Comments needed on Sawmill Profitability Analysis

[kjsifer]

Guys,
I was looking around out there on the net and found a spreadsheet that was a profitability analysis for a sawmill business. The spreadsheet didn't really have the flexibility I was looking for so I created my own, using some of their ideas. The spreadsheet is attached to this post. I guess I just want comments on how valid my numbers are from some of you experienced guys before I show this to the wife.  :>)

Anybody is welcome to use it and I will also welcome any comments on the spreadsheet and be glad to modify it if anybody else has any good suggestions about what it should contain.

Thanks!
Kevin

[backwoods sawyer]

To give a quick brake down 1/3 the sawmill operation 1/3 to fuel and if you are lucky there is a 1/3 left for you, your milage section don't seem to add up, and an extra box of saws or two as well, $750 for a single maintenace issue will through your anual budget off as well. $.50 bft seems high as well as your hourly rate for the size of mill you have.  A good starting point to sharpen your pencil and work from. Winter months can be slow and the working season can be buisy.

[landscraper]

Kevin,

A couple of comments on your spreadsheet, in no particular order.

1 - Zero employees in B43, yet $4320 in employee expense due to $0.10bft * 288hrs @ 150bft hr.  Change the contents of cell B43 to =IF(b43>0;(B43*B44)*(B45*B46)+((C11*B13)*B47);0) to make it exclude employee cost per BFT if you have no employees.
2 - Depreciation?
3 - Looks like you are sawing at $78.47 an hour effective rate.  Sound right for your market?  Is $0.50 bft the going rate in your area, or close?  The expense component of your hourly rate will decline as fixed expenses are spread over a larger amount of hours.  That can cause a reduction in rate charged, or an increase in profit if the rate remains the same.
4 - Any business license expenses to consider?  BPOL, machinery & tool, and other local taxes in my area can be expensive.  It varies a lot with the region.  Lots of small businesses fly beneath the radar I'm sure.

Not knowing your market I can't speak to whether there is 3 days a month of sawing @0.50 a bft available to you.  But I will say that in general with mechanical equipment of any kind, assuming 8 hrs of uptime/billable per day is optimistic.  Lunch, blade changes, refueling, water refills, etc. will all cut into blade-in-the-wood time, so I would figure 6 hrs of output per 8 hr shift, or assume that you will have to put in 10 hours to be productive for 8.  If working by the hour you and your customer can set your own terms for when the clock stops and starts.  The by the bft/by-the-hour debate goes back and forth alot.  To each his own.

Otherwise your approach to summarize annual expenses/income and apply them to a pool of working hours/bft production is exactly how I would do it.  Good luck.

[drobertson]

Saw a lot, all day every day, bout the only thing I can offer, they say numbers never lie, and this is true, but only after the fact, not before, It is kinda like counting chickens before they hatch, 

[DGK]

Where is the like button for droberton's post?