Thinking of starting a firewood business

[matariki]

Hello,

I'm looking into starting up a firewood business in my neck of woods, I just recently obtained my qualification for breaking out and processing on the landing. I was interested to know how other members on the forums that sell fire wood go about their pricing and what factors are taken into account.

I hoping to spend less than 7k on startup costs. The main costs being 2 chainsaws, a cage trailer and maintenance equipment. I already own a set of PPE which I received from the course that I was on and I have my own 4wd vehicle that is kitted to go off-road (a little 1993 Suzuki escudo), I am also thinking of fitting a winch. 

Does anyone know if there are any attachments that I can install on my little truck that can lift the drag of a stem? I'm not planning on hauling huge logs, just smaller pieces that are too big to move by hand, to a more suitable location for processing. 

I'm also interested in how people on the forum get their wood. Do you pay landowners to harvest fallen trees? If so, how does it factor into your sale price? 

Cheers.

[Southside]

Welcome to the Forum,  there are more than a few member here who are in the firewood business and I am sure would be willing to pass along advice.  @Ianab is a member who is in your neck of the woods and perhaps can add some local insight as well.  

Stick around and don't be bashful to ask questions.  We love photos too of your operation.

[woodshax]

Welcome,

Try to never pay for wood.....if you do, then buy by the ton for log Length.....around here you can get it for $50 to 75 a ton.   Talk to people in the tree service business....they are always looking for a place to dump wood they get paid to cut down.  To that end....by taking fallen trees and removing them from the land owners property you are doing them a favor....approach them using that perspective and your cost to acquire will go way down

[mike_belben]

Part 1 StepA. find out what a cord or rick or ton or whatever measure of cut split delivered firewood costs in your area.  

Step2.  See how many other vendors are supplying wood in your area.  And what are they driving?  Nice trucks or torn to rags old trash?  

This will tell you A- how much you can get, and B, if local competition will force you to price lower to make sales or prevent you from getting more.  How profitable they look says something about the market.


Part B, you need a source of wood and a place to process, stack and dry etc.  Best case scenario you have tree trucks dumping in your backyard.  Every time you have to leave to fetch wood, you take a paycut. 

The larger the volumes of wood the quicker the business will kill you physically without expensive equipment.  Handling is a sure path to carpal tunnel and worn out shoulders.  If all you have are a saw and maul you need to aim for bundled sales, itll pay the highest per unit of wood. A 5gallon bucket with bottom cut off and a 5inch shrink wrapper will get you started.  

A splitter and a dumptruck or trailer will be the best startup money you can spend if you are talking about really doing firewood.  After that is a loader. The more times you have to handle each piece of wood the sooner you will quit.  It is a young persons game to do firewood without the equipment.

[woodshax]

Agree!

Selling by the stick is the most profitable business model....especially if you are selling directly to the consumer....Our model is strictly by the 2 cu Ft by volume bag at state parks and we get $1200 a full cord

[matariki]

Part 1 StepA. find out what a cord or rick or ton or whatever measure of cut split delivered firewood costs in your area.  

Step2.  See how many other vendors are supplying wood in your area.  And what are they driving?  Nice trucks or torn to rags old trash?  

This will tell you A- how much you can get, and B, if local competition will force you to price lower to make sales or prevent you from getting more.  How profitable they look says something about the market.


Part B, you need a source of wood and a place to process, stack and dry etc.  Best case scenario you have tree trucks dumping in your backyard.  Every time you have to leave to fetch wood, you take a paycut.

The larger the volumes of wood the quicker the business will kill you physically without expensive equipment.  Handling is a sure path to carpal tunnel and worn out shoulders.  If all you have are a saw and maul you need to aim for bundled sales, itll pay the highest per unit of wood. A 5gallon bucket with bottom cut off and a 5inch shrink wrapper will get you started.  

A splitter and a dumptruck or trailer will be the best startup money you can spend if you are talking about really doing firewood.  After that is a loader. The more times you have to handle each piece of wood the sooner you will quit.  It is a young persons game to do firewood without the equipment.

Part A: In NZ most people sell by the cubic meter/ft. Average price for Pine in my region is $50 - $75 (thrown wood, not stacked)

Part B: Most vendors in my area are driving small trucks (Utes) with trailers. Commercial guys tend to drive larger vehicles (class 4), which are basically small dump trucks. I haven't seen any commercial guys in my next of the woods. Most of the people I see are farmers and DIY types (do it yourself). Usually 1 or 2 man operations.

I plan on doing bundle wood. Mostly looking at native hardwoods. Native hardwoods are high in demand here in NZ for carving. So I am looking for wood that can be milled, any pieces that can't be milled will be sold on as bundle wood. For splitting, at this point in time I am looking at hiring a log splitter until I have the income to purchase one. As for business size, I plan to keep it small mostly as another form of income (pocket money). But I totally agree, good equipment saves time and money.  

I'm not sure what tree surgeons do with trees in NZ after they've taken them down, my guess is that they get sold onto to larger wood processing companies. I could try ringing around and seeing what is out there. How do you guys go about doing it in places like the USA?

[matariki]

Another thing, can anyone recommend me any YouTube channels/videos or any books on the subject?

What I'm looking to learn is the following;

• Seasoning and storing firewood - I have a large open shed which gets plenty of airflow, and that is protected from the elements. I live on a semi rural property that is about 1/4th of an acre. 1/8th of an acre that can be used for firewood storage and processing.

• What equipment I need for a small scale operation - 1 to 2 man operation on a budget.

• Obtaining wood - Other than asking landowners and going into the bush, what are some other ways of acquiring stems/logs for processing and selling on as firewood?

• How to price firewood (a formula for costs) - What formula do you guys use for your operation?

     

[mike_belben]

Youre a new entrant into an established market.  If youre selling a product as good as the other guys, charge the same as the other guy or a hair more.  If you ask significantly more than the competition they just wont buy from you.  You must have cash flow to pay the bills.  The seasonality of heating wood makes that very difficult in summer for me. The prices are low in winter, and below my cost in summer. Here its a bad business but its what ive got for now.

It would be very difficult for you to alter local market valuation of firewood.  you have to manage your expense side in a way that you can turn a profit off what its paying.  The more bills you create the less your chance of succeeding.

Most rapid drying you can achieve is single row stacks, open air with sun on the piles from rise until set.  Cover for rainy days then immediately uncover to prevent mold.  


I think for a start, you may be better off to have a load of cut/split/dried delivered to your house from a local competitor.  Take that wood and start making bundles.  You can spend $2grand on a wrapper but i suggest you cut the bottom off a bucket and make bundles with a hand shrink wrapper for a risk free startup.  Take the finished product and go develop your sales end.   This way your capital expenditure outlay on equipment is essentially zero but you get to find out exactly what the potential market is.

Use proceeds from this to acquire equipment as the business earns it, rather than going into debt.  Tree to pile is hard, hard work with a lot of equipment.  If you can let someone else do that and limit yourself to taking wood from pile to bundle at the comfort of your own home, youll probably make more money for less work and WAY LESS overhead.  

[Ianab]

I do a bit of firewood as a "hobby". Yes I charge the going rate for a cube of dry wood, so I'm not undercutting the guys trying to make a living, or working for nothing.

But as I don't need the $ right now I can just putz around  at the weekend and stack up tops / limbs / mill edgings and other scraps from tree cleanups to dry. Not having a splitter I will even run the mill through a big gnarly pine log and just saw it into 6x4 that I can block up into firewood later.

Then you wait till near the end of winter when the folks that haven't bought quite enough wood are running gow. There are plenty of people that will buy a couple of cube trailer load if its dry and your price isnt stupid. I just put up an ad on the local FB buy/sell page and sold 8 cube in 2 hours, which was all I had dry. Will have more ready for next winter.

[matariki]

I do a bit of firewood as a "hobby". Yes I charge the going rate for a cube of dry wood, so I'm not undercutting the guys trying to make a living, or working for nothing.

But as I don't need the $ right now I can just putz around  at the weekend and stack up tops / limbs / mill edgings and other scraps from tree cleanups to dry. Not having a splitter I will even run the mill through a big gnarly pine log and just saw it into 6x4 that I can block up into firewood later.

Then you wait till near the end of winter when the folks that haven't bought quite enough wood are running gow. There are plenty of people that will buy a couple of cube trailer load if its dry and your price isnt stupid. I just put up an ad on the local FB buy/sell page and sold 8 cube in 2 hours, which was all I had dry. Will have more ready for next winter.

@Ianab How do you go about obtaining mill edgings?

[matariki]

Youre a new entrant into an established market.  If youre selling a product as good as the other guys, charge the same as the other guy or a hair more.  If you ask significantly more than the competition they just wont buy from you.  You must have cash flow to pay the bills.  The seasonality of heating wood makes that very difficult in summer for me. The prices are low in winter, and below my cost in summer. Here its a bad business but its what ive got for now.

It would be very difficult for you to alter local market valuation of firewood.  you have to manage your expense side in a way that you can turn a profit off what its paying.  The more bills you create the less your chance of succeeding.

Most rapid drying you can achieve is single row stacks, open air with sun on the piles from rise until set.  Cover for rainy days then immediately uncover to prevent mold.  


I think for a start, you may be better off to have a load of cut/split/dried delivered to your house from a local competitor.  Take that wood and start making bundles.  You can spend $2grand on a wrapper but i suggest you cut the bottom off a bucket and make bundles with a hand shrink wrapper for a risk free startup.  Take the finished product and go develop your sales end.   This way your capital expenditure outlay on equipment is essentially zero but you get to find out exactly what the potential market is.  When it buys and when it does, what it will pay and so forth.  

Use proceeds from this to acquire equipment as the business earns it, rather than going into debt.  Tree to pile is hard, hard work with a lot of equipment.  If you can let someone else do that and limit yourself to taking wood from pile to bundle at the comfort of your own home, youll probably make more money for less work and WAY LESS overhead.  

Do you sell your bundles through stores e.g. petrol stations, supermarkets etc. or do you sell direct to the consumer? or both? 

It would make sense to sell direct to the consumer as you're not paying a percentage to the shop owner. But having your product outside a store is a form of advertising. I will have to find out from my local shops what they want in terms of percentage. 

I'm thinking about doing a small business course next year (which is free). It will give me a good foundation. This year I'm more focusing on accumulating product. Getting it nice and dry for sale. As well as recording my costs. 

[mike_belben]

I advertise on CL and a local sale site, maybe FB marketplace this year.  9 out of 10 sales are delivered, very few will pick up.  I did manage to sell a whopping $90 worth of bundles to gas stations leading up to 4th of july weekend.  They didnt sell, no reorders.   In rural Tennessee, anyone who wants firewood only has to walk out back and gather up what blew over this month.  Mild winters, cheap natural gas and abundant wood means low prices.  In northern cities its the opposite.

I went to school for business and it was largely a waste of time and money.  Nothing will teach you the ropes of your local markets like throwing your hand in and trying to make it pay.  You learn the most at your liquidation sale.  Lose a few houses and youll REALLY know to be careful with credit.  

I bought the current house and all my junky old iron in cash this time.  I wish the business school just told me that from the get go.  

PS.  9 of 10 startups fail, and not for a lack of education, intelligence or effort. Its for a lack of cash flow.  Your business dies when it cant pay its bills.  If it can always pay bills it'll live forever.  So statistically speaking, the odds are you will be one of them.  Dont take it personal, just get back on the horse and try again.  

[matariki]

I advertise on CL and a local sale site, maybe FB marketplace this year.  9 out of 10 sales are delivered, very few will pick up.  I did manage to sell a whopping $90 worth of bundles to gas stations leading up to 4th of july weekend.  They didnt sell, no reorders.   In rural Tennessee, anyone who wants firewood only has to walk out back and gather up what blew over this month.  Mild winters, cheap natural gas and abundant wood means low prices.  In northern cities its the opposite.

I went to school for business and it was largely a waste of time and money.  Nothing will teach you the ropes of your local markets like throwing your hand in and trying to make it pay.  You learn the most at your liquidation sale.  Lose a few houses and youll REALLY know to be careful with credit.  

I bought the current house and all my junky old iron in cash this time.  I wish the business school just told me that from the get go.  

PS.  9 of 10 startups fail, and not for a lack of education, intelligence or effort. Its for a lack of cash flow.  Your business dies when it cant pay its bills.  If it can always pay bills it'll live forever.  So statistically speaking, the odds are you will be one of them.  Dont take it personal, just get back on the horse and try again.  

Its good to know this stuff. Most petrol stores and supermarkets often have their own suppliers or they supply their own in-house brand. It's difficult to compete against the big guys. I like your approach of starting small, that way if you do fail you don't have a looming debt. It also means you have more flexibility in case you need to adjust your business model. I'm fortunate that I have family members that have experience running business. So I'm learning what I can from them. 
Loosing a house is pretty rough, we lost our family home thanks to the 2008 recession. Eventually we recovered and bought another house, small and modest. Now I'm living with my parents because of the housing crisis here in New Zealand. But that's life and you need to make the most out of what you have.
Hopefully I can make some cash to help out my parents and save some for school so I can study to become an mechanical engineer. I wish I had started 10+ years ago, but don't we all. 

[mike_belben]

Yeah, thats life.  How cold are your winters and how prevalent is natural gas heating?  Fuel oil is in a rising trend so that will bump wood demand.  Are you far from urban areas?  

 
The issue with big stores is they want consistent uniform product on time.  I got the regional purchasing agent info from two chain stores regarding campfire bundles and never called them once i looked at how many locations in a region.  I gave it some thought and realized i cant supply and deliver to 25 locations.  Rather not call then enter a failing venture and hurt my own reputation for the future.  For me firewood is just a byproduct of clearing land for my shop and house build.  I will go back into the machinery business once i get my stuff all down here.

I went and got a few trailer loads of free wood from a site about 5 miles from here.  With the time and fuel it cost to bring the bobcat, cut, load, bring home and process, i stopped going.  The wood payment a year later doesnt cover the expenses incurred right now.  I ended up breaking a winch that i really need and said this is stupid, if this guy wants his storm blowdowns cleaned up hes gonna have to pay my expenses.  I can wait a year for profits but i cant pay expenses now to clean up someone elses yard.  He wouldnt pay and i pulled chocks.  I doubt the wood will cover the winch.  Lesson learned. Its smarter for me to work my own land.  Now If it was $250 a cord id be singing a different tune.

[Ianab]

How do you go about obtaining mill edgings?

I have my own hobby scale portable sawmill. Most of the larger mills either use the edgings as fuel for their kilns etc, or have their own firewood supply sidelline. But the smaller portable guys often just leave them behind. Not always good firewood (can be a lot of  bark), but if they are cutting Macrocarpa they logs tend to a bit ugly and tapered, so there is some decent chunks of firewood in there. Might be worth asking around and see if you can get some (cheap) by the trailer load.  Still have to process, dry and deliver it, but you don't need a splitter, just a chainsaw, sawbuck and good back.

How cold are your winters and how prevalent is natural gas heating?

Winters in most of NZ are pretty mild, in comparison to most of the USA anyway. Natural gas is common in the urban areas, propane otherwise, and electric heat pumps are popular. But a small and efficient wood burning fireplace is also a popular form of heating. If my maths is right it takes about 2.5 of your cords of firewood to heat an average house though winter. There are plenty of people selling firewood, from the larger commercial guys to some weekend part timers. You can make a few $$ doing it.

This is one cube of mixed firewood. Dry and delivered local for $70. Customers were happy, but Sorry, sold out. 


I know I'm not going to get rich doing this. But the way I look at it, some people PAY to go to the gym and keep fit. Or have a Mt Bike that's worth more than my chainsaw.  ???   

But I can get PAID to play with my chainsaw, and get a workout... 

[mike_belben]

Whats the trailer dimension?   Is that $70 USD or NZ?  I have no idea on exchange rate.  

A "rick" here is a facecord, 1row 4x8ft.  Avg 17inch pieces.  Its $50-$60 delivered but a country mile can be pretty dang far.  Ive driven 40 mins one way when times were tough.  

Theres a real challenge for me in trying to reduce manual handling vs trying to reduce trips.  I refuse to stack every bit of wood, its killing my carpal tunnel. So i stack 8 ricks a year on pallets between fence posts for pickup customers (to measure before purchase) and pile the rest.  I built a trailer that is the perfect measuring cup for 1 rick and fill it with bobcat and a rock bucket, that does a fair job of shaking out some junk.  When i get there i have to throw most of it off because the trailer dump doesnt tilt quite high enough.   

In the coming year i will build a dump trailer from a truck frame and mason body i cut up (no need to tag trailers here so its smart to have 1 truck and many trailers)  i hope to be able to deliver 3ricks at a time.  The issue is that will cut the number of buyers down and theyll be sure to want a "volume discount."  I can gamble and not advertise until the later months when the $35 a rick crowd runs out, but some winters are like fall into spring.  Last winter i walked on my pond a few times and sold every stick i had.  Coulda got $70 a rick.   Im right on the north south fringe line where its inconsistent.  Id consider finding a distributor near nashville or knoxville and hauling it all on the gooseneck, but we have quarantine for thousand canker and such.  

[lxskllr]

That sounds about what it goes for here Mike. What seems to be popular is a 2*4 stack for $25. Not sure of the length. I just see it while passing on the road. The gas station bundles always mystify me regarding how well they sell. I'd burn my furniture before paying $5 for a bundle of wood I can carry in my finger tips  :^D

[Ianab]

Whats the trailer dimension?

It's a 4' x 8' trailer, and approx 12" long wood. That conveniently converts to about 1 cubic metre, which is the local firewood measure.  NZ $70 is about US $50

[Pulphook]

Here in northern New England firewood is sold by the cord = 4'x 4' x 8' stacked pile ( sometimes loosely thrown in a truck or trailer ). Price has gone up for green hardwoods ( varied species ) to around $250./cord cut, split,
delivered; more for seasoned. When I had to buy 6 cords ( new hip ) a few years ago it was $225. We harvest 6-8+ cords out of the woodlot/year.
Firewood dealers here buy or get log lengths from developers, arborists, road/line crews. It's a tough, labor intensive business with thin margins for profit. Also the customers using and buying firewood has diminished over the past decade.
Knowing a few of the sellers, it's hard to see how they make a buck; insurance, gear, fuel, maintenance, manpower.
Best of success starting up.

[mike_belben]

And thats at 250/cd.  At 150/cd its working for free some days.  Ill try to take some pictures later and throw a few more thoughts up to help you Matariki.  Only you will know what really suits your unique life, but i can critique my own layout and maybe you can gain some ideas on whats good and bad about it.  

Every business will go down the wrong road a few times then backtrack and take the other turn.  The less time you spend backtracking the more time you spend in the revenue generating side.  Thats a lot better than generating capital depreciation.  Deductions are worthless without revenue to apply them to. 

[matariki]

And thats at 250/cd.  At 150/cd its working for free some days.  Ill try to take some pictures later and throw a few more thoughts up to help you Matariki.  Only you will know what really suits your unique life, but i can critique my own layout and maybe you can gain some ideas on whats good and bad about it.  

Every business will go down the wrong road a few times then backtrack and take the other turn.  The less time you spend backtracking the more time you spend in the revenue generating side.  Thats a lot better than generating capital depreciation.  Deductions are worthless without revenue to apply them to.

I would appreciate seeing your layout. It will give me a good insight on setup and execution. 

[woodshax]

I am always looking to "fill the hole"......in this case it is translated into  "find the niche".....what is the under served market or scarce product and how can I differentiate myself from the pack....  Is it city folk without access, campers who don't want to leave the wilderness in search of wood, do I make my product "premium"......Like kiln dried?, heat treated?.....below 20% moisture?  all oak?  You have to build loyalty and a brand to break away from the others...and then ultimately charge more (or make it up on volume) and make more.

[Leigh Family Farm]

I would highly suggest you start small using only the money you can afford to lose completely. In the beginning, focus on marketing a good quality product with reliable service. Then grow as you gain customers, market shares, and capital. Here is what I would do in your shoes:

Purchase a chainsaw, a used box log splitter, 5 Gallon bucket, and plastic wrap. To me a box log splitter is the ones that make the uniform squared pieces that many bundlers sell.   You already own a ute and trailer so use them to haul rounds to your place. Don't worry about a winch or other equipment for now. 

Next, I would call all the tree service companies in a 10km radius. See what they do with their tree tops, smaller logs, etc. Offer to pick them up weekly. The key here is to be consistent in your pickups. Don't take on too many tree companies that you can't handle them. 

Then, I would reach out to every orchard in 20km. Particularly, apple, cherry, and peaches (or whatever sweet fruits grow in NZ). Offer to come and take away all of their prunings, limbs, and rounds they have. 

Then, I would begin processing the firewood for drying. Keep the fruit wood separate from the other wood you get. Start marketing your firewood online. You can easily offer bundled wood to the city dwellers & cord wood to the home owners. The fruit wood is used by smokers and bbq'ers. Find local clubs or stores looking for a good source of fruit wood. Offer it to them in 2L portions (or whatever small paper grocery bag size you can get) and add a commission for referrals. 

This all take very low start up, allows you to grow a business as you can, and you can create your profitable niche market. Again this is what I would do in your situation. Good luck! 

[rjwoelk]

I am from sask canada out in the prairies. So my wood is costing me x $a cord delivered plus processing so i have 2 tractors and a processor . Log deck. Min bulk bag holders.
So when you add up all your costs and pay yourself 20 a cord or rather some one to help you. You need to still make a profit. The profit line is how much can you sell above cost. My customers all come to pickup i have lost maybe a couple of orders becuse of it. But a 30 min haul into the city Need a truck and trailer equiped with crane to off to off load a bag, add comercial insurance and liability insurance. It would mean 30 to 50 $ more a bag. Not happen. Small bags will be the most labour but gain you the most proffit. We sell ours for 15$ but they weigh the same as 2 bags from the corner store. I have a fellow who buys a cord at a time and the bags from us. We let him use the packer.  He gets to double his money.and we make our proffit on the larger  bags.

[mike_belben]

Those are all good points to consider above.  I have been slacking on getting pics up but meanwhile watch this vid and pay attention to their method. 

Lumberjacks : How We're Different - YouTube


 Obviously they are big time, as big as firewood gets and no expenses spared on equipment.  They could be running an autocycling processor and a lot less laborers.  But instead they are splitting pieces in half then sending to another line to split further, plus a lot of hand sorts to pull out the junk.  

 And that is my point, no forest produces 100% good wood.  It is a gradient from standing compost to prime veneer and everything in between, but a firewood processor will just churn it all up the conveyor and your customer may not appreciate punky mushroomy ant infested black wood.  So guys with wood processing machines have to dedicate more time finding "good processor wood" to feed in if they want a nice end product to come out.  A person manually splitting can separate the good and bad pieces with little overhead but at a much slower production rate and with infinitely more exertion. 

Sorts are a major component of the labor world.  Whether you are a scrapyard, a logger, a sawmill, a recycling center, whatever.  Sorting stuff by grade is a common theme in business.  Your premium product brings best money, but if you dilute it with a percentage of junk its brings the whole pile down.  Scrappers and loggers learn this fast when one or two pieces downgrade a whole truckload.  You may get away with selling junky firewood for good money a few times but itll catch up and cost you.  To get best money per unit, sort your stuff into a few piles.  Prime, medium and junky wood.  If youll be making bundles it should be the nicest sidegrain wood you can procure because the package is small enough for severe scrutiny.  I ask customers over the phone what they prefer.  Nice wood for $ or 2nds for less? 

  I burn the junkyest and buggiest stuff that comes off the splitter myself and give quite a bit to my neighbor.  I also have stuff so junky it goes right to the bonfire pile before splitting.  That is one issue with taking free wood dropoffs. You get it all, good bad and ugly.  Then you have to do something with the stuff you cant sell.  Can you push it over a hill or burn it at your place? Will your neighbors and zoning laws tolerate constant smoke billowing over the fence? Do you have a woodstove?