The pallet industry is booming, and it’s a great time to get into the business. With pallets being used for everything from furniture to major shipping platforms, there is an ever-expanding market for your custom pallets. If you’ve been searching for a new career or side hustle with the potential for growth, this could be the one!
This post will show you the necessary things to do to help you start a pallet business. Are you ready? Let’s go!
Which Industries Can Benefit From Wood Pallets?
Most times, when people ask how profitable is a pallet business, they also wonder what industries use them. The first thing that typically comes to mind is the construction industry. But the truth is that pallets are very versatile, and so they can be used in various industries.
Some common industries that can benefit from wood pallets are:
- Wine and beverages
- Furniture
- Art galleries
- Food distribution
- Schools
- Medical equipment
- Moving and storage companies
Is Pallet Business Profitable?
Pallets have long been used for various purposes, including packing and moving things across various industries. And from the look of things, it doesn’t seem to be going away soon. Without pallets, shipping of products will be practically impossible. So the pallet market is growing and will continue to grow.
Experts estimated that the pallet market will likely grow by $88.69 billion by 2026 in the United States alone. So if you are thinking of going into the industry, you can be sure you are venturing into a highly profitable venture.
11 Steps To Starting a Pallet Business
#1: Research the market
This is the first thing to do when thinking of starting a pallet business. You need to first gather information about the market. Know what demand, competition, and trend look like in the local market. This will help you see where gaps are in the market and how you can come in. you can ask questions around or check websites like palletprofile.com or RecycleRecord.com.
#2: Identify your business model
Before starting your pallet business, you must know what business model you will be implementing. So, first figure out what type of pallet business model will work best for you:
- Lumberyard – This model involves buying used lumber and building new products from that wood. These businesses are often open seven days a week and may even stay open 24/7 if they’re around large metropolitan areas where they expect high demand on weekends or holidays.
- Wholesaler – This model involves buying used lumber and reselling it to either retailers or other businesses who use the material themselves (such as recyclers). These companies often keep regular hours but have higher overhead costs than those found in lumberyards because they do not process their own products; instead, they sell them raw, so the buyer must complete manufacturing before a sale takes place.
Once you’ve decided which option is best suited for your business goals, that will help you have a better idea of the financial implications of starting the business.
#3: Consider your competition.
You must know your competition. Whether you are competing with other businesses or just yourself, make a list of what you will be doing for your business and how it will compare to others in the field. This information could give you ideas on how to improve upon what is already out there.
It will also help shape your goals and objectives as well as help determine if this type of business is right for you.
#4: Learn the Manufacturing Process
Although pallet making is very easy, you will still need to learn the manufacturing process to be on top of the game when you are looking to start a pallet business. Contact local manufacturers to learn what the latest pallet manufacturing methods are. While wood is the most common material for pallets, some use metals and plastics too.
#5: Create a business plan
You shouldn’t open your business without a business plan. It will help you enjoy good times with the business while running a profitable business. Some of the things you should include in your business plan are:
- What the startup cost will be
- What recurring costs will look like
- Equipment needed
- Materials and who supplies them
- Target customers
- Pricing strategy
- Advertising strategies, etc.
#6: Set your location
The location you choose for your pallet business will mean a lot to the success of the business. Remember, you will need a factory for the business. So, choose a location based on your budget and availability. You should also take into consideration which is the best state to form an LLC and how much tax money you can save. Choose a location close to your target market and make sure there is ease of transportation around there.
#7: Find suppliers for pallet materials
You may be able to find pallet repair companies in your area willing to sell you used pallets at a discounted price. This is a great way to get started, as it doesn’t require any huge upfront investments and allows you to test the waters before making purchases.
On the other hand, you can find suppliers who can provide a variety of materials. It’s best if your supplier has different sizes and types of wood available for sale, as well as other materials (such as corrugated cardboard) that could be useful for building your own packaging solutions or creating unique pallet-inspired furniture pieces.
#8: Calculate the costs
Another important thing is to calculate the costs. The best way to do this is by breaking down each step and figuring out how much it will cost you in equipment, materials, and labor; marketing and advertising; licensing, insurance, and taxes; utilities and rent (if applicable); transportation (if applicable); employee benefits (if applicable).
Some of these expenses may be negligible if you’re starting small or doing this as a side hustle. However, if there are any significant costs involved with setting up shop – like buying expensive machinery or leasing space – you may want to consider hiring someone else. Someone who has experience running their own business or getting help from people who’ve been where you’re at now before taking on all those risks yourself!
#9: Purchase the necessary equipment
After you’ve decided to start a pallet business, it’s important to get all of the right equipment and hire employees, if needed. The major raw material you will need for wood pallets is wood. So, if you are starting small, you may not need more than that in addition to nails and lumber, nail guns, worktables, and forklifts.
But if you are starting on a large scale, you may need to go for completely automated machines. In that case, you may need between $500,000 and $1 million.
In addition, when buying your equipment, always go for quality and not just the cheapest. You don’t want to buy cheap equipment that won’t do the job right. A good example is having a forklift that can lift 300 pounds but only has 200 pounds worth of load capacity. If this happens, then you’ll have wasted money on an inadequate machine!
#10: Get your business license and insurance.
If you’re thinking about launching a new pallet business, you will need to get your business license and insurance. This will help protect you and your customers in case of accidents or other damages.
Business licenses are usually handled at the city or county level. If you live in a large city, visiting City Hall and obtaining one there may be possible. If not, call them to find out what steps are needed to obtain one. You can also check their website for any helpful information.
Getting insurance can vary depending on which type of company you want to start. For example, sole proprietorship, LLC, or corporation should have some form of general liability coverage as well as property damage coverage. Some policies also offer personal umbrella coverage, which protects against lawsuits outside normal operations, such as defamation suits from disgruntled clients/customers/etc.
#11: Create a budget for marketing and advertising.
You can’t just throw money at your marketing, but it’s also important to have a budget. You’ll need to determine how much you’re going to spend on advertising and then make sure you stick with it. However, don’t be afraid of shelling out big bucks. If there’s one thing that business owners agree on is that they wish they had spent more on marketing early on in their company’s life cycle.
What methods should you use? The answer varies by business and industry. But if you’re just starting out, here are some common and affordable ways to get started:
- Google AdWords
- Facebook Ads
- Organic search results (SEO)
Conclusion
Starting a pallet business can be an exciting venture into the world of entrepreneurship. You are able to set your own hours, be your own boss and have a flexible schedule for family responsibilities or other personal needs. With careful planning, you will have all the tools you need to keep your business running smoothly and efficiently.
In this post, we have provided all that you need to start a pallet business. Go through them again, and act on them to start your own pallet business. You can check our blog for other posts that also address the subject and can be beneficial to you.
