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Author Topic: Business Plan  (Read 2202 times)

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Offline woodsteach

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Business Plan
« on: May 16, 2005, 01:23:58 PM »
I've been mainly lurking and learning here for a long time so now it is time for a question.

First background info:  I've been an Industrial Arts (wood shop and Drafting) instructor for 10 years.  Also, built homes footing to finish.  I love working w/wood.  No milling experience, but I have a mill close who is willing to help with problems.  I just want to cut up trees myself 8)

Have family access to over all total of 60-80 acres of misc. trees (Walnut, Red and White oaks, large cedars (for N.E. Kansas), and of course Osage Orange, Mullberry, Cottonwood, and Hackberry.  I have also started working with the local dozer operators and they call when they have some good logs for me to pick up, instead of putting them in the burn pile.  So I have enough millable trees for a long time if managed properly.

I have the time, went from full time teacher to teaching everyother day.

I can almost justify purchasing a mill (I'm looking at the brandx or peterson), in milling my own lumber for projects (fences, outbuildings, furniture).  15,000-20,000 is quite an investment but I am certain my family could recoup the money in lumber.

Here is the question.

How do I make some extra money with the mill?  The local mill ships out pallet parts, walnut cants for flooring, but this is all more than I want to jump in, simply because of the support equipment.  As with most all of you, I want it all, (cake and eat it too!)  I want to make money with out a lot of inital investment. 

Thanks for an awesome site and all the help.

Paul


Brand X Swing Mill, JD 317 Skidloader, MS460 & 290, the best family a guy could ever dream of...all provided by God up above.  (with help from our banker ; ) )

Offline Jeff

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Re: Business Plan
« Reply #1 on: May 16, 2005, 02:05:38 PM »
I dont know if this might apply to your area, but I know if I had a swinger around here, I could get some work just going around to some of the local mills and breaking down oversize logs for them. Logs to big for their systems. The reason I say "I know" is because I approached two of them with that hypothetical question at the Michigan Association of Timbermens convention this past April.

Not enough work for a full time gig, but something that could add to the justifications of owning that type of mill. :)
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Offline woodsteach

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Re: Business Plan
« Reply #2 on: May 16, 2005, 02:21:35 PM »
Thank you Jeff, that is something I hadn't thought of.  I need to do more thinking outside of the box. smiley_headscratch

What do you folks do with the lumber that you mill?  Use it green, AD and sell, KD and sell, KD-mill and sell? 

Paul
Brand X Swing Mill, JD 317 Skidloader, MS460 & 290, the best family a guy could ever dream of...all provided by God up above.  (with help from our banker ; ) )

Offline woodsteach

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Re: Business Plan
« Reply #3 on: May 16, 2005, 03:08:18 PM »
Yet another question,

An old timer found out that I'm looking for a mill and wants me to go out to the woods and see about purchasing his old circle mill, 48" replaceable tooth, propane powered.  "Hasn't been used for a few years, but the blade and engine have been housed in the shed, what'll ya give me for it?" I have not a clue yet as to what kind or anything.  I don't even know if he knows.  Hopefully he can show me how it works.

What should I look for?
 Heck, it is a chance to learn something new from an oldtimer so I'll take the journey.

With the above description, which is all I have, what would it be worth?

Brand X Swing Mill, JD 317 Skidloader, MS460 & 290, the best family a guy could ever dream of...all provided by God up above.  (with help from our banker ; ) )

Offline Part_Timer

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Re: Business Plan
« Reply #4 on: May 16, 2005, 03:21:22 PM »
     We built a small kilf for drying 60" pieces so they could be shipped UPS without the up charges.  We sell green AD and KD.  Talk to the woodworking stores and get the names of some clubs in the area and let them know you are out there.  We went to a craft show this weekend adn passed out some cards to people turning things.  Lots of ways to make it part time.

Lots of luck
Tom
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The only place success comes before work is in the dictionary.

Offline Kelvin

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Re: Business Plan
« Reply #5 on: May 16, 2005, 06:32:30 PM »
very difficult here in central michigan to sell lumber.  I guess competition with local wholesalers is steep.  KD oak sel for $1200 per 1,000.  Try beat that.  I don't really want to.  You have to be sure of the actual market in your area.  There is no other way then actually trying to sell wood.  Some people here have all sorts of demand.  I have almost none after 3 years, KD, green or any other way.  Its a lot harder to sell lumber than it seems here.  Even if some cabinet maker types say they will buy from you, thats not a gurantee.  Most people i've delt with around here want me to sell below wholesale, or they will simply wait for me to go out of business and buy the stuff real cheap!  I've come up with my own solution and am building our own home out of my horded lumber.  Thats the way to make money with a sawmill, but watch out for building inspectors, they will try and shut you down.  Hopefully you have one of those easy markets, but a hole doesn't last long in the economy.  Cabinet makers in your area all ready have sources for lumber.  You have to give them a reason to switch to you and that often means selling below wholesale, which i am unwilling to do.
Good luck
Kelvin

Offline footer

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Re: Business Plan
« Reply #6 on: May 16, 2005, 09:06:09 PM »
Hi woodsteach, Good to see another Nebraskan on the site!
I am still looking for the answers to your questions myself.

Offline J_T

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Re: Business Plan
« Reply #7 on: May 16, 2005, 09:58:40 PM »
Don't know the worth of that old mill but here not much ??? I got one running I don't want to much for and you need help to run it fast 8)
Jim Holloway

Offline Timo

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Re: Business Plan
« Reply #8 on: May 17, 2005, 11:46:23 AM »
I've recently gone through the kind of thinking process that you are currently engaged in. I ended up with a Peterson WPF 8', and am quite happy with my decision - just not enough time to mill yet! Still, I just made my first sale of maple flooring yesterday.

Like Kelvin, I am going to use a lot o my first boards to build a house - I intend to be my own best customer for a while.

Unless you can afford to purchase outright in cash, and not worry to much about your investment for a few years, I believe you have to break your costs down - finance, purchase, extra equipment, etc. to a managable number - cost per month, revenue needed per year, or something like that. It is also good to consider your break out point: you buy the mill, get it delivered, and start the engine - now how much can you sell it for if you need to?  The appreciation curve is much gentler then with, say, a new car, but it is still pretty steep in the transition from new to used. I personally figured that I would have to get about 15-20% of the cost out of the mill to break even before I could resell without a loss, it will be even more if that takes lots of hours. Have a number like "I need to make $300per month with my mill in the first year" is easier to manage then trying to think of how you are going to pay off a $20,000 investment.

Personally, I think you have to look at what other resources you have to be able to produce a product that you can make money on, and there is a market for. You clearly have many other wood working skills, perhaps you can produce a product like flooring or window frames or such that requires a bit more finishing and gets the most out of your wood. Use your own wood to build a shop, and a place to stock pile lumber, and away you go.

There is a fellow up Island from me that also cuts maple flooring. He buys logs, mills on this Woodmizer, drys the boards, and installs - the whole meal deal. His price is competative with other suppliers, and he gets every bit of revenue out of the product.

Just a few thoughts....

Also, if you are going into production milling, you will need support equipement. It is just math - a $5000 tractor with pallet forks and helper will double the production of your mill at half the extra cost per day.

Good luck!





Peterson WPF27 with bipedal, dual grapple, 5'6" loader/ offloader

Offline woodsteach

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Re: Business Plan
« Reply #9 on: May 17, 2005, 04:41:24 PM »
Thank you for all of the great info to digest. 
I found more info cleeeeeeear back on page 163 or 164 that I had missed that also has info on starting a business.

All I have to do now is move 12 semi-truck loads of retail furniture and sell a fixer up house and I'll have the coin to purchase a mill.  All this while keeping the Mrs. happy and our 3 little angles out of trouble (ages 5,3, and 9 mo.)


Paul
Brand X Swing Mill, JD 317 Skidloader, MS460 & 290, the best family a guy could ever dream of...all provided by God up above.  (with help from our banker ; ) )

Offline AtLast

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Re: Business Plan
« Reply #10 on: June 06, 2005, 10:39:18 PM »
When doing my business plan my CPA's advice was  " try to make the business fail"....from that I used the lowest number on everything....to a certian degree it worked.....but alot depends on what youre trying to achieve....research research research!!!!!...what are your market targets?....what is your log flow? what is your time frame? but basically it boils down to how " serious" are you about your endevour


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