Pallets are used in many different industries to put together, store, move, and carry products. In the last ten years, the US pallet business has grown by about 50%. This is because the pallet, which is usually made of wood, works as a base and helps protect products. There are two ways to use this trend to make money with your own business that makes beds. You can build a plant and buy expensive production equipment, or you can collect old pallets, fix them up, and sell them as environmentally friendly salvaged pallets.
No matter what you choose, you must first know how to start a business. This step-by-step guide shows you how to start a profitable business making pallets.
Step 1: Find Out if this is the Right Business for You?
Positives Vs Negatives
| Pallets usually sell for $40 each, and there are a lot of them for sale. Pallets are used in many different types of businesses. Customers Who Come Back: Pallets wear out over time and need to be replaced. | High costs to start up – Putting up a plant is an expensive project. Compete in a market with a lot of other box makers. |
Industry Trends
- Size of the business and how it has grown in the past: The US wood pallets and skids industry is expected to be worth $11.9 billion in 2022, which is a rise of nearly 50% from 2012.
- By 2022, the business of making wood beds and slides in the US is likely to grow by less than 1%.
- In 2021, there will be 2,813 companies in the US that make wood boxes and skids.
- The business of making wood boxes and skids in the US will hire 62,441 people in 2021.
Cost of Starting Pallet Manufacturing Business
For about $28,000, you can start a business making salvaged boards. Costs include the shop and rent for a place to build beds, tools to fix beds, a down payment on a truck, and a working budget. Companies that want to get rid of their old, useless barrels should be able to give you a steady supply of them for free.
To start a new business making boxes, you will need at least $1.3 million. The most expensive thing will be the tools for the assembly line that is needed to make new boxes.
On the National Wood Pallets and Containers website, you can sign up for an account and take online classes on how to make pallets. You won’t have to pay anything, and you can finish all the classes in a few days.
Investment Items:
- Pry bars
- Air blower
- Nailing gear
- Bed fix workstations
- Saws
- Heat treating gear
Is Pallet Manufacturing Business Profitable?
These figures will be based on the idea that you are starting a business to make recycled pallets. Each used box should go for about $30. Your profit margin should be about 20% after rent, costs, and labor.
You might sell 200 boxes every week for $312,000 in your first year or two. Using a profit rate of 20%, this would mean about $63,000 in profit. As your business grows, you might be able to sell 800 boxes every week. With an annual income of $1,250,000, you could make $250,000 per year.
Entry Barriers
- Costs of starting a business and getting money to do it
- Big pallet makers’ battle
- Finding and getting a good place, as well as hiring staff
Step 2: Create a Strategy
Identify a Gap
Investigating local companies that make pallets to learn about their products, prices, and ways of selling them. You want to fill a need in the market. For instance, the neighborhood market might not have a business that recycles plastic or wood barrels.
This could get people talking about you again and bring you new business right away.
Solutions
You should have different sizes of pallets for different uses. People can also buy pallets.
Pricing
Each box that is recycled should be worth about $30. Your costs will be lease, above, and work. You should aim for a profit margin of about 20%.
Once you know your costs, you can use our Step-by-Step Profit Margin Calculator to figure out your rate and final price points. Remember that your shipping prices should be able to change whenever the market calls for it.
Target Market
Any business that uses boxes will be your target market. This includes both big-box stores like Home Depot and production and manufacturing companies. You can find business owners and managers on LinkedIn, or you can use Google and Cry to find related companies and call them.
Location
A place to make things has to be rented. You can use Craigslist, Crexi, and Instant Offices to look for office space to rent in your area.
If you’re looking for a place to do business, you should follow these basic rules:
- The place is convenient and easy to get to with public transportation.
- The room has a lot of natural light and good air flow.
- As your business grows, you can stretch the lease.
- It is ready to be used and doesn’t need any major fixes.
Step 3: Write a Business Plan
A firm must have a plan. This will assist you in guiding your new firm through the launch process while keeping your major objectives in mind. A business plan also helps potential partners and investors better understand your company and its goals:
- Executive Summary: A brief outline of the whole business plan that should be written after the plan is done.
- Business Overview: A summary of the company’s goals, vision, purpose, assets, and control structure.
- What we make and what we do: Explain in detail what you’re selling.
- Do a SWOT analysis and look at market trends like changes in demand and growth opportunities.
- Competitive Analysis: Look at your key rivals’ strengths and flaws and make a list of what makes your services better.
- Sales and Marketing: Look at the unique selling points (USPs) of your business and come up with sales, marketing, and promotion plans.
- Management Team: An overview of the team’s tasks and professional backgrounds, as well as a business structure.
- Operations Plan: Your company’s operational plan includes how it will get supplies, where it will put its office, what its most important assets and tools are, and other practical details.
- Financial Plan: A three-year plan for money, including start-up costs, a break-even analysis, predictions of profits and losses, cash flow, and a balance sheet.
- Appendix: Add any other papers related to money or business.
Step 4: Create a Marketing Plan
Some of your business will come from people walking by or finding you online, but you should still spend money on marketing! Getting the word out is especially important for new businesses because it will bring in more customers and make more people aware of the brand.
Once your website is up and running, connect it to your social media accounts. Social media is a great way to market your business because you can make posts that are interesting and sell your products.
- Facebook is a great place for paid ads because it lets you target specific groups, like guys under 50 in the Cleveland area.
- Instagram has the same benefits as Facebook, but it is used by a different group of people.
- Website: Search engine optimization (SEO) will help your website rank higher in relevant search results, which is a key part of getting more sales. Make sure there are clear calls to action on your website. Change the size, color, and placement of calls to action like “Book Now.” This could bring in a lot more people.
- Google and Yelp: Getting listed on Yelp and Google My Business can be very important for getting people to know about your business and buy from you.
- Signage: Add eye-catching signs to your website.
- In-Person Sales: Sell your boxes to local companies.
- Post a video – Post a video about your bed-making business. If you use fun, it could spread like wildfire.
- Email marketing/bulletin: Send regular emails to clients and prospects. Make them your own.
- Start a blog—Start a blog and post regularly. Change up your content and share it on a number of different channels.
- Paid social media ads: Run ads on sites where your target crowd is.
- Pay-per-click marketing: Use Google AdWords to improve your search engine results. First, find out about your watchwords.