A Gearhead’s Guide to Starting a Junkyard Business

Do you love taking apart old cars and tinkering around with their parts? If so, you might be the perfect person to open up a junkyard in your community.

While the term “junkyard” sometimes has a negative connotation, scrapping old junk cars can actually be a very lucrative business. Most of those cars contain parts that could be worth a lot of money if you know how to find them and remove them from cars safely.

Before you start a junkyard business and begin living out every gearhead’s dream, there are some steps you need to take to give your business every chance to succeed. By going through the proper motions, you’ll set your new junkyard up for long-term business success and love what you’re doing right from the beginning.

Follow this guide to get your junkyard moving in the right direction.

Put Together a Business Plan

When you first decide to open up a junkyard, you might be tempted to run right out and start looking at available lots to build it. Resist the urge to do this right away.

Instead, take the time to put together a well thought out business plan. Your business plan should lay out exactly how you plan to use your junkyard to make money.

You’re going to need to consider everything from how large you want your junkyard to be to how you’re going to acquire the junk cars that end up on your lot.

At some point, you may need to approach a bank or another lender about taking out a business loan. They’re going to want to see a business plan from you before making a final decision. Have one ready to go right from the start.

Create a Business Name and Form a Legal Company

While you’re busy putting together a business plan for your company, you should also be thinking about what you want to call your junkyard. You should come up with a clever name for your business that explains exactly what your junkyard is all about.

Once you have a name in place, you should register your business legally and obtain the proper business licenses and certifications for it. Check with your local town or city to see what you’ll need to do to get your junkyard up and running in the near future.

At this point, you can also open up a bank account for your business. You’ll want to keep any funds associated with your junkyard separate from your personal finances.

Find a Piece of Property for Your Junkyard

Your business plan is starting to come together. But it won’t feel real until you’re able to find a piece of property for your junkyard.

Look around at the available lots in your town or city to see what’s out there. Ideally, you’re going to need a relatively large piece of property to conduct business. There are going to be quite a few junk cars on the property at any given time.

There is one very important thing you’ll need to consider when looking for junkyard lots. The Environmental Protection Agency will need to approve your property before you build a junkyard on it.

The EPA will get involved because you will likely be working with hazardous materials at times that could potentially pollute local waterways if you’re too close to them. You’ll be required to work closely with the EPA to make sure your junkyard doesn’t pose a threat to any water or soil in the area.

Install a Fence Around Your Property

On the surface, it might not seem like there’s a whole lot of value in old junk cars. These are, after all, cars that most other people don’t want.

But you know how valuable they are, and so do a lot of other people out there who could try to steal from your junkyard if you don’t protect it.

After you buy EPA-approved land to build your junkyard, put up a fence around it. You should also consider putting barbwire around the top of the fence and installing security cameras.

This will let those in your community know that you’re taking the safety and security of your junkyard very seriously. It’s a good idea to set a precedent right from the start.

Build a Well-Ventilated Facility to Disassemble Junk Cars

In addition to installing a fence around your property, you should also start building the facility that you and your employees are going to use to disassemble junk cars.

Whether you choose to put up a small garage that can handle one car at a time or a larger one capable of housing multiple cars at once, the facility you build should have excellent ventilation. You and your employees won’t want to breathe in some of the fumes that older cars can produce.

Once your facility is built, you’ll also want to fill it with all the tools you and your employees will need to pull parts from old cars accordingly.

Hire Employees Who Know as Much About Cars as You Do

We’ve mentioned your employees a few times now, so let’s talk about them for a minute.

In all likelihood, you’re going to need to hire some people to help you out with your junkyard. And they’re going to need to be gearheads just like you are if they’re going to be beneficial to your business.

Put ads on job listing sites looking for help and interview everyone who applies to see how well they know their way around cars. Assembling a strong team will be almost as important as disassembling old cars when it comes to your business’ success.

Figure Out a Way to Organize Used Car Parts

What are your employees going to do with the used car parts that they pull off old cars?

You need to have some sort of inventory management system in place so that junkyard parts don’t end up all over the place and make a huge mess. Create a system that’ll make it as easy as possible for you to label parts and find them later.

In a perfect world, you should enter each and every part that you pull off used cars into a digital database that you can reference later. It will take some time to build that database up, but it could pay off in a big way.

Find Companies Interested in Purchasing Scrap Items From You

There are some junkyards that will collect as many scrap items as possible and then sell them individually to those who want them. There are others that will partner with companies looking to buy scrap metal and sell the scrap items they pull from cars to them.

If you’re going to take the second approach, companies like Amalgamated Scrap Metal would like nothing more than to purchase scrap metal from the junk cars you bring into your junkyard. They can give you top dollar for scrap items if you want to go that route.

It all depends on how you want to set your junkyard operation up from the start.

Buy Equipment to Crush Cars When You’re Done With Them

After you’ve pulled used car parts and other scrap items off junk cars, you’re going to be left with lots of metal frames.

Getting rid of these metal frames one by one can be a challenge. But there is a lot of value in recycling them all at once.

While you let your collection of metal frames build up, you should bring in a car crusher that’s capable of crushing cars and limiting the amount of space they take up. Since you’re just starting off, you might want to search for a used car crusher that can get the job done for you.

Some junkyard owners also like to invest in a heavy-duty crane to make transporting car frames from one section of a lot to another as easy as possible.

Market Your Services to the Community

You can set up the most amazing junkyard in your area. But if no one in your community knows about it, what’s the point?!

Market your services to those who live and work around you as effectively as you can. You can do it by running ads in your local newspaper, setting up social media accounts for your business, and hanging flyers on telephone poles. Additionally, you can design a professional website for your junkyard.

You can also hang up big, bold signs outside of your junkyard and welcome people to sell their old junk cars to you. It won’t be long before you’re generating a lot of interest once people know you’re open for business.

Open Your Own Junkyard Today

As you can see, it’s going to take a little bit of time and effort on your part to get your junkyard going. But if you’re a true gearhead, you’ll likely enjoy every single aspect of it.

Just make sure you take the right steps to prevent yourself from running into problems later. The last thing you want to do is build your facility without getting consent from the EPA or fail to create a system for organizing parts and end up with more parts than you can handle on your hands.

Read our blog for more advice on starting a successful business.