Starting a Firewood Business

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CampFireJack

CampFireJack

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A good friend of mine just contacted me and suggested that we start a firewood business together. His words were a "tree cutting" business, but it's all the same. Actually, it's not; there's tree work and then splitting, storing, and delivering firewood. I've had a few other friends want to discuss this type of thing with me in the past and some have even suggested that we start a wood pellet storage and delivery business. All of these ideas seem rather tempting on the surface, but the more you dig into them, the accounting becomes troublesome.

One of the primary problems people face when beginning a new business is the math. For some reason, people don't like to do any of it. It's like they detest math. Starting businesses for them is an emotional choice; they're either running away from a job they hate or are just bored with their lives. These are very bad reasons to start a new business because they're not built on reason. Instead, they're built on emotion and as we all know, emotion doesn't last. It's a fleeting thing that should be considered with caution. Also, as I like to say, no one should begin a new endeavor because they dislike the old. They should begin a new endeavor because they have a lust for it and it makes good sense.

Not all businesses are financially sustainable. Just because my friend and I are able bodied and have the know how to process firewood and sell it, that doesn't mean that we wouldn't lose money doing it. I suppose if we did it as a hobby, that would be one thing, but the amount of labor involved would surely turn us off quickly. No one wants to spend days splitting firewood by hand and then deliver it to make a few hundred dollars. Split that between the two of us and then factor in the cost of the firewood itself and we'd be walking away with about $25 each per day. For backbreaking work, no thanks. I can make more than that folding shirts down at the local store for just two hours. There's an opportunity cost here and we'd both be losing out big if we did something like this.

Just for fun, I'm going to go through some math to see how much we'd either make or lose by starting a firewood selling business here where we live. This will be very rudimentary and I won't be using real accounting, meaning I won't be depreciating equipment and all that. This is just simply arithmetic.

The simplest operation we could possibly find ourselves involved with right now is to cut down some trees in my back woods, cut the wood up, and then split it. We'd need to deliver it as well, so there are additional costs involved with that. The problem with this model right now is that I only have a limited number of trees to cut down, so we'd only get a few cord from the woods. But after we do that, what will I burn in my own house? I'd have to actually buy firewood at full market price because I had already sold off what I own. I'm going to discard this idea because it's a stupid one.

The next best situation would be for us to pool our money and buy ten cord of wood and have it delivered via logging truck to my house. I can get ten cord for $1,000. I know this because I've already considered buying it this way and then cutting it and splitting it myself to burn. It's not a bad idea, but it is much more work than simply purchasing it split already for double that price. But just for kicks, let's say we buy ten cord of logs for firewood. Market price around here is anywhere from $200 to $250 per cord. The cheaper the wood, the greener it is. The more expensive, the more seasoned it is. Stacking it and letting it season isn't a problem. To sharge a premium for that type of thing is actually a good idea, so we'll say that we can sell a cord of seasoned firewood for $250 a cord, delivered. But what would we need for this?

10 Cord of Firewood Log Lengths - $1,000
Chainsaw - $500
Log Splitter - $1,300
Truck & Trailer - $10,000
Gas, Oil, Chains, Incidentals, Vehicle Insurance - $1500 per season

I already have some of this stuff, but I'll be damned if I'm using what I already own for a business that's bound to fail. So we'll need to hunt around for deals to see what we can conjure up. The above are just estimates. But as it stands, we'll need $14,300 just to get going. I see guys around here trying to sell their split firewood for around $150 per cord, delivered, just because they can't get rid of the stuff. We're actually in a horrible market for firewood. There's too much of it and nobody wants to spend any money for it. But let's keep going.

How many cords of firewood can my friend and I realistically cut, split, and stack in my front yard the first season? I would estimate ten. If it were any more than that, we'd need to stack it in my back yard and that would take a lot of time. So let's just stick with ten cord.

10 Cord x $250 per cord = $2,500

Do you see the problem? Even if we sold ten cords of firewood per year, we'd only be making $2,500 per year. That would just cover the cost of the wood and the incidentals. If we did the same exact thing for ten years, we'd make $22,500, but our expenses would be the same thing. And this doesn't even factor in the idea that our equipment would be breaking down and may need replacement by that time. So the only thing we'd need to do is split and sell more wood. I could calculate a breakeven point, but I don't think I have the energy for that. It would require too much work. Really though, the only way to make any money in the firewood business is to use very old and cheap equipment, get the logs for free from local tree services, and sell the firewood in a market that pays a lot for it. Make it more of a service business than a product one. I've only seen one market like this in my life. It's in the Putnam/Westchester County area of New York. That area has lots of tree services that have nowhere to dump the trees they take down. They'd gladly give you their wood. Also, firewood costs a premium down there, especially if you sell it seasoned, delivered, and stacked. Businesses down there charge upwards of $450 per cord. It makes much more sense to start a business there than where I live. People here are cheap and there's no way they'd pay that much, especially with all the competition around.

Let me ask you a question. Have you ever considered starting a firewood business? If so, please let me know your thoughts on the whole thing. Did you ever get it off the ground? Did you make any money? I'd love to know all about it.
 
Starting a Firewood Business was posted on 12-02-2020 by CampFireJack in the Outdoor Forum forum.

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