Making a living buying logs and selling the lumber

[Bibbyman]

Many get started doing custom sawing.  This solves two major problems - acquiring logs and finding a market.

[woodmills1]

what bibby said

A) logs



B) market

[Leigh Family Farm]

The plan you have is a good starting point, now refine it with research. Markets? Advertising? Monthly expenses? Space? Labor? Ability to haul logs? Are people in your area buying more than just lumber, like mulch or firewood? What will you do when business is slow?

With your young age and the support of family, here is what I would do:
1) Get a small part time job to bring at least some steady money. This will help offset expenses in the beginning so you don't burn through your $8,000.
2) Start small and gain experience. Get one load of logs, saw them, and then sell them. Learn to saw a quality product, know how much a log will produce, and what people want in your area. Go custom sawing like many have suggested.
3) Be as efficient as possible. You will spend a lot of time doing everything else but sawing (moving logs, stacking, marketing, etc.). The more efficient you are at any one task the higher your return on investment will be.
4) Sawing might not be the money maker. Realize that sawing might not be your money maker but more of an added option. Mulching, firewood, kiln rental, finishing (molding & planing), and tree service dump could all be more profitable than sawing. Learn which service works in your area.
5) Get a business plan together. Talk to others who have run a business, any business that has been around for 24 months or more. Ask other sawmills in your area to tour their set up. What are they doing? What aren't they doing that you could?

Good luck in your new venture. Keep us updated on what you do and always ask your questions because unasked questions benefit no one. 

[Magicman]

Many get started doing custom sawing.

I did it backwards.  As I recently stated in another related thread, in the beginning, I intending to saw and sell lumber, but inventory and proper storage issues put me into the custom sawing business.

"My sawing expectations/plans changed drastically after I got my sawmill.  What I initially thought that I would be sawing, I don't, and what I never dreamed that I would be sawing, I do."

[Schramm]

Well I will say one thing for a 19 year old I love the fact that you are so ambitious.  Now with that said I have been in business since I was your age and I can tell you that you will need to Google business costs before you can figure in a full $1 per bf into your senerio.  Business is not 1-2-3, as 4-5-6-& 7 are also there and that is what most people forget about.  I have started and sold 4 businesses since I was your age and finally stuck on one that I really love.  I do not know a lot about milling but I know a major amount about running a business and what it costs and what you need to know if you at some point want to be successful.  Lets start with knowing about supply and demand, then knowing about your competition (what they do, charge and how they run there day to day), you need to track cost of fuel, insurance, if you hire anyone you will have workmans comp and the list goes on for days.  Most professionals will tell you that if you can make it 5 years chances are you will make it.  I say if you are still in business after the first year without a plan your *DanG lucky, if you make it to year 5 your doing pretty good and that should be the time where profit should be good and all things should be paid off but in my opinion you will not know if it will be good til year 8.  The guys here will tell you more on the milling end and like I said all I can tell you is the business side.  From what I understand about oak from the guy I know with a kiln it has to sit and air dry for a period of time before going into the kiln and then it takes a while in a kiln so the idea of cut today and sell within a short period of time after may not work.  The other thing that comes to mind, since I have been buying wood from a mill for 10 years, if they only had 1 type of wood I would defiantly not drive 1.5 hours to get to it.  My suggestion and I am not being funny is to take a course on business at a local community college while you are starting off while the best part of learning is "hands on" the education and ability to bounce questions off the instructor will find invaluable.
Good luck with the new start up but before you get to deep into buy a ton of oak logs take some time to re-evaluate a business plan and most of all take it slow, money does not fall from trees (pun intended) but it can if you have a plan.
Rob

[Timberline]

A little more info:  I am currently in my second semester of college (I am actually taking an microeconomics class now) and for several years I have been trying to decide whether to go the college route or to start my own business.  The three things I love is the lumber and log/timber home business and flying.  My dad is a professional pilot and that is always what I wanted to do.  In more recent years I have grown to like timber related things and have become fonder of the charter side of the aviation business vs. the airlines. 

If I can make the milling business work and save up roughly $200k within the next 5 years, then I would have the money to begin the process of starting a small charter company on the side while still having a working mill business.  If I can do what I just mentioned, then I really have no need for college.  If I can make $60k or so per year in the 2nd or 3rd year, it would be well worth it.  Then again, with college credit given for my flying, I am only 4 more semesters away from a degree.  I just have to weigh out whether to start the business right away or finish college first.

[Okrafarmer]

Well, your plan could work, but marketing in my opinion is the biggest part of it. You have got to look out there across the horizon and see every human being as a potential customer. Ask yourself what product or service could you provide for the lady across the street, the man down the road, or the business across town?

Some have said, and I agree, that it is best to start with all your options open and offer many types of products and many types of services for sale, if possible. Always try to find markets for your by-products, too.

I am trying to do the same thing. You do have the benefit of some cash and a lack of dependents. Go for it-- you're guaranteed to make some mistakes along the way, but you will learn as you go along. Your business classes will keep you informed, and so will this Forum. There are some things that are hard to learn without just doing it yourself. People skills and marketing will be the key to success.

[Schramm]

Well not going to be much of a help with your decision, I think saving 200K in 5 years is very unrealistic.  Selling 200K in that time sure.  I am in a very very nitch market manufacturing antique mirror glass (new mirror that looks old-as shown below).  In my first year I worked my ass off to make a whopping 30K.  Keep this in mind there is only 4 companies that make antique mirror in the USA and the rest comes from China (I am one of those companies), by the 2nd year I was up to 75K and now have been doing it for 15+ years as a business (been making mirrors since I was very young).  Last year I was nearly 500K and after doing changes and buying and paying for all my equipment years ago including wear and tear and all bills I am at 29% overhead when my competition owes money on everything (I know them all), rents everything they have an over head of *DanG near 85%.  To tell you what is real in that 5 year plan you have to assume breakdown, tool replacement, down time, slow sales, insurance, rents among the other bills.  Assuming that it fair that your parents pay for you free of charge is not a good practice on there part.  If as an adult you are going to live off them for free you are going to flip when you find out what life is really about and have to start paying for things.  When I was 18 I joined the Marines but by the time I was 19 I had tore my right knee up and got out on a honorable/medical discharge.  At that time I made the decision to start my own business and within a year I found out that I had NO clue what business was all about.  Now I do not tell you this to keep you from doing it as if you have a good support team as a team you can find a way (i didnt), but it still is a huge uphill battle to profit especially in a market like lumber.  Why?  2 major home centers Lowes and Home Depot!  Most people just walk in and buy everything that they need at 1 place while only dedicated woodworkers buy from mills.  Mostly furniture makers, cabinet companies and a few others are your main people.  Now if you added a Woodmaster along with your mill and started making moldings then you may have a nitch thing but that is at least another 4-5K investment up front.  I own one and it is only for me but I get a lot of calls from designers I work with that want things ran on the molder.  I have them pay for everything and then I keep the knives (I have about 100+ now).  Just take your time, check all aspects of the business and make sure you know your upfront costs (its not just a mill) and then rethink everything before just taking the leap.  You know you could always work part time, mill part time and go to school and it would be a great way to start.

Good luck, sounds like you have a good head on your shoulders and I wish you a lot of luck.
Rob



  


  


  


 

[Schramm]

I think that you can make a good living but it takes time!!

[DRB]

I think having a business or accounting degree would be most useful in running a mill and I would encourage you to complete your degree before pursuing your dream.  Expect that things will not work as you planned so be flexible and willing to change your business plan when opportunities come up and when things do not work as you had hoped. Some observations from the family run mill that we used to have is storage is a huge issue. You can cut and dry it faster then you can sell it.  Lots of what you saw will not be good enough to sell to a cabinet shop so either find a market for pallet grade lumber or be very picky in sawing and make firewood out of any log that will not saw out a high percentage of high grade lumber.  Handling wood is a huge time burner if you can sell the wood green off the mill at a profit you are probably better off then trying to dry it and sell it later.  Every time you touch a piece of wood to move it costs you time and time is the one thing you will never have enough of. You will have lots of customers who want small jobs done that do not make you any money. You have to be careful that your time is well spent. There are only 24 hours in a day and running a small business means you will need all of them.  Get used to 5 to 6 hours of sleep and getting up at 5am after working till 10PM.   Paid vacations do not exist. Sick leave is without pay and can really set you back. Do not forget to get health insurance for a young man it may not seem a big deal but one injury and the hospital bills will destroy you. Oh did I say you will get hurt it may only be scrapes and bruises but they happen all the time. A broken bone could put you out of business so be careful and always wear hearing protection don't be like my father who never did when sawing is now almost deaf. You have a lot of things going for you in a supportive family, land, a mill and a little cash.  You are young and have a lot of time to recover if things go bad. you will find it very difficult to save up much cash when trying to start a business. I say try it I wish I had when I was young.

[stavebuyer]

Finding markets for all of the different grades of lumber that come from each log is a challenge and quite frankly if you have the sales ability to develop those niche markets you might be better off buying lumber from other small mills and re-selling. Not to say that you can't take your mill and make a profit; or that drying and selling some of your production isn't possible but that putting mill run lumber into the kiln and selling all of it at that average doesn't seem likely.

[Ron Wenrich]

I've been involved in several startups.  These have been on the commercial side and the smallest started out at about 500 Mbf/yr.  Most failures are due to log supply.  The ones that have been successful had their own logging crew.  The one that I have been doing work for, gets urban logs.  Costs are "free".  Here's what they look like:



 

This was before hurricane Sandy filled up 4 acres of this yard.  I've seen all sorts of things hanging from these logs.  Also I've seen lots of nails.  Some of the logs are 5' in diameter.  What kind of equipment do you have that can move logs like that?  Many logs are short, because tree service guys just can't lift anything heavy.  This outfit put in a used circle mill, and has hopes of putting out 15 Mbf/day.  They also run another mill to handle the big logs. 

They also talk about all local lumber that they sell for the big bucks.  I've seen the orders.  Some are for as little as 3 boards.  They haven't sold 10 Mbf/month to the local markets.  They are in a major metropolitan area, which simply means more buyers.  But, they have a salesman out making calls.  They might make it, but its going to be tough.

You need to make a better plan.  Simple cost equation is profit = lumber value - log costs - mfg costs.  Get a handle on all those numbers and where everything fits.  Lumber value would be the value of everything in the log, including pallet, sawdust, slabs, and lumber.  Figure out all those markets.  You need to be able to sell your waste.  Log values differ on species and quality.  If you're expecting a specific quality, than you have to pay more.  Mfg costs are all the expenses that go into making lumber.  Make sure you don't skimp on these.

Here would be my suggestion.  Keep on going to college and get your degree.  It will come in handy.  Spend this summer working in a sawmill.  If you have to move out of town for the summer, its an even better learning experience.  You'll get to see all the things involved with a mill.  If you can't find a mill, find a commercial yard that has kilns.  Use it as an apprenticeship.  Work on someone else's investment and learn the ropes.

[stumpy]

First off, Of course it's possible to build this business, This is America 8) Second, I would read and absorb every bit of advice you get from the people on this forum.  It's the best knowledge base you'll ever find.  Lastly,  and this is critical, Find your market first! I would venture to say that the vast majority of sawyers on here(including me) that saw as a business, will tell you that finding buyers and establishing profitable markets is the single hardest part about this line of work. Once you find your market, it will much easier to assemble a good business plan.

[Timberline]

As far as health insurance I am covered under my dads work policy until 26.

That is some fine work you do Schramm.

If I continue with college I will be out of state for that 1.5 years.  Maybe I should just do the planing/marketing and practice sawing over the summers in the mean time and be ready to go when I finish up.

It sounds like marketing is the key.  My Grandpa has his PhD in Economics and also has degrees in marketing and accounting.  I know one thing he always says is to define your market first.  For various business ideas my dad and I have had he always counsels us to try to sell the product or service prior to actually providing it.  What if I narrow down cost/supply figures then try to market myself as having X lumber available for X cost (maybe through cold calls and advertising) and figure out where my market is.  I would of course tell them that it is not available yet and let them know when it will be if they are interested.  This way I could figure out which segment of the market would be most profitable for me and be able to have customers lined up before I have to get into things to far.

I do like the idea of getting into a specialty market like moldings.  I think buying a Woodmaster would be a good investment.

[Brad_S.]

I don't recall seeing anyone already mention this as I read quickly, but you are making a false assumption that you will get $2.00 for every piece of lumber that comes off the mill.
What you will get is a mixed bag of quality. Some you will sell for that, maybe more. Some you will break even on and some you will sell at a loss...the high grade has to make up for that loss. You have to have a market for all those different qualities.

I was in the sawing business full time for 15 years. I had always figured that when I could open a retail lumber outlet, I would finally catch that dangling carrot. I was wrong. Hobby woodworkers are a fickle bunch who take up way too much of your time for a $20 sale and will abandon you to buy lumber 5 cents a board foot cheaper 50 miles away. The hunt for lumber is part of the joy of woodworking for them. Trying to stock all the different thicknesses and species they want was a nightmarish logistical problem to achieve efficiently through the saw and kiln process.

Cabinet shops want a one stop source for their needs...if they want 100 bdft of cherry, 20 of walnut and 10 of bubinga plus 12 sheets of plywood, they are willing to pay a little extra to not have to run around to a bunch of small sources even if they can get it cheaper that way.

That leaves you the wholesale market which, as mentioned, is a quantity based game that is hard for small mills.

As mentioned, niche markets are your best bet, so before you jump in, I would listen to all those that have told you to research markets first.

Sawing with the "if I saw it, they will come" approach will bring you only disappointment. I should know!

Best of luck. Use the knowledge resource this site provides...I wish it had existed when I started my business.

(BTW, if you do like the moulding market, step up to at least a Logosol or Baker moulder so you can do all 4 sides at once. You will outgrow a Woodmaster way too quickly. Just my 2 cents.)

[drobertson]

Timberline, after reading that you are working on a degree, finishing this would be first on the list.  You can mill and learn as you go,  keep the faith and determination,   david

[pnyberg]

A Craigslist ad popped up today that I thought was relevant to this discussion.  Obviously, I don't know the story behind this ad, but it could be from somebody who thought they'd mill first and work out the marketing later...

Misc species 4/4 thickness rough cut hardwood lumber lengths from 4' through 12' random width.
have roughly 45 bundles available,averaging 900 bf per bundle.
100.00 per bundle.
great for firewood.
also have a limited supply of 5/4 ash.
and 8000 bf of 4/4 yellow poplar.
any questions please call.

Here's the picture he posted:

If he's got his numbers right, that about $0.11/bdft.  Note the suggested use is firewood. Also note that he's got about 40,000 bdft, not counting the ash and poplar. 

--Peter

[Bibbyman]

Sure looks fresh.  Only thing I can figure is that it got caught in a foreclosure and has set too long and molded.  Even so, it could be used as pallet lumber. Chipped for biomass fuel?   

[Schramm]

Did he put in a phone number?  The reason I ask there are plenty of craigslist SCAMS, they give you an email address and you email it and then they use your email address to scam others.  The internet is great and terrible all at the same time.

Rob

If he was in Illinois I would make him an offer on all of it!

[Brucer]

I like to play devil's advocate.

I spent all my summers in high school working in a sawmill, pulling lumber off the green chain. At age 19 I decided that was no way to make a living, so I went off and got a degree in engineering. I spent 23 years working as an engineer and never once thought I could run my own business. Then I got laid off. After a short semi-retirement I bought a portable sawmill (LT40, manual). That's when I discovered that not only could I run a business, I was actually good at it . So now I pull lumber off the sawmill and I love doing it ;D.

I didn't buy a lot of "toys" when I was a professional so I managed to save up a decent nest egg that helped tide me over while I got the business started. It sounds like you have the family support that will allow you to start up a business.

When I was growing up, it was naturally assumed that kids would finish high school and immediately go out and get further educated: science, teaching, nursing, trades, whatever. Then they would start a career and stick with it for the rest of their working lives. But when I look back (and talk to some of my old classmates) I keep thinking, "At that age, how could we possible know what we wanted to do for the rest of our lives?".

I'd say it's wide open for you. If you really want to get that degree first, go for it. If you'd like to try your hand at business first, why not? Try it for a year. If it's not working or you find you don't like it, no big deal. You can still go back to college and you will have learned a great deal for the trying.

When it comes to market analysis, I did a terrible job. I assumed the conditions were perfect for a portable sawmilling business. Wrong :(. So I spent a lot of time figuring out what exactly I could do with a small bandmill. Eventually I teamed up with a Timber Framer who was fed up with dealing with a timber supplier that was 3 hours drive away. That kind of morphed into a completely independent custom sawing business. Now I'm the go-to guy in this area (except that after the economic meltdown there aren't as many contractors "going-to"). My prices are high, but so is my quality. I don't sell "lumber yard" stuff. Why bother, people can get it at the lumber yard. I sell stuff that you can't find at the lumberyard, or a commercial sawmill.

Funny thing is, I don't think I would ever have bought that first mill if I had done some proper market research. I'd have decided there was not enough demand. And then I might never have found out I'm good at running a business. I wish I'd found that out when I was 19.

If I was to give advice, I'd say, follow your heart.

[GeorgeK]

I would like to say I learn something new every time I log into the forum the knowledge you guys have is awesome. I am very new but I can say if you want to get into business always build from a point of little to no risk until you learn that the bills can be paid. I bought my mill with savings so if it does not run I do not go broke. I bought what I thought I needed an LT 40. I bought that brand as they are close and if needed in less than 3 hours it can be at factory.

I have worked high paying jobs. I have run several business's that I have owned and I have a business degree. What I do like the best is working for myself not the "man". The saw business plan I used was how many days a month could I get someone to pay me to come mill by the hours or board foot and would that be a workable amount of money to live on right now in my life. The answer in my mind was yes. Then I thought there have to be more profitable parts to the business and as I learn them I will be fine. So follow your heart but do your homework. I am sure every area has different problems and rewards. As I am sure every state is also very different to deal with. Like in KY if I want to mow logs I would be commercial and DOT. But if a farmer wants to bring me logs for his farm to cut into fencing he can do that. So knowing the way to do things is important. My saw mill in KY does not need a license plate but my trailer for my lawn mower does. Odd place.

Good luck running the numbers. factor in rain days, break downs etc.