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You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your septic tank cleaning service. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a septic tank cleaning service?
This is an expensive business to start. Startup costs are include a pump truck and a place to dump the waste material. Most used trucks can be bought for between $20,000 and $30,000. Other than that, you may need office space and the usual business and office supplies. Your biggest cost will be buying and maintaining a fleet of trucks.
What are the ongoing expenses for a septic tank cleaning service?
Ongoing expenses for this business include office overhead and expenses, truck maintenance, and local fees for waste removal and disposal. Depending on where you live, how much mileage is put on the truck during the year, and how much business you're doing, these costs can be high or low. Some companies realize maintenance costs of up to $15,000 per year, per truck.
Who is the target market?
Preferred customer types are those that live in areas not serviced by municipal water or sewer supply. Customers who are on their own well and sewer system need routine maintenance. While businesses do sometimes own property with a septic tank, most customers will be consumers living in single-family residential homes.
How does a septic tank cleaning service make money?
This business makes money by charging customers to clean and maintain their septic tanks and systems. Most tanks need to be cleaned every 1-3 years, depending on the size of the tank and the number of people using it. So, companies may provide interim complimentary advice-based services on how to clean and maintain the tank and system between pumpings.
How much can you charge customers?
Charges vary, but most companies charge a flat or fixed fee for emptying a septic tank.
These fees run between $75-$200, but they can be as high at $350 or $400. for larger tanks between 1,500-2,500 gallons.
How much profit can a septic tank cleaning service make?
Profit is highly variable in this industry, and depends on local competition and market demand. Some businesses struggle to make 5% margins, while others maintain a 20% margin.
How can you make your business more profitable?
You can make your business more profitable by minimizing overhead costs. In this industry, it’s common to lease pump trucks in the early years. However, these lease costs add up and can decrease profit margins over time.
That’s because the cost to lease may be lower than buying a truck outright in the early years, but becomes much more expensive as time goes on.
Also, try to use as much personal savings as possible and avoid expensive commercial loans.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your septic tank cleaning service is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a septic tank cleaning business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Occupational Safety and Health Administration (OSHA) Regulations
Septic tank cleaning business owners may interact with harmful chemicals such as industrial cleaners and it is important to reference to OSHA’s (Occupational Safety and Health Administration) rules and general standards for chemicals:
- Standard 1910.1200 states that employees be adequately informed of all potential hazards when working with chemicals
- Standard 1910.132 states that the necessary personal protection equipment be provided to the employee working with chemicals, such as safety glasses, a face mask and suitable gloves
Septic tank cleaning businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your septic tank cleaning business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Businesses are required to register vehicles which will travel across state lines for commercial purposes. Check here for a list of state requirements.
Class B Driver Licensing Requirements
In most states, licences are issued by classes, operating according to the weight of the vehicle being driven. Drivers of standard cars and trucks require a class A commercial driver’s license (CDL), while operators of heavier vehicles, including most tow trucks, require a Class B CDL to operate. More information can be found here.
Oversize Vehicle Permits
Some states, including Michigan, require a businesses to obtain an oversize/overweight vehicle permit for its trucks, sometimes also referred to as “wreckers.” More information about state weight load permitting can be found here.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a septic tank cleaning service
Market your business locally through the newspaper, on local T.V., and local pay-per-click advertising. Consider sending out direct mail to local residents or posting fliers in community bulletin boards.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Because this industry has long relied on price cutting and commoditization of the service, you can differentiate your company by setting a higher standard than your competition. Make sure someone friendly, helpful, and patient answers the telephone, for example. Show up to jobs on time, always honor your quotes, and provide more service than what you originally promised.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Septic Tank Cleaning Service In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This business is perfect for individuals who enjoy daily travel, don’t mind getting dirty, and are willing to work flexible hours. Business owners who start a septic tank cleaning service must also like being around and interacting with other people on job sites and customers as well. Cleaning septic tanks can be hard, dirty, and grueling work, so keep this in mind.
What happens during a typical day at a septic tank cleaning service?
The day-to-day activities of a septic tank cleaning business include meeting with clients, checking septic tanks, and pumping them. The pumping is normally done with a large truck and a hose, which is lowered into the septic system in the front or back yard. The hose then pumps the tank and hauls away the waste material.
A septic tank cleaning company may service multiple customers during the day, maintaining an active rotating customer list. Other day-to-day tasks include doing paperwork, invoicing clients, and maintaining a log of current and past-due customers.
What are some skills and experiences that will help you build a successful septic tank cleaning service?
This job is skill-intensive. Because septic systems are dynamic and complex ecosystems, containing a host of biological organisms, the downstream effects of a mistake can be expensive.
A few of the more important skills necessary for this business include extensive operation monitoring, operation and control, critical thinking, troubleshooting skills, quality control and analysis, judgment and decision-making skills, monitoring, active listening, and complex problem solving.
Septic tank cleaners must be able to read, monitor, and adjust dials, gauges, and other indicators to make sure a machine is working as it should. They also need to be able to troubleshoot systems out in the field. Since there can be any number of problems on the job, critical thinking and problem-solving is a must.
It also helps to have a plumbing background or experience in the industry before starting your own company.
What is the growth potential for a septic tank cleaning service?
Growth of this business can be slow or fast, depending on demand for services in your area. Competition may be limited in some areas, in which case growth may be exponential. Local laws and regulations may limit or control how septic tank companies operate. This may or may not allow you to expand into new markets and grow your business. Make sure you check local laws and regulations before making business expansion plans.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a septic tank cleaning service?
Marketing your business is important. Check out the competition and what’s working (and what’s not working) before you dive in. Learn from others’ mistakes in the business. Then, fill in the gaps not serviced by your competitors. Often, in this industry, it’s a matter of providing better service and friendlier customer service, than the competition.
How and when to build a team
You can operate this business with one truck, but it will remain a small business. Expand as your funds allow. This business has theoretically unlimited potential as long as there are customers in your service area that need septic tank cleaning and maintenance. Start with one truck and expand to two when you can. Add additional office support staff when you have at least 3-5 trucks.