Can we make money out of other people’s garbage? Well, according to Tom Szaky, the answer is yes, absolutely. Tom is the Founder/CEO of TerraCycle, a successful small business which turns garbage into useful products and, eventually, money.
Solving garbage problems
Tom started TerraCycle about 10 years ago, and it’s still running and thriving today with $15 million annual revenue. His company has got major publicity from the media: CNN, The New York Times, and many more.
It’s a global business; operating in 22 countries and employing 110 employees, TerraCycle collects unique wastes: Chewing gums, used cigarette butts, dirty diapers and chips bags.
What TerraCycle is doing with all the wastes? The company reuses, upcycles and recycles them. One of the ways is by starting a fertilizer company, which is a very successful one.
Today, TerraCycle has a strong line of 1,000 unique products, created from 1 million pounds of garbage every month.
So, how Tom finds success? Here are some lessons learned from Tom.
Lessons learned
Raising capital via business plan competitions – and more
Tom mentioned that things were difficult early on – no one wanted to finance his business idea and help him to turn that idea into a reality. So, he looks around and found out that raising startup capital is possible via business plan contests.
What such contests can offer you? $5000, $20,000 even $1,000,000, depending on the scale of the contest.
Tom says that entering business plan contests offer you great opportunities beyond an opportunity to get your startup funded; even when you lose, you will get valuable insights on how to make your pitch better.
When TerraCycle was started, Tom kicked off with several failures in business plan contests. As he took valuable feedback and improve his pitches, things started to roll; he won 7 business plan competitions in a row and raised $100,000 – sufficient to get the business launched.
Another benefit of entering multiple business plan contests is the fact that when you finally won a contest or two, your plan is ready for bigger things – such as attracting investors.
Don’t go to venture capitalists – go to the angels!
An interesting thing in the video is that Tom says when you are raising money for your small business, you should not go to venture capitalists. Why? Because, even though you may get a large sum of money, you will put your small business under aggressive terms which can swallow your business alive.
A better way? Find angel investors. They invest twice as much as venture capitalists, and they offer friendly terms.
Build a solid team of accountant and lawyer
While many of us starting up a small business in bootstrapping mode (read: DIY everything) Tom suggests that when you are raising money for your small business, you need to hire a good accountant and lawyer. Get your business incorporated and have all the nitty-gritty well-covered by your accounting/legal team.
Be responsive to change
Tom said that business is about change. Starting up, you should not thing that what will work today will work in the future. You need to be flexible and able to respond to changes quickly.
So, what’s your take? What lessons you gained from the video? Please share them with us!
