Launching a new business can uncover myriad obstacles and opportunities, even more so for innovators and entrepreneurs determined to get into sprouting sectors such as organics.
For compost operators in Colorado, challenges span from securing financing to equipment purchases and customer education. While these issues may seem commonplace amongst startups in waste and recycling, the intricacies of each one are particularly tough to navigate when scaling in organics.
During the 2022 Summit for Recycling & Rocky Mountain Compost Symposium, three operators shared their insight into starting a compost and hauling business.
Working from Home
For Jamie Blanchard-Poling, Compost Queen in Fort Collins began as a home business with two buckets and her personal SUV.
After her business began to expand, she developed "mutually-beneficial" partnerships with farms to micro-composting sites, which are exempt from regulations that would prevent the composting process.
Once Compost Queen operation began churning, Blanchard-Poling saw operations unsustainable in a home setting. Once she established agreements with farms that would alleviate agricultural waste and provide her with new locations, she hired her first employee.
"I'm gonna say no one here is in composting to get rich. So, please keep that in mind," she told attendees. "I bootstrapped my business from the start. I do not have any loans. I do not have any debts. I outright own everything. And that was my plan because I didn't want to get to a point where I had to stop and then not have assets I could sell to keep me floating."
The regulatory, operational and financial aspects of starting a composting business are crucial to consider to ensure stability right out of the gate.
State, county and city regulations must be researched for composting, composting sites and hauling.
"Make sure that you have researched every one of those and what that means for composting, composting sites, hauling if that's what you decide to do, et cetera," Blanchard-Poling explained. "What kind of permits do you need? What kind of licenses do you need? Where can you do it?"
Consider the type of operations. Is composting in the mix, or will the business provide hauling services or both? What kind of composting will be done, and will there be a digester? These are the types of questions that must be considered when crafting a business plan.
"You have to also think about your feedstocks," she said. "feedstocks are what you put into your compost pile. Where are you going to get them? What are they going to be? And what does that mean as far as your operations go??
Operators need to determine if their process will accept items such as compostable packaging, which is more involved than just regular food scrap waste.
"What you have to do is make sure you have a place to do it. That is one of the most probably important parts especially here in the state of Colorado," Blanchard-Poling said. "Finding a site is one of the probably the hardest things you're going to go through is finding a site getting it permitted."
Compost Queen's small exempt facilities at farms enables state compliance for composting within a certain size limit. A Class III permit would be required for services to municipalities, which is a long-term goal for Blanchard-Poling.
Should a new composting business secure a business loan?
"I was in a situation that I had money saved up that we decided to invest in this business," Blanchard-Poling said. "If you don't have that, then definitely look into things like SBA (Small Business Administration) loans, which are cheaper loans than a typical bank loan. Typical banks don't even want to give you any [loans] for composting. Trust me, I've looked."
Investing in a team and reliable equipment are essential to success. In the end, the structure should allow a business owner to pay themselves at a certain point in their growth journey, something still in Compost Queen's plans.
"How are you going to pay yourself, and how are you going to pay others to help you?" she asked. "I still have not paid myself to this day, and I've been in business for four years. I am planning to have myself on payroll by the end of this year. So we're working on it. But if you need to have a certain income, make sure you're planning that into your business plan. I thought I would be paid by now but running a business, but it takes a lot more."
Instead of paying herself, Blanchard-Poling reinvested in the business. Aside from unexpected expenses, inflationary pressures can cause unexpected disruptions to composting, which makes budgeting one of the most crucial parts to stability.
"Plan your budget table for your business and then add at least 20 percent," she suggested.
Lower-cost equipment doesn't mean it is the best value. Breakdowns and repairs can significantly impact operations, making is essential to do some research before purchasing.
"It's hard to find good equipment at a cheap price. So, make sure that you are doing all your research," Blanchard-Poling said, "especially when it comes to purchasing this stuff. Look for the grants. Look for whatever you can do try to purchase it for you. Look for things that are used, et cetera. But make sure that it's still good because you do not want to be taking your truck to the mechanic every month. Like me. I have three trucks because one is a hit or miss. So, I don't know if we're gonna have that truck for much longer. Make sure that what you are using is in good maintenance and good repair for the long haul."
Compost Queen started at her home base providing services for a couple of friends, essentially one cubic yard, and the last four years for Blanchard-Poling have been a journey of viability and scaling.
"I wanted to start small to make sure it was something I enjoyed doing," she said. "It turned out it really, really was."
Just six months later, it got to a point where an exempt facility was needed. Set to avoid overleveraging her fledgling business, she partnered her first local farm who wanted to find ways to manage their manure. She then purchased a truck.
"We would move literally probably about four cubic yards from one stall and we put it in to another stall to churn it, and we did that by hands with shovel and a wheelbarrow," Blanchard-Poling said. "That's when we realized we need a tractor. So we got to tractor and that made it everything a lot easier. Our operations are much smoother now. And I did this all by myself for two years without even paying myself, but it was a lot of fun."
Blanchard-Poling quickly realized this is what she wanted to do in the long term, which led her to hiring two employees and maintaining support from volunteers such as her husband and her brother. She credited her unwavering support from farmers, other businesses, family and friends for Compost Queen's growth.
"When you work in the composting business, it's really easy to make friends, whether that's partnerships whether it's friendships, whether it's looking for a mentor, whether it's joining a committee, get out there and let people know what you're doing, because if they don't know what you're doing then you're not going to accept more yield."
Fostering relationships, whether at the city, county or state level, can mean the difference between success and failure. Whether it's navigating the types of permits and licensing needed to just general support, connecting with others in the community and its members is going to mean progress that could launch secure contracts with municipalities, for example.
"Knowing those people is very, very important," Blanchard-Poling stressed. "So, call them email them, try to build some sort of relationship where you're just talking to them at any point."
Lastly, she suggested starting off slow and don't "bite off more than you can chew."
"This goes for any type of system, even if you're going to open a Class III system that you can do 60,000 tons per year. Maybe start at like 20 to 30 tons and make sure your systems are working before you are just overloaded," she said. "If something goes wrong somewhere that you didn't you didn't think about before, it's going to make that problem a lot more magnified. And you're doing it at such a high volume."
Editor's Note: This is part one of a three-part series that explores three compost startups in Colorado. In Part One, Jamie Blanchard-Poling explains how beneficial partnerships can assist business owners with navigating relationships. In Part Two, Winn Cowman of Cowgirl Compost CO takes readers on a trip to Steamboat Springs in Yampa Valley, where bear-resistant bins are standard. Part Three takes readers to high country in Salida with Julie Mach of Elements Mountain Compost.