees.
• Marketing (~1-5% of revenue): cost incurred in executing strategies and activities aimed at promoting the waste management services you offer, creating brand awareness, and attracting customers.
• Other operating costs (20% of revenue): may include legal fees for compliance issues, employee training programs, and other administrative expenses.