How to open a secure document shredding company?
There's no doubt that starting a secure document shredding company requires a lot of work, but with expert planning, you'll be well on your way to creating a profitable business venture.
This guide will give you a low down on all of the major steps involved, from choosing a legal structure to creating a financial forecast and registering your business.
We will also walk you through the process of checking whether or not your idea can be viable given market conditions.
Let's embark on this exciting journey together!
Learn how a secure document shredding company works
Before you can start a secure document shredding company, you need to have a solid understanding of how the business works and what are its main revenue streams.
This will give you a glimpse into the profitability potential of your venture, whilst allowing you to decide whether or not it is a good fit for your situation (current skill set, savings and capital available to start the business, and family responsibilities).
It may be that creating a secure document shredding company is an excellent idea, but just not the right one for you.
Before starting their own company, successful entrepreneurs typically:
- Consult with and take advice from experienced secure document shredding company owners
- Acquire hands-on experience by working in an operational secure document shredding company
- Take relevant training courses
Let's explore each option in a bit more detail.
Consulting with and taking advice from experienced secure document shredding company owners
Having "seen it all", established business owners can offer valuable insights and hands-on advice drawn from their own experiences.
This is because, through both successes and failures, they've gained a more informed and practical understanding of what it takes to build and sustain a successful secure document shredding company over the long term.
Acquiring hands-on experience by working in an operational secure document shredding company
If you want to open a secure document shredding company, having industry-specific experience is imperative because it equips you with the knowledge, network, and acumen necessary to navigate challenges and make informed decisions critical to the success of your future business.
You'll also be able to judge whether or not this business idea is suitable for you or if there might be conflicts of interest with your personal life (for example, long working hours could be incompatible with raising young children).
This work experience will also help you to make contacts in the industry and familiarise yourself with customers and their expectations, which will prove invaluable when you set up your secure document shredding company.
Take relevant training courses
Taking a training course is another way of familiarising yourself with the business model of your future activity before you decide to make the jump.
You may choose to complete a training course to obtain a certificate or degree, or just take online courses to acquire practical skills.
Before going any further in setting up your venture
Before you go any further with your plans to open a secure document shredding company, make sure you have a clear vision of what it will take in terms of:
- What skills are needed to run the business successfully (do you have some or all of these skills?)
- What a standard working week looks like (does it suit your personal commitments?)
- What sales potential and long-term growth prospects the secure document shredding company has (compare this with your level of ambition)
- What options you'll have once you decide to retire (or move on and inevitably sell the company)
This analysis of the business model and the constraints of the business should help you to check that your idea of launching a secure document shredding company fits your entrepreneurial profile.
If there is a match, it will then be time to look at assembling the founding team of your business.
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Assembling your secure document shredding company's founding team
The next step to opening your secure document shredding company is to think about the ideal founding team, or to decide to go in alone.
Starting and growing a successful business doesn't have to be a solo journey and setting up a secure document shredding company with several co-founders is generally easier. The business benefits from a management team with a wider skillset, decisions are made together, and the financial risk is shared among the partners, making the journey more collaborative and less daunting.
But, running a business with several partners brings its own challenges. Disagreements between co-founders are quite common, and these can pose risks to the business. That's why it's crucial to consider all aspects before starting your own business.
We won't go into too much detail here, as this is a complex topic that deserves its own guide, but we do recommend that you ask yourself the following questions:
- What is the ideal number of co-founders for this venture?
- Are you on the same wavelength as your potential partners in terms of vision and ambition?
- How will you deal with potential failure?
Let's look at each of these questions in more detail.
What is the ideal number of co-founders for this venture?
To answer this question you will need to consider the following:
- What skills do you need to run the business? Are you lacking any?
- How much startup capital do you need? How much do you have?
- How are key decisions going to be made? - It is usually advisable to have an odd number of partners (or a majority shareholder) to help break the tie.
Put simply, your co-founders contribute skills, capital, or both. Increasing the number of partners becomes advantageous when there is a deficiency in either of these resources.
Are you on the same wavelength as your potential partners in terms of vision and ambition?
Your business partners should share the same short and long-term vision, be it business expansion or social responsibility, to avoid future frustrations and simplify decision-making. Different views are natural, but alignment is ideal.
In any case, you should think of having an exit mechanism in place in case one of the partners wants to move on.
How will you deal with potential failure?
We wish you nothing but success when starting up and growing your secure document shredding company, but it's always wise to have a backup in case things don't go as planned.
How you deal with a potential failure can vary significantly based on the relationship you have with your business partner (close friend, spouse, ex-colleague, etc.) and the personal circumstances of each of you.
For instance, starting a business with your spouse might seem appealing, but if it doesn't succeed, you risk losing 100% of the household income at once, which could be stressful.
Similarly, going into a partnership with a friend can put pressure on the friendship in the event of failure or when you need to make difficult decisions.
There is no wrong answer, but it is essential to carefully evaluate your options before starting up to ensure you're well-prepared for any potential outcomes.
Undertake market research for a secure document shredding company
The next step to start your secure document shredding company is to use market research to check that there is indeed an opportunity to be seized. Let's take a look at what this involves.
The objectives of market research
In a nutshell, doing market research enables you to verify that there is a business opportunity for your company to seize, and to size the opportunity precisely.
First of all, market research enables you to assess whether the market you're targeting is large enough to withstand the arrival of a new competitor: your secure document shredding company.
The market analysis will also help you define the product and service offering of your secure document shredding company, and transcribe it into a market positioning and concept that will strike a chord with your target customers.
Finally, your market research will provide you with the data you need to draw up your sales and marketing plan and estimate the revenue potential of your secure document shredding company.
Analyse key trends in the industry
Market research for a secure document shredding company must always begin with a thorough investigation of consumer habits and current industry trends.
Normally, secure document shredding company market research begins with a sectorial analysis which will provide you with a better understanding of how the industry is organized, who the major players are, and what are the current market trends.
Assess the demand
A demand analysis enables you to accurately assess the expectations of your secure document shredding company's future customers.
Your analysis will focus on the following questions:
- How many potential customers are present in the geographical areas served by your company?
- What are their expectations and purchasing behaviors?
- How much are they willing to spend?
- Are there different customer segments with distinct characteristics?
- How to communicate and where to promote your business to reach your target market?
The main goal of your demand analysis is to identify potential customer segments that your secure document shredding company could target and what products or services would meet these customers' expectations.
Supply side
Supply-side analysis looks at the products and services offered by your competitors on the market.
You should focus here on the following questions:
- Who will your competitors be?
- Are they any good?
- Where are they located?
- Who do they target?
- What range of products and services do they offer?
- Are they small independent players?
- What prices do they charge?
- How do they sell their products and services?
- Do their concepts appeal to customers?
One of the aims of your supply-side analysis will be to gather the elements that will enable you to define a market positioning that will set you apart from what is already being done on the market, so as to avoid direct confrontation with competitors already established (more on that below).
Regulations
Market research is also an opportunity to look at the regulations and conditions required to do business.
You should ask yourself the following questions:
- Does it take a specific degree to open a secure document shredding company?
- Do you need specific licences or business permits?
- What are the main regulations applicable to your future business?
Given that your project is still in its early stages, your analysis of the regulation can be carried out at a high level for the time being. You just want to identify the main laws applicable and check that you meet the conditions for running this type of business before going any further.
Once your project is more advanced, you can come back to the regulation in greater detail with your lawyer.
Concluding your market research
Your market research should lead you to draw a clear conclusion about your chances of commercial success of your business idea:
- Either the market is saturated, and you'd better look into another business idea.
- Or there's an opportunity to be seized in the geographical area you're considering, and you can go ahead with your project to open a secure document shredding company.
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Choosing the right concept and positioning for your secure document shredding company
Once your market research is completed, it's time to consider the type of secure document shredding company you want to open and define precisely your company's market positioning in order to capitalise on the opportunity you identified during your market research.
Market positioning refers to the place your product and service offering occupies in customers' minds and how they differ from competing products and services. Being perceived as the premium solution, for example.
There are four questions you need to consider:
- How will you compete with and differentiate yourself from competitors already on the market?
- Is it better to start or buy a secure document shredding company already in operation?
- How will you validate your concept and market positioning?
Let's look at each of these in a little more detail.
How will you compete with and differentiate yourself from competitors already on the market?
When you choose to start up a secure document shredding company, you are at a disadvantage compared to your rivals who have an established presence on the market.
Your competitors have a reputation, a loyal customer base and a solid team already in place, whereas you're starting from scratch...
Entering the market and taking market share from your competitors won't happen automatically, so it's important to carefully consider how you plan to establish your presence.
There are four questions to consider here:
- Can you avoid direct competition by targeting a customer segment that is currently poorly served by other players in the market?
- Can you offer something unique or complementary to what is already available on the market?
- How will you build a sustainable competitive advantage for your secure document shredding company?
- Do you have the resources to compete with well-established competitors on your own, or would it be wiser to explore alternative options?
Also, think about how your competitors will react to your arrival in their market.
Is it better to start or buy a secure document shredding company already in operation?
An alternative to opening a new business is to take over a secure document shredding company already trading.
Purchasing an existing secure document shredding company means you get a loyal customer base and an efficient team. It also avoids disrupting the equilibrium in the market by introducing a new player.
A takeover hugely reduces the risk of the business failing compared to starting a new business, whilst giving you the freedom to change the market positioning of the business taken over if you wish.
This makes buying an existing secure document shredding company a solid alternative to opening your own.
However, buying a business requires more capital compared to starting a secure document shredding company from scratch, as you will need to purchase the business from its current owner.
How will you validate your concept and market positioning?
Regardless of how you choose to establish your business, it's crucial to make sure that the way you position your company aligns with the expectations of your target market.
To achieve this, you'll have to meet with your potential customers to showcase your products or services and get their feedback.
Deciding where to base your secure document shredding company
The next step to opening a secure document shredding company is deciding where you want to set up your business.
Choosing the right location for your business is like finding the perfect stage for a play. Without it, your business may lack the spotlight it deserves.
Whilst there is no “perfect” location for your secure document shredding company, one that meets as many of the following factors as possible could be ideal:
This list is obviously not exhaustive and will have to be adapted to the particularities of your project.
Once you’ve considered the factors above, it’s important to think about the budget that your startup has at its disposal. You’ll need to find a location that meets your business requirements but is affordable enough, especially short-term.
If you opt for renting instead of buying your premises, make sure to take into account the terms of the lease, including aspects such as the duration, rent increase, renewal, and so on.
The lease contractual terms vary greatly from country to country, so be sure to check the terms applicable to your situation and have your lease reviewed by your lawyer before signing.
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Choosing your secure document shredding company's legal form
The next step to open a secure document shredding company is to choose the legal form of your business.
The legal form of a business simply means the legal structure it operates under. This structure outlines how the business is set up and defines its legal obligations and responsibilities.
Why is your secure document shredding company's legal form important?
Choosing the legal form for your secure document shredding company is an important decision because this will affect your tax obligations, your personal exposure to risk, how decisions are made within the business, the sources of financing available to you, and the amount of paperwork and legal formalities, amongst other things.
The way you set up your business legally will impact your taxes and social contributions, both at a personal level (how much your income is taxed) and at the business level (how much the business's profits are taxed).
Your personal exposure to risk as a business owner also varies based on the legal form of your business. Certain legal forms have a legal personality (also called corporate personality), which means that the business obtains a legal entity which is separate from the owners and the people running it. To put it simply, if something goes wrong with a customer or competitor, for example, with a corporate personality the business gets sued, whereas without it is the entrepreneur personally.
Similarly, some legal forms benefit from limited liability. With a limited liability the maximum you can lose if the business fails is what you invested. Your personal assets are not at risk. However, not all structures protect you in such a way, some structures may expose your personal assets (for example, your creditors might try to go after your house if the business incurs debts and then goes under without being able to repay what it owed).
How decisions are made within the business is also influenced by the legal form of your secure document shredding company, and so is the amount of paperwork and legal formalities: do you need to hold general assemblies, to produce annual accounts, to get the accounts audited, etc.
The legal form also influences what sources of financing are available to you. Raising capital from investors requires having a company set up, and they will expect limited liability and corporate personality.
What are the most common legal structures?
It's important to note that the actual names of legal structures for businesses vary from country to country.
But they usually fall within two main types of structures:
- Individual businesses
- Companies
Individual businesses
Individual businesses, such as sole traders or sole proprietorships, are legal structures with basic administrative requirements.
They primarily serve self-employed individuals and freelancers rather than businesses with employees.
The main downside of being a sole trader is that there's usually no legal separation between the business and the person running it. Everything the person owns personally is tied up with the business, which can be risky.
This means that if there are problems or the business goes bankrupt, the entrepreneur's personal assets could be taken by creditors. So, there's a risk of personal liability in case of disputes or financial issues.
It is also not possible to raise equity from investors with these structures as there is no share capital.
Despite the downsides, being a sole proprietorship has some advantages. There is usually very little paperwork to get started, simpler tax calculations and accounting formalities.
Companies
Companies are all rounders which can be set up by one or more individuals, working on their own or with many employees.
They are recognized as a distinct entity with their own legal personality, and the liability is usually limited to the amount invested by the owners (co-founders and investors). This means that you cannot lose more than you have invested in the business.
This separation ensures that in legal disputes or bankruptcy, the company bears primary responsibility, protecting the personal assets of the founder(s) and potential investor(s).
How should I choose my secure document shredding company's legal structure?
Deciding on the legal structure is usually quite straightforward once you know how many co-founders you'll have, whether you'll have employees, and the expected revenues for the business.
A good business idea will be viable whatever the legal form you choose. How businesses are taxed changes every year, therefore one cannot rely on specific tax benefits tied to a particular structure when deciding to go into business.
One easy way to proceed is to take note of the legal structures used by your top five competitors, and assume you're going with the most commonly chosen option. Once your idea is mature and you're prepared to formally register the business, you can validate this assumption with a lawyer and an accountant.
Can I switch my secure document shredding company's legal structure if I get it wrong?
You can switch your legal setup later on, even if it involves selling the old one to a new entity in some cases. However, this comes with extra costs, so it's better to make the right choice from the beginning if you can.
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How much money do I need to start a secure document shredding company?
To answer this key question, we first need to look at the resources you'll need to launch your secure document shredding company and keep it running on a daily basis. Let's take a look at what that entails.
Since each venture is distinct, providing an average budget for starting a secure document shredding company is impossible.
We strongly advise careful consideration when reading estimates on the web. It’s best to ask yourself the following questions:
- Is my project similar (location, concept, planned size, etc.)?
- Can I trust where this information is coming from?
- Is the data fresh or stale?
Your thinking behind the investments and human resources required to launch and operate the business will then enable you to cost each item and include them in your financial forecast (which we'll look at later in this guide).
Once complete, the forecast will give you a precise idea of the initial investment required and profitability potential for your business idea.
Startup costs and investments to start a secure document shredding company
Let's start with the investments. To set up a secure document shredding company, initial working capital and investments can include the following items:
- Commercial Shredders: These are high-capacity shredding machines specifically designed for secure document destruction. They can handle large volumes of paper and are equipped with advanced security features to prevent tampering or unauthorized access to shredded documents.
- Secure Storage Bins: These are lockable containers used to store confidential documents before they are shredded. They are made of durable materials and have tamper-proof locks to ensure the security of the documents inside. They come in various sizes to accommodate different volumes of documents.
- Shredding Trucks: These are specialized vehicles equipped with industrial shredding machines that can shred large amounts of documents on-site. This is a convenient option for businesses that require regular shredding services and want to witness the destruction of their documents.
- Security Cameras and Alarms: These are essential security measures for a secure document shredding company. Security cameras can monitor the premises and deter potential threats, while alarms can alert the authorities in case of a break-in or unauthorized access to the shredding facility.
- Data Management Software: This is a crucial tool for keeping track of the documents that are being shredded, their destruction dates, and any necessary compliance reporting. This software can also help with inventory management and scheduling of shredding services.
Of course, you will need to adapt this list to your company's specific needs.
Staffing requirements to operate a secure document shredding company
You'll also need to think about the staff required to run the business on a day-to-day basis.
The human resources required will vary according to the size of your company.
Once again, this list is only indicative and will need to be adjusted according to the specifics of your secure document shredding company.
Operating expenses of a secure document shredding company
The final point to consider when analyzing the resources required is the question of operating costs.
Operating expenses for a secure document shredding company may include:
- Staff costs: This includes salaries, benefits, and any other expenses related to your employees. This may also include training costs to ensure your staff is properly trained in secure document shredding procedures.
- Accountancy fees: You may need to hire an accountant to help you keep track of your finances and ensure that your operations are compliant with tax laws and regulations.
- Insurance costs: As a secure document shredding company, it is important to have appropriate insurance coverage to protect your business in case of any accidents or incidents.
- Software licenses: You may need to invest in software to help manage your operations, such as document management software or security software to protect sensitive information.
- Banking fees: As a business, you will have expenses related to banking, such as transaction fees, wire transfer fees, and account maintenance fees.
- Rent/lease: You will need a physical location to operate your secure document shredding company. This may include rent or lease payments for office space, warehouse space, or both.
- Utilities: This includes expenses such as electricity, water, and internet services for your office and/or warehouse space.
- Marketing and advertising: To attract clients, you may need to invest in marketing and advertising efforts, such as creating a website, printing marketing materials, or attending industry events.
- Transportation costs: You may need to factor in transportation costs, such as fuel or vehicle maintenance, if you offer on-site shredding services or if you need to transport documents to your facility.
- Equipment maintenance: As a secure document shredding company, you will need to regularly maintain your shredding equipment to ensure it is functioning properly and efficiently.
- Supplies: This includes the cost of purchasing shredding bags, bins, and other necessary supplies for your operations.
- Legal fees: You may need to seek legal advice or services to help ensure your operations are compliant with laws and regulations.
- Background checks: In order to ensure the security of your operations, you may need to conduct background checks on your employees.
- Training and certifications: To maintain high-quality operations, you may need to invest in training and certifications for your employees.
- Waste disposal: You will need to properly dispose of the shredded documents, which may incur costs for waste management services.
Here also, this list will need to be tailored to the specifics of your secure document shredding company but should be a good starting point for your budget.
Create a sales & marketing plan for your secure document shredding company
The next step to launching your secure document shredding company is to think about the actions you need to take to promote your products and services and build customer loyalty.
Here, you'll be looking at the following issues:
- What is the best method to attract as many new customers as possible?
- How to build customer loyalty and spread word of mouth?
- What human and financial resources will be required to implement the planned actions?
- What level of sales can I expect to generate in return?
The precise sales and marketing levers to activate will depend on the size of your secure document shredding company. But you could potentially leverage some of the initiatives below.
Besides your sales and marketing plan, your sales forecast will be affected by seasonal patterns related to the nature of your business, such as fluctuations during the holiday season, and your competitive landscape.
Can your business idea be profitable?
Just enter your data and let The Business Plan Shop crunch the numbers. We will tell if your business idea can generate profits and cash flows, and how much you need to get started.
How do I build my secure document shredding company financial forecast?
Let's now look at the financial projections you will need to prepare in order to open a secure document shredding company.
What is a secure document shredding company's financial projection?
Your financial forecast will help you budget your project so that you can evaluate:
- Its expected sales and growth potential
- Its expected profitability, to ensure that the business will be viable
- Its cash generation and financing requirements
Making your financial forecast is the only way to determine the amount of initial financing required to create your secure document shredding company.
There are lots of business ideas out there, but very few of them are viable, and making a financial forecast is the only way to ensure that your project makes economic and financial sense.
Creating a secure document shredding company financial projection is an iterative process, as you'll need to refine your figures as your business idea matures.
You'll start with a first high-level version to decide whether or not to continue working on the project.
Then, as your project takes shape, your forecasts will become increasingly accurate. You'll also need to test different assumptions to ensure that your idea of starting a secure document shredding company holds up even if your trading environment deteriorates (lower sales than expected, difficulties in recruiting, sudden cost increases or equipment failure problems, for example).
Your financial forecast will be part of your overall business plan, which we'll look at in more detail later. Your financial partners will use your business plan to decide if they want to finance you.
Once you've launched your business, you can compare your actual accounting figures with your forecasts, to analyze where the discrepancies come from, and then update your forecasts to maintain visibility over your future cash flows.
Financial forecasts are, therefore, a financial management tool that will be with you throughout the life of your company.
What does a financial projection look like?
Your secure document shredding company forecast will be presented using the following financial tables.
The projected P&L statement
The projected P&L statement for a secure document shredding company shows how much revenue and profits your business is expected to generate in the future.
The projected balance sheet of your secure document shredding company
Your secure document shredding company's projected balance sheet provides a snapshot of your business’s financial position at year-end.
The cash flow forecast
A projected cash flow statement for a secure document shredding company is used to show how much cash the business is expected to consume or generate in the years to come.
What is the best financial forecasting tool for starting your secure document shredding company?
The simplest and easiest way to create your secure document shredding company's projections is to use professional online financial forecasting software such as the one we offer at The Business Plan Shop.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- The software helps you identify and correct any inconsistencies in your figures
- You can create scenarios to stress-test your forecast's main assumptions to stress-test the robustness of your business model
- After you start trading, you can easily track your actual financial performance against your financial forecast, and recalibrate your forecast to maintain visibility on your future cash flows
- You have a friendly support team on standby to assist you when you are stuck
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Choose a name and register your secure document shredding company
The next phase in launching your secure document shredding company involves selecting a name for your company.
This stage is trickier than it seems. Finding the name itself is quite fun; the difficulty lies in finding one that is available and being the first to reserve it.
You cannot take a name that is similar to a name already used by a competitor or protected by a registered trademark without inevitably risking legal action.
So you need to find a name that is available, and be able to register it before someone else can.
In addition, you will probably want to use the same name for:
- Your company’s legal name - Example LTD
- Your business trading name - Example
- The trademark - Example ®
- Your company’s domain name - Example.com
The problem is that the procedures for registering these different names are carried out in different places, each with their own deadlines:
- Registering a domain name takes only a few minutes
- Registering a new trademark takes at least 12 weeks (if your application is accepted)
- The time taken to register a new business depends on the country, but it's generally fast
You will therefore be faced with the choice of: either registering everything at once and hoping that your name will be accepted everywhere, or proceeding step by step in order to minimise costs, but taking the risk that someone else will register one of the names you wanted in the meantime.
Our advice is to discuss strategy with your legal counsel (see further down in this guide) and prioritise your domain names and registered trademarks. You'll always have the option of using a trade name that's different from your company's legal name, and that's not a big deal.
To check that the name you want is not already in use, you should consult:
- Your country's business register
- The relevant trademark registers depending on which countries you want to register your trade mark in
- A domain name reservation company such as GoDaddy
- An Internet search engine
In this area too, your legal counsel will be able to help with the research and formalities.
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Deciding upon the corporate identity of your secure document shredding company
The next step in opening a secure document shredding company is to look at your company's visual identity.
Your company's “visual identity” plays a crucial role in shaping your brand image. It helps you to be recognizable and to stand out from your competitors.
Although you can define your visual identity yourself, it is generally advisable to call on the services of a designer or marketing agency to achieve a professional result.
At a minimum, you will need to define the following elements:
- Logo
- Brand guidelines
- Business cards
- Website theme
Logo
Your secure document shredding company's logo allows others to quickly identify your company. It will be used on all your communication media (website, social networks, business cards, etc.) and official documents (invoices, contracts, etc.).
In addition to its design, it's important that your logo is available in a variety of colors, so that it can be seen on all media (white, dark background, etc.).
Brand guidelines
Having brand guidelines enables you to maintain consistency in formatting across all your communications media and official documents.
Brand guidelines define the font (family and size), design and colours used by your brand.
In terms of fonts, for example, you may use Roboto in size 20 for your titles and Lato in size 14 for your texts.
The colours used to represent your brand should generally be limited to five:
- The main colour,
- A secondary colour (the accent),
- A dark background colour (blue or black),
- A grey background colour (to vary from white),
- Possibly another secondary colour.
Business cards
Designing business cards for your secure document shredding company is a must, as they will allow you to communicate your contact details to your customers, suppliers, partners, potential recruits, etc.
In principle, they will include your logo and the brand guidelines that we mentioned above.
Website theme
In the same way, the theme of your secure document shredding company website will be based on your logo and the brand guidelines we mentioned above.
This involves defining the look and feel of your site's main graphic elements:
- Buttons,
- Menus,
- Forms,
- Banners,
- Etc.
Navigate the legal and regulatory requirements for launching your secure document shredding company
The next thing to do in getting a secure document shredding company off the ground is to handle all the legal and regulatory requirements. We recommend that you be accompanied by a law firm for all of the steps outlined below.
Intellectual property
One of your priorities will be to ensure that your company's intellectual property is adequately protected.
As explained before, you can choose to register a trademark. Your lawyer can help you with a detailed search to make sure your chosen trademark is unique and doesn't clash with existing ones.
They'll assist in preparing the required documents and steer you in picking the right categories and locations for trademark registration.
Moreover, your lawyer can offer guidance on additional measures to protect other intellectual property assets your company may have.
Getting your secure document shredding company paperwork in order
For day-to-day operations, your secure document shredding company will need to rely on a set of contractual documents.
Your exact needs in this respect will depend on the country in which you are launching your secure document shredding company, the number of partners and the envisaged size of the company.
However, you will probably need at least the following documents:
- Employment contracts
- General terms and conditions of sale
- General terms and conditions of use for your website
- Privacy Policy for your website
- Cookie Policy for your website
- Invoices
- Etc.
Applying for licences and permits and registering for various taxes
Operating your business legally may require licences and business permits. The exact requirements applicable to your situation will depend on the country in which you set up your secure document shredding company.
The lawyers who advise you will also be able to guide you with regard to all the rules applicable to your business.
Similarly, your accountant will be able to help you take the necessary steps to comply with the tax authorities.
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The Business Plan Shop makes it easy to create a financial forecast and write a business plan to help convince investors that your business idea can be profitable.
Create a business plan for your secure document shredding company
The next step to open a secure document shredding company: put together your business plan.
What is a business plan?
To keep it simple, a business plan comprises two crucial components:
- Firstly, a numerical part, the financial forecast (which we mentioned earlier), which highlights the initial financing requirements and profitability potential of the secure document shredding company,
- And a written, well-argued section that presents your project in detail, aims to convince the reader of its chances of success, and provides the context needed to assess whether the forecast is realistic or not.
The business plan will enable you to verify the coherence of your project, and ensure that the company can be profitable before incurring further costs. It will also help you convince business and financial partners.
As you can see, your business plan must be convincing and error-free.
How to write a business plan for a secure document shredding company?
Nowadays, the modern and most efficient way to write a secure document shredding company business plan is to use startup business plan software like the one we offer at The Business Plan Shop.
Using The Business Plan Shop to create a business plan for asecure document shredding company has several advantages :
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can access a library of dozens of complete startup business plan samples and templates for inspiration
- You get a professional business plan, formatted and ready to be sent to your bank or investors
- You can create scenarios to stress test your forecast's main assumptions
- You can easily track your actual financial performance against your financial forecast by importing accounting data
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast and write a business plan to help convince investors that your business idea can be profitable.
Raise the financing needed to launch your secure document shredding company
With your business plan in hand, you can tackle one of the final steps to open a secure document shredding company business: the search for financing.
Raising the capital needed to launch your business will probably require a combination of equity and debt, which are the two types of financing available to companies.
Equity funding
Equity is the sum of money invested in a secure document shredding company by both founders and investors.
Equity is a key factor in business start-ups. Should the project fail, the sums invested in equity are likely to be lost; these sums therefore enable the founders to send a strong signal to their commercial and financial partners as to their conviction in the project's chances of success.
In terms of return on investment, equity investors can either receive dividends from the company (provided it is profitable) or realize capital gains by selling their shares (provided a buyer is interested in the company).
Equity providers are therefore in a very risky position. They can lose everything in the event of bankruptcy, and will only see a return on their investment if the company is profitable or resold. On the other hand, they can generate a very high return if the project is a success.
Given their position, equity investors look for start-up projects with sufficient growth and profitability potential to offset their risk.
From a technical standpoint, equity includes:
- Share capital and premiums: which represent the amount invested by the shareholders. This capital is considered permanent as it is non-refundable. In return for their investment, shareholders receive shares that entitle them to information, decision-making power (voting in general assembly), and the potential to receive a portion of any dividends distributed by the company.
- Director loans: these are examples of non-permanent capital advanced to the company by the shareholders. This is a more flexible way of injecting some liquidity into your company as you can repay director loans at any time.
- Reserves: these represent the share of profits set aside to strengthen the company's equity. Allocating a percentage of your profits to the reserves can be mandatory in certain cases (legal or statutory requirement depending on the legal form of your company). Once allocated in reserves, these profits can no longer be distributed as dividends.
- Investment grants: which represent any non-refundable amounts received by the company to help it invest in long-term assets.
- Other equity: which includes the equity items which don't fit in the other categories. Mostly convertible or derivative instruments. For a small business, it is likely that you won't have any other equity items.
The main sources of equity are as follows:
- Contributions made by the owners.
- Private investors: business angels, friends and family.
- Crowdfunding: raising funds by involving a group of people through campaigns where they contribute money or make donations, often getting something in return for their support.
- Start-up aid, e.g. government loans to help founders build up their start-up capital.
Debt financing
Debt is the other way of financing companies. Unlike equity, debt offers lenders a limited, contractually guaranteed return on their investment.
Your secure document shredding company undertakes to pay lenders' interest and repay the capital borrowed according to a pre-agreed schedule. Lenders are therefore making money whether or not your company makes a profit.
As a result, the only risk lenders take is that of your secure document shredding company going bankrupt, so they're extremely conservative and will want to see prudent, hands-on management of the company's finances.
From the point of view of the company and all its stakeholders (workforce, customers, suppliers, etc.), the company's contractual obligation to repay lenders increases the risk for all. As a result, there is a certain caution towards companies which are too heavily indebted.
Businesses can borrow debt in two main ways:
- Against assets: this is the most common way of borrowing. The bank funds a percentage of the price of an asset (a vehicle or a building, for example) and takes the asset as collateral. If the business cannot repay the loan, the bank takes the asset and sells it to reduce losses.
- Against cash flows: the bank looks at how much profit and cash flow the business expects to make in the future. Based on these projections, it assigns a credit risk to the business and decides how much the business can borrow and under what terms (amount, interest rate, and duration of the loan).
It's difficult to borrow against future cash flows when you're starting a secure document shredding company, because the business doesn't yet have historical data to reassure about the credibility of cash flow forecast.
Borrowing to finance a portion of equipment purchases is therefore often the only option available to founders. The assets that can be financed with this option must also be easy to resell, in the unfortunate event that the bank is forced to seize them, which could limit your options even further.
As far as possible sources of borrowing are concerned, the main ones here are banks and credit institutions. Bear in mind, however, that each institution is different, in terms of the risk it is prepared to accept, what it is willing to finance, and how the risk of your project will be perceived.
In some countries, it is also possible to borrow from private investors (directly or via crowdfunding platforms) or other companies, but not everywhere.
Key points about financing your secure document shredding company
Multiple solutions are available to help you raise the initial financing you need to open your secure document shredding company. A minimum amount of equity will be needed to give the project credibility, and bank financing can be sought to complete the financing.
Launching your secure document shredding company and monitoring progress against your forecast
Once you’ve secured financing, you will finally be ready to launch your secure document shredding company. Congratulations!
Celebrate the launch of your business and acknowledge the hard work that brought you here, but remember, this is where the real work begins.
As you know, 50% of business start-ups do not pass the five-year mark. Your priority will be to do everything to secure your business's future.
To do this, it is key to keep an eye on your business plan to ensure that you are on track to achieve your goals.
No one can predict the future with certainty, so it’s likely that your secure document shredding company's financial performance will differ from what you predicted in your forecast.
This is why it is recommended to make several forecasts:
- A base case (most likely)
- An optimistic scenario
- And a pessimistic scenario to test the robustness of your financial model
If you follow this approach, your numbers will hopefully be better than your optimistic case and you can consider accelerating your expansion plans. That’s what we wish you anyway!
If, unfortunately, your figures are below your base case (or worse than your pessimistic case), you will need to quickly put in place corrective actions, or consider stopping the activity.
The key, in terms of decision-making, is to regularly compare your real accounting data to your secure document shredding company's forecast to:
- Measure the discrepancies and promptly identify where the variances with your base case come from
- Adjust your financial forecast as the year progresses to maintain visibility on future cash flow and cash position
There is nothing worse than waiting for your accountant to prepare your year-end accounts, which can take several months after the end of your financial year (up to nine months in the UK for example), to realise that the performance over the past year was well below the your base case and that your secure document shredding company will not have enough cash to keep running over the next twelve months.
This is why using a financial forecasting solution that integrates with accounting software and offers actuals vs. forecast tracking out of the box, like the financial dashboards we offer at The Business Plan Shop, greatly facilitates the task and significantly reduces the risk associated with starting a business.
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Key takeaways
- This guide outlines the 15 key steps to open a secure document shredding company.
- The financial forecast is the tool that will enable you to validate the financial viability of your business idea.
- The business plan is the document that will enable you to approach your financial and commercial partners to convince them of the strengths of your project and secure the financing you need to launch your business.
- The real work begins once you've launched your business, and the only way to maintain visibility of your company's future cash flow is to keep your forecast up to date.
- Using a financial planning and analysis platform that combines forecasting, business planning and actual vs. forecast tracking and monitoring, such as The Business Plan Shop, makes the process easier and reduces the risks involved in starting a business.
We hope this guide has helped you understand how to start a secure document shredding company. Please don't hesitate to contact us if you have any questions.
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Founder & CEO at The Business Plan Shop Ltd
