The Junk Shop Business is most relevant today considering that the government has promoted environmental awareness among its citizens, expressing the need for proper waste disposal and recycling of materials as a major factor in protecting the environment.
As such, business of this nature has developed into a small scale industry. At a glance, one can not immediately see the profitability of this business but in fact that junk shops continue to exist is proof enough. The proliferation of junk shops in many localities attests to the stability of this small scale industry.
The introduction of new materials such as plastics and aluminum containers replacing the old kind have expanded the items now considered in the business unlike before wherein old newspapers, glass bottles and metals are the main concern. From the simple and ordinary galvanized iron and brass steel products, copper, aluminum and plastic user more as an alternative, has taken the limelight.
And so we can say that this enterprise which is actually a simple buy and sell business is here to stay.
Registration and Permits
In whatever type of business one intends to venture into, legally is a must. The licenses coming from the concerned government agencies should be acquired prior to operation. Below is a list of the said agencies.
- DTI – Business name registration
- BIR – Taxation purposes
- Barangay Certification
- LGU (City/Municipality) – License to operate
- 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)
- Monthly rent
- Utilities (electricity, water, telephone, gas)
- Manpower (wages)
- Purchasing cash
Contingency Fund (optional)
Location/Site of the Business
The project’s location should be within a commercial district and proximate to residential developments. It should be high accessible to private and public utility vehicles, trucks included. Prior to signing of the leas contract, the entrepreneur must check with the local barangay with regards to any restrictions concerning the junk shop operation.
There are two options that can be considered with regards to how big an area one should lease.
- 1. 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.
- 2. 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 Equipments
The Junk Shop Business is not manpower intensive but like any other businesses, one must have a trustworthy and hardworking 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 equipments 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 of the City/Municipality Government.
- 1 Weighing Scale (Bascula)
- 1 50kg countertop/hanging weighing scale
- 2 Metal push-cart (cartilla)
- 1 Acethyline Torch and Gas Tank
- 1 Pulley
- Tools (steel saw, pliers, vice grips, screw drivers, hammer, “baretta de cabra”, etc.)
Systematic Operation of the Business
The Junk Shop Business may not be that pleasing to the eye but always remember that there’s a local saying that says “May pera sa basura! (There is money in junk!)”. One would look at the Junk Shop’s operation and say that it is quite easy and simple to operate one, but any business without an operation system would surely lead to bankruptcy.
Prior to the start of regular operations, the entrepreneur must consider the following:
1. Sourcing of Potential Clients
The Clients we are referring to are the parties to whom the entrepreneur will be selling the junk purchased, sorted and segregated. The entrepreneur must search the market for several possible recycling agents/companies to e able to get the best deal possible, such as a lock-in period with regards to the buying price of a specific item. Cost of delivery or pick-up affecting the price should always be taken into consideration. The entrepreneur must bargain for the best deal possible and coordinate with the respective recycling agents/companies as to the payment schedule and volume of deliveries or pick-up.
2. Walk-in Procedure for Retailers
The retailers we are talking about are the scavengers, with or without pushcarts, residents of nearby communities and local business establishments. To be able to avoid pilferage and to maintain an accurate inventory, listed below are the basic guidelines that each staff involved should follow. The step-by-step procedure is the common system currently applied in the business.
- a. The walk-in customer/retailer with the recyclable items will be met and assisted by the helper. The helper will inspect the items and sort it out if needed. He will be the one to put the items in the weighing scale.
- b. The OIC will then do the actual weighing. He will then fill up a “weigh slip” wherein the type of item and its corresponding weight is reflected and sign it. The OIC shall then submit the slip to the Cashier.
- c. The helper shall then transfer the weighted items to the corresponding stock area.
- d. The Cashier shall then compute the total amount due to the customer.
- e. The customer must personally receive the amount and sign the slip of paper as proof of payment.
- f. The cashier shall file all Weigh Slips on a daily basis.
3. Daily Accounting
- a. On day one of operation, a pre-determined amount shal be the basis of the Starting Purchasing Cash (SPC). This amount shall be maintained and replenished at the start of each working day.
- b. At the start of each working day, the Cashier shall count the SPC which should be the pre-determined amount as mentioned.
- c. At the end of each working day,the Cashier shall make a summary of all purchases, enter it n a log book based on the filed Weigh Slips.
- e. The Cashier shall also note down all expenses made for the day excluding purchases on a separate log book.
- f. The SPC less all purchases and expenses of the day shall match the existing cash-on-hand.
- g. The Cashier shall then make a cash count for the day.
- h. All cash in-flow coming from the Junk Shop’s sale to the clients shall be directly deposited to Junk Shop’s bank account.
4. Trading Process
It is also important that the entrepreneur prior to start of regular operations search for potential wholesales that has by-products in their businesses that would fall under the categories that the entrepreneur would be buying. It is by principle that it is best to be a step ahead of the competition, in this case, beat the competition to the products that we’re buying by gong directly to those who are selling.
Another approach is to tap scavengers by providing them with wooden pushcarts (kariton) n the condition that you get a first crack on their products and if possible at a lower cost to at least cover for the cost of the cart. Some junk shops even allow advances up to a certain amount to maintain the in-flow of materials. Although not all junk shops practice the latter, the limit on advance in this informal credit system is up to the prerogative of the junk shop operator. Some junk shops go as high as P500.00 on an agreement simply based on trust.
The sourcing of potential Clients must be a continuous process. After having decided as to whom each type of item/material is to be sold, the basic factors to consider are the following:
- Payment terms
- Schedule of pick-up and/or delivery
- Volume of pick-up and/or delivery
In any case that there is a broker or agent for the client, it should be pre-agreed upon by both the Junk Shop and the Client that all payments should be made directly to the Junk Shop owner or his/her duly authorized representative. All checks shall be made payable to the Junk Shop or it’s owner only.
Items/Materials for Recycling
The table below enumerates the different recyclable materials, itemized per category with their corresponding approximate Buying Price per kilogram or piece based on an actual market survey held this January 2007. The Approximate Buying Price is considered valuable as the ever changing law of demand and supply dictates. It is recommended during actual operation that the entrepreneur from time to time as needed conduct his/her own market buying price scan to be updated and keep up with the growing competition.
- P4.00-5.00 Old newspapers, periodicals, other newsprints, etc.
- P7.00 Bond paper (white)
- P3.50 Carton and cardboards
- P0.25-2.00 Beer, softdrinks, selected hard liquor, soy sauce, fish sauce, etc.
- P210.00 Copper (red)
- P130.00 Copper (yellow)
- P70.00 Aluminum
- P80.00 Aluminum (jalousey framing)
- P60.00 Aluminum cans
- P20.00 Aluminum bottle caps
- P65.00 Zinc
- P20.00 Lead
- P50.00 Stainless
- P60.00 Casserole
- P8.00 GI sheets
- P8.00 ordinary steel
- P5.00 Can (canned goods)
- P12.00 Plastic cups (clear/transparent)
- P7.00 Plastic (ordinary – basins, containers, etc.)
- P17.00 Plastic bottles (softdrinks, juices, water, etc.)
- P150-400/pc Car, Trucks, Motorcycles, etc.
- P2-5/pc Rice, flour and sugar sacks
source: TRC (www.tlrc.gov.ph), photo from philippines.usaid.gov