Sunday, July 8, 2012

How To Start A Junk Shop Business

For more than 5 years now, I have been thinking of going into junk shop business. Since grades school, it has always been known to me that there is money in the trash (may pera sa basura). I came from an environment where one of the past time was to play hide and seek in the junk shop of Mang Will (RIP). Though I do not find the business glamorous and definitely not my line, I know I do not need a green thumb just like in gardening to go through the junk shop business.

In line with the planning, I have read a lot of blogs about it and I am sharing one of them to you. Hope you find it useful as it is to me. The only reason that holding me not to venture into this business is the lack of sufficient capital and good location.

Scrap trading has advanced into a small scale industry. The fact that junk shops continue to thrive in many localities is proof that this is a lucrative business.

Aside from the usual old newspapers, glass bottles and metals, new materials such as plastic, aluminum, non-working auto batteries and precious metals are introduced. And so we can say that this enterprise which is actually a simple buy and sell business is here to stay.

The licenses coming from the concerned government agencies should be acquired prior to operation. Below is a list of the said agencies.

Department of Trade and Industry (DTI) – Business name registration
Bureau of Internal Revenue (BIR) – Taxation purposes
Barangay Certification
LGU (City/Municipality) – License to operate

Since this is a trading/buy and sell business, the initial capital investment required is not much compared to other similar trading businesses. Suggested minimum initial capital investment should be at least One Hundred Fifty Thousand Pesos (P150,000) or around $3,000. It is highly adviced that the entrepreneur make a detailed checklist of the following:

Business licenses and registrations
Security (refundable) and advance rental deposit equivalent to 4 months
Vehicle (optional-pick-up truck)
Renovation (in case of land lease)

Operating Expenses

Monthly rent
Utilities (electricity, water, telephone, gas)
Manpower (wages)

Revolving Fund

Purchasing cash

Location/Site of the Business

Location should be highly accessible to private and public utility vehicles, trucks included. Prior to signing of the lease contract, the entrepreneur must check with the local barangay with regards to any restrictions concerning the junk shop operation. Usually the owner is required to put up a concrete fence especially if the location is proximate to residential areas.

There are two options that can be considered with regards to how big an area one should lease.

Buying Station – Should one find hard to acquire a space for both purchasing and warehouse purposes due to inavailability or high rent, one can operate a buying station with an area of at least 30 sqm. However, a storage area proximate to the buying station is required. The storage area must be at least 100 sqm., portion of which is covered, the ratio to be determined based on the market assumptions. In this case, it is necessary to have at least a small pick-up vehicle for transporting the purchased goods from the buying station to the storage area.

Warehouse Operation – A warehouse set-up with ample open area is advisable. The gross floor area should be at least 100 sqm., portion of which is covered, the ratio between the open and covered area to be determined based on the demand in relation to the volume of recyclable items/materials. In this case, the acquisition of a delivery vehicle is optional.

Manpower and Equipment

The Junk Shop Business is not manpower intensive but like any other business, one must have a trustworthy and hard-working staff to succeed. A personal touch is advisable as the foundation of the business’ operation is pretty much cash oriented. If the entrepreneur can act as the general manager and the cashier at the same time, the possibility of pilferage can be minimized if not eliminated.

The list below outlines the basic skeletal force for operation.

1 General Manager/Cashier
1 Officer-in-Charge (minimum wage)
1 Driver/Helper (can act as Checker) (minimum wage)
2 Helper (can act as Checker) (allowance+free board)

Basic office equipment and furniture consisting of 2 sets of tables and chairs, calculator, adding machine and other office supplies as required.

The list below outlines the necessary operating equipment to start up the business. It is not necessary that these are brand new as long as it is functional and accurate. All weighing scales should be inspected and calibrated by the DTI or the City/Municipality Government.

1 Weighing Scale (Bascula)
1 50kg countertop/hanging weighing scale
2 Metal push-cart (cartilla) or ecobike

1 Acethyline Torch and Gas Tank
1 Pulley
Tools (steel saw, pliers, vice grips, screw drivers, hammer, “baretta de cabra”, etc.)


This aspect is rarely discussed but connections and or networking is an integral part of a business. For junk shop business, it is important that you have a harmonious relationship with the neighbourhood, potential customer and clients which are mostly junk and recycle centers

Source: JunkShopBusiness.Com

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  2. However, for many budding entrepreneurs the issue is
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