Junk shop is considered by many as a dirty business, I mean it literally, but this

is a lucrative business that generates a lot of money both for garbage collectors
and junk shop owners.

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.

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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 plastic 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 use 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.

o Department of Trade and Industry (DTI) – Business Name Registration

o Bureau of Internal Revenue – Taxation Purposes
o Barangay Certification
o Local Government Unit (City/Municipality) – License to Operate
Capitalization

Since the project is a trading/buy and sell business, the initial capital investment
required is not that much compared to other similar trading businesses.
Suggested minimum initial capital investment should be at least P1500,000. It is
highly advised that the entrepreneur make a detailed checklist of the following:
Capital Investment

A. Fixed
o Business Licenses & Registration
o Security (refundable) and Advance Rental Deposits equivalent to 4 months
(2 months security deposit and 2 months advance rent)
o Equipments
o Vehicle (Optional-Pick-up truck)
o Renovation (In case of land lease)
o Miscellaneous
B. Operating Expenses

o Monthly Rent
o Utilities (Electricity, Water, Telephone, Gas)
o Manpower (Wages)
C. Revolving Fund

o Purchasing Cash
D. Contingency Fund (Optional)

The entrepreneur must open and maintain a separate bank account solely for the
Junk Shop’s financial transactions.

Location/Site of the Business

The project’s location should be within a commercial district and proximate to
residential developments. It 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.

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

1. Buying Station

o Should one find it 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 sq. ms. However, a storage area
proximate to the buying station is required. The storage area must be at
least 100 sq. ms. 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

o A warehouse set-up with ample open area is advisable. The gross floor
area should be at least 100 sq. ms., 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 business
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.

Designation – Personnel – Salary

o General Manager/Cashier – 1
o Officer-in-Charge (Secretary/Checker) – 1 – (Minimum Wage)
o Driver/Helper(can act as Checker) – 1 – (Minimum Wage)
o Helper (can act as Checker) – 2 – (Allowance+free board)
Basic office equipments 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. These can be acquired through surplus shops and second hand
retailers. All weighing scales should be inspected and calibrated by the DTI or
the City/Municipal Government.

Description – No. Units

o Weighing Scale (Bascula) – 1

o 50 Kg countertop/hanging weighing scale – 1
o Metal push-cart (cartilla) – 2
o Acetylene Torch and Gas Tank – 1
o Pulley – 1
o 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 basural (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 operational
system’would surely lead to bankruptcy.

Prior to the start of regular operations, the entrepreneur must consider the
following:
1. Sourcing of Potential Clients

o 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
be able to get the best deal possible, such as a lock-in period with regards to
the buying price of a specific item.
o 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 terms, schedule and volume of deliveries or pick-up.
2. Walk-in Procedure for Retailers

o 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.
This step-by-step procedure is the common system currently applied in the
business:

o 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.
o 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.
o c. The helper shall then transfer the weighed items to the corresponding
stock area.
o d. The Cashier shall then compute the total amount due to the customer.
o e. The customer must personally receive the amount and sign the slip of
paper as proof of f. payment.
o g. The cashier shall file all Weigh Slips on a daily basis.
3. Daily Accounting

o a. On day one of operation, a pre-determined amount shall be the basis of

the Starting Purchasing Cash (SPC). This amount shall be maintained and
replenished at the start of each working day.
o b. At the start of each working day, the Cashier shall count the Starting
-.Purchasing Cash (SPC) which should be the pre-determine amount as
mentioned.
o c. At the end of each working day, the Cashier shall make a summary of all
purchases, enter it on a log book based on the filed Weigh Slips.
o d. The Cashier shall also note down all expenses made for the day
excluding purchases on a separate log book.
o e. The SPC less all purchases and expenses of the day shall match the
existing cash-on-hand.
o f. The Cashier shall then make a cash count for the day.
o g. 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

4a. Buying

o It is also important that the entrepreneur prior to start of regular

operations search for potential wholesalers 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 going directly to those who are selling.
o Another approach is to tap scavengers by providing them with wooden
pushcarts (“kariton”) on the condition that you get a first crack on their
products and if possible at a lower cost to at (east cover for the cost of the
cart. Some junk shops even allow advances up to to a certain amount to
maintain the inflow 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
on an agreement simply based on trust.
4b. Selling

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:

o Payment Terms
o Schedule of pick-up and/or delivery
o 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 variable 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.