The demolition business is not one of those industries you can enter on the cheap. Unless you have Superman on your payroll, demolishing anything requires equipment. If you start with small demolition jobs, the equipment is more affordable than if you're demolishing shopping malls or skyscrapers.
A successful demolition company startup needs enough capital to buy the equipment your jobs require. There's a good chance you'll encounter toxic material such as asbestos and lead, so you need to train your workforce in hazmat disposal techniques. Expect to spend $2,000 to $10,000 in demolition company startup costs.
Demolition Company Startup Costs
Your demolition business faces the same startup expenses every company does: paying for local business licenses, the costs of incorporating if you go that route, and the need to hire workers. One expense you have that some companies don't is the cost of buying a lot of equipment. The amount depends on whether your demolition business tackles large or small demolition jobs.
- Small demolition jobs like clearing residential properties require hand-held tools such as jackhammers, grinders, concrete cutters, cutting torches, pry bars, wire strippers and sledgehammers. You also need wheelbarrows to haul equipment and refuse away and protective gear such as gloves, ear protectors and safety glasses.
- Large demolition jobs require bigger and more expensive equipment: excavators, crushers, conveyors, bulldozers and scaffolding. Some of these machines may require a licensed operator.
There are several options for keeping costs down:
- Buy some equipment used. Scaffolding, sledgehammers and pry bars, for example, have no moving parts to wear out, so they're reliable even when they are used. For items such as jackhammers, you may be better off buying new rather than risk them breaking down and costing you a deadline.
- Rent machinery and operators on an as-needed basis. This takes a lot of planning, as you don't want to be told "no" when you call your source and ask for a backhoe ASAP.
- Find a ready source of spare parts for your equipment. The demolition business is one where the equipment wears down a lot faster than, say, web design.
The Demolition Business and Hazmat
Another thing that makes the demolition business different from fashion design or selling groceries is that sooner or later, demolition requires clearing hazardous materials from the job site. The construction industry has used lots of toxic material in the past, sometimes for a good reason. Asbestos was an effective fireproof insulator, for example, but now we know it comes with a variety of health risks.
Along with asbestos, the demolition business may require dealing with lead paint, PCB caulking, mercury-containing light bulbs, mercury switches in thermostats, and a long list of other toxic chemicals. Hazmat materials have to be removed carefully to avoid contaminating the area and then disposed of safely.
The disposal of asbestos, lead and other on-site toxins requires trained workers. Typically, you or your hazmat-trained employees need 40 hours of training to meet federal safety standards. That includes a mix of classroom instructions in safety procedures and on-site training in handling hazmat equipment and dangerous chemicals.
Another difference between the demolition business and, for example, retail sales, is that your clients may require you take out a surety bond. This is a guarantee you'll complete the job on time and under the terms of the contract. If not, the surety company either completes the project or pays the customer, and then it seeks reimbursement from your business.
Taking out a surety bond gives your customers confidence that your demolition company startup will meet deadlines, dispose of hazardous waste safely, and otherwise comply with the contract. The bond premium varies with the contract and how good a risk the surety company thinks you are.