How To Start a Waste Oil Collection Business

by Laura Acevedo; Updated September 26, 2017
Deep fryer with oil

Successful waste oil collection businesses provide equal attention to the collection and disposal portion of their business. You need a steady stream of clients for collection and a strong recycling program to obtain higher revenue and profits. Whether you want to focus on cooking oil used in restaurants or car oil, you need a strong understanding of the regulations for collection, transportation and disposal of waste oil. This business can be started with about $20,000 in start-up funds and can be run as a one-person operation. Provide an efficient and convenient service for collecting waste oil, and you will have a strong basis for a long-term business.

Items you will need

  • Business insurance
  • Licenses
  • Collection containers
  • Transportation vehicle
  • Testing equipment
Step 1

Research the waste oil regulations in your area. Determine what types of oil you can collect, the regulations and costs for disposing non-recyclable oils, transportation requirements, legal requirements and the necessary containers.

Step 2

Determine the types of waste oil you want to collect. Your options include car oil, restaurant oil and oil used in manufacturing processes. Each type of waste oil may have different regulations and recycling options in your area. Research the existing market and current service providers to find a niche that is not currently oversaturated with other waste oil collectors. Look at the value of waste oil for recycling and the distance to the closest recycling plant. Based on your research, pick the type of waste oil that will provide a high number of clients and a high recycling value.

Step 3

Formally establish your business. Consider establishing an S corporation to help limit legal and personal financial exposure in case of accidents. Set up accounting and organizational systems that tracks your expenses and profits. A basic system of a desktop computer and Quickbooks Accounting software should cost around $800. Obtain all needed licenses, including commercial driver's licenses, or CDL, for driving larger trucks with a hazardous materials, or HAZMAT, endorsement if appropriate. If you use a smaller truck, a CDL license is not needed. CDL training and licensing can be found for around $1,000. Buy business insurance to cover all equipment from loss and liability insurance in case of accidents. Insurance costs vary based on the type of truck you are driving and your location. For a small truck in an urban area, budget about $400 a month for commercial insurance.

Step 4

Buy equipment. Buy all needed equipment to store, distribute and recycle the type of waste oil you want to collect. You may need to buy special containers for your clients to use between pick-ups, a commercial transportation vehicle, storage vats, testing equipment and any equipment specified by your state or local governments. A small flatbed truck with a 12-foot bed and a lift can be found used for around $14,000. Start with about 40 fifty-five gallon drums for customer storage, which will let you service about 35 customers. Purchase additional storage drums as your business grows. You can find used certified drums for about $50 each. When starting out, rely on your drums for all stages of oil storage. Total equipment cost will be about $2,500. The total cost of a vehicle and equipment should average $16,500.

Step 5

Obtain clients. Send out fliers and visit businesses using the types of oil you want to collect. Consider advertising in a local trade paper for restaurants or for the automotive industry. You can usually place a small ad for about $100. Describe your services and obtain agreements to collect their oil. Make it convenient for business owners to work with your service. Doing so will help obtain additional clients through word-of-mouth advertising. Consider offering additional services, such as deep cleaning, to increase your per-customer revenue.

Resources

Photo Credits

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