Where are the Angels?

[LeeB]

I don't know about angels and such, but I do know about self worth and when you forget that or give up trying to maintain it you are surely lost. I don't think you are anywhere near that point yet. Keep scratching and clawing along. You'll make it through. I know you will cause if don't Matt won't have a place to work and then I gotta feed him. I've seen that boy eat and I really don't want to foot that bill.

[ARKANSAWYER]

LeeB  it might be cheaper for you to become an Angle Investor then try to feed them two kids.   :D  :D  :D  Jobs are getting hard to come by here.
  BillG came by and visted Wednesday and bought me lunch and then had to pull some slabs and wrasle some logs for the privilage.  ;D  It is a real pleasure to visit with people who like wood and sawing.  We could have gotten more visiting done if the customers would have left us alone.  A few days above freezing has really brought out the stump kickers.

[jim king]

 
 

We could have gotten more visiting done if the customers would have left us alone.

That sounds positive  8)

[kderby]

Arky, thanks for the observations.  I am still coming along behind you.  I did not borrow money and that may be my salvation.  This week I had a meeting with a mentor and we did my numbers.  He ended up saying that I had better find a way to get into the black or I should just say this "business" was an expensive "hobby."  Of my customer groups, one group the "artists" do not buy much but I get good margin.  The other group "landscape timbers (railroad ties)" buy volume but at a slight loss.  I spent a day wondering if this has all been an expensive junket (hobby).  Then I re-connected with an earlier customer and shared my current situation and found some opportunity.  Nothing in writing yet but a solid opportunity.

It was actually good for me to consider the hobby angle and really face (again) losing this business.  I realized I still had my health and my loyal and loving wife.  Even if I had to lose the business I was still able to have what matters most to me.  Like you, I still may go from poor to really poor but I am not broke.  That seems a little less horrible now that I recognized the other values.

In the old days men would set sail on an expedition.  They would hope to return with pockets full of treasure.  Sometimes the family got a telegram: Ship lost at sea...no surviviors.  Starting this business has been my big  expedition.  Am I sad/angry/scared when I struggle to survive, yes.  I just need to remember the sun will come up, the grandkids will giggle and the fish will wiggle.  I may get home from this adventure busted up.  I needed the reminder that at least I could come home.  My chickens are laying more and the garden will feed me...got bait?...lets go fish.

I am sure glad you are still here and talking.  I really am right behind you on this business start-up expedition.  It would mean a real loss to me if you were "lost at sea."

Kderby

[Ironwood]

Nice post KDerby, I like the giggle, wiggle thing.

Things are tight here. Opportunity is still out there, working harder to get it though, and tightening my belt a bit.

Kids are healthy, wife still loves me. The important stuff is in order.  ;)


Ironwood

[Bill Gaiche]

Arky has the talent and desire because I see it in him. He loves what he does and I can see why. He has all the tools to provide the customer what they need if only this economy would turn in his favor in which I believe it will and he will survive. He has what it takes and that is very important. I wish him the best and anyone else that is in his shoes also. bg

[ARKANSAWYER]

  Kderby is just the reason I started this thread.  Because just before you go under you will grab for just about any thing that you think will help you float a little longer.  His observation about how with some customers you have a good profit margin and on others you lose money or just break even.  You need both customers.  I am not having troubles with getting orders where my problems come from is my purse is light on coins so I have to wait for an order to be filled then picked up and paid for before I can start again.  So each month I lose from a week to two weeks of production waiting to get some coin to go again.  Now I am not talking about just a few logs but truck loads.  If there was no work and no logs to be had then the pain would not be so bad.  What is my fault is I tried to grow and become larger and was about to make it when the housing bubble busted and then the Banks pulled in the lines of credit and stopped loaning money.
  Kderby talked about how men used to go to sea to make their fortune and how many did not make it.  "Go west young man" comes to mind and what has made this country a world leader.  It will need to be that attitude that pulls us out of the mess we find ourselves in.  This country was founded by those who sought out more then what they had.  Up to now they had to just go after it and many never returned or made it the first half dozen times.  In the days of old the Gov was not taxing them to death, workmans comp, income tax, property tax, and a pile of rules and regs that make you head hurt trying to figure out just what they want done.  Just ask someone selling catfish.
  It will take people doing what hurts.  We will have to spend more and buy US made.  We will have to boycott imports.  Not buy stocks in companys that move their production offshore.  Invest at home and take lower, slower returns on our investments.  We are going to  have to use less fuel and vote more for them that help us here at home.  Stop wasting money and spending Billions on a war we can not win if we are not willing to fight it to win.  I may go down with the ship but I will be bailing till my head goes under water and I can no longer find my bucket.

[D Hagens]

  Well I'm kind of lost here when you say that you're in business and self-proclaimed good at it and then I read that you expect to break even on jobs and expect a loss on others? What's that all about?
I've been in business for 17 yrs and there's never been a loss on a job. If anything I've learned from each job how to make more on the next one.
If my accountant saw me going downhill I think she would tell me to start looking for a job hanging out a window serving fries.
Yeah the economy goes up and down like a Yo-yo but when that happens a guy has to diversify.

[jim king]

I have been in business much more than 17 years and I can say that all of my ventures were not great.  Some were world class catastrophies but you just have to get up and shake your head and try again.

Above was a note about hobby industries.  There are a lot of niche markets out there that can and do make a lot of money.  They normally have a low overhead which is the cancer that kills most businesses and they operate on very good margins.

When I was shipping out hobby woods I would invoice about $140,000 for a 7,000 bf 20 foot container  shipment.  The big mills with a huge investment got about $6,000 for the same volume of wood.

Now the competition in that market do to the internet plus the new avalanche of laws has about ruined it.  It is time to come up with something new again.

Maybe a serious round table discussion with a group of friends and a case of rum will generate a new winner.

[Patty]

I have owned several business's over the past 30 years or so. Like Jim, I had a few world class failures, and they were very painful, to say the least.

No one has a God-given right to own a particular business, you have to earn it through hard work. And even then, sometimes they fail. I owned a restaurant once. I put my heart and soul into that place. I arrived at 4:00 am and left at 11:00 pm, exhausted, 7 days a week. It nearly killed me, before I went broke. We sold the building, the contents, all of our furniture, and our home to pay off the debt. We moved into an abandon farm house and worked very hard to pay off the remaining debt. (I do not believe in bankruptcy, I promised to repay the debt when I took out the loan, and I do not break my promises). Then I got up, dusted myself off, and licked my wounds for a few years while working a 9-5 job.

It took a long time to build up the courage to try a new business. We saved the sign from the restaurant, and whenever the entrepreneurial bug would hit, I would go out and look at that sign, and all the pain would come rushing back.

No one has any guarantees in life, and sometimes you just gotta say, "enough", and move onto the next phase of your life. Blaming the bank, or investors, or your mom, or the weather or whatever, just doesn't cut it. You have to suck it up, admit your failure, and then move on. There is no shame in trying. There is no shame in failing. There is shame in blaming everyone but yourself.

[jim king]

I think a major key to success is being to stupid to quit.  Or unemployable by a normal company.

[gunman63]

OK, this is  what i would do, but everyone is different, u have orders,  u have a mill, u need logs or money, find a partner with cash and that wants  to work, even if its short term, not  everyone wants a partner,  but sometimes what u want and what u  need need to be looked at.

[ARKANSAWYER]

DHagens,  When you saw logs it is a crap shoot from the beginning.  There are logs that just do not saw out well and you will lose  money on it.  Then there are those logs that just keep making money.  When you saw an oak log the outside wood is sold by grade and it is what will make or break you.  The railroad tie that you cut from the middle will most of the time it will just break even on the cost of log and production.  So yes you saw knowing that on somethings that you make will lose you money.  If you cut pallet stock most of the time it is just a way to move a product but you will not make money doing it.  If it was easy everyone would be doing it and be very rich.
  The trick as in most businesses is to be able to get a break and do the things that make you money.  Some people get it right right out of the box and everything falls together.  Most do not even the first 3 or 4 times.  It is more luck then just about any thing else.  You have to work hard and be  willing to take a loss.  But it is like Las Vegas, enough people have to win to keep people willing to try.

[D Hagens]

DHagens,  When you saw logs it is a crap shoot from the beginning.  There are logs that just do not saw out well and you will lose  money on it.  Then there are those logs that just keep making money.  When you saw an oak log the outside wood is sold by grade and it is what will make or break you.  The railroad tie that you cut from the middle will most of the time it will just break even on the cost of log and production.  So yes you saw knowing that on somethings that you make will lose you money.  If you cut pallet stock most of the time it is just a way to move a product but you will not make money doing it.  If it was easy everyone would be doing it and be very rich.
  The trick as in most businesses is to be able to get a break and do the things that make you money.  Some people get it right right out of the box and everything falls together.  Most do not even the first 3 or 4 times.  It is more luck then just about any thing else.  You have to work hard and be  willing to take a loss.  But it is like Las Vegas, enough people have to win to keep people willing to try.

Yes Arky I do understand log grade, how it works and yes there are the odd logs that get shipped through that can be a crap shoot but you pencil that in to your costs and you will have a nice average at the end of the day.
When I was a lumber grader we figured that about 8% went to the bin. Yes we could have cut shorts and sent it to the re-man for finger jointed crap but with the slim margin why waste time. Time is money!
From a business point of view if you're going to waste time by not making money cutting pallet stock then why do it? It's really a bad business practice and when people around you see you doing this you might get labelled for it.
K I charge out 65.00 an hour, let's say times are tough and I charge out 45.00 which I know I'm just getting by then what happens next week when things pick up? I'll tell ya what happens people already got wind that I lowered my rates and want the same deal. In their minds they think that I was hurting last week so it's the same price. I say no, they turn around and hire the guy above me cause I now have bad business practices.
K when you say you're hurting and blaming everyone from the janitor at your kid's school to the politician up the road you're doing one BIG thing wrong! You're not putting any of the blame on yourself and your business practices.
It's your business; you make it sink or swim! There's no one to blame for a bad day but yourself.
No lumber in my area? Move your mill, look elsewhere.
One thing I will say that I've always noticed about my competition that has to borrow money to keep going is that I get a flow of their customers a year later cause they can't make payments and whine at the lumber store about how bad it is out there.
Arky, take a big step back, don't beat yourself up and look at the big picture from the outside.

[Jasperfield]

As you apparently know, Job literally lost everything he had except his name. And through no fault of his own. He lost all of his wealth, family, and health. However, by his keeping faith, he recovered way more than he ever lost.

My commentary is this:

Look at the worst possible fiscal scenario. Determine how you would begin to resolve that situation. Then, go up from the bottom and find the most likely point where your actual situation will stabilize from the fall, and work from there.

Having determined movement from the bottom will help direct your actions from a higher level.

[Cedarman]

It is better to saw the rest of the log into a tie or pallet lumber and take a small loss than throw it in the chipper or burn pile for a big loss.  The biggest profit margin is on the high grade lumber.  But to get the high grade you are left with material in the log that won't make much profit or any.  The log is paid for. Now if the cost of sawing is more than what you get from the material, then punt.
My job is to get the greatest economic profit from every log doing it in the most effiecient manner possible.  It is to find the best market for each part of the log.  Highgrade material, low grade, slabs, and sawdust.   You sure can't say you saw slabs for a profit if you figure what you paid for the log and value the material in the slab the same as the material in the high grade lumber.

Gross profit is what you have after buying the log and paying processing costs using equipment on hand.   Your decision is what to make from the log that gives the greatest profit after processing costs are subtracted.  Different product mix gives different profits.  These can change as prices for products change.

[Cedarman]

Pallet lumber, grade lumber, ties, chips, etc have the price set by the buyer, which you have no control over.  You must shop for they best price.
When you charge by the hour or sell wood in a niche market, you control price and can change on a whim.
Two completely different situations.

[DanG]

Either I have misunderstood, or we have drifted away from the original dilemma here.  All this talk about what to do with the log is great info, and probably helpful to a lot of people, but Arkey's problem is that there is no log.  You can't cut a tie or pallet lumber out of a no log.  According to his posts, he could get logs if he had the money to do so, and he could sell the lumber if he had the logs, so what about some ideas of how to get the capital he needs to get rolling?  In these times, that is going to take some creative thinking.

Arkey, I'm sure you're already having to do some things that go against your grain, and you may have to do more of that.  I'm betting that your nature is to get to the mill bright and early, and have metal and wood together as the sun comes up.  You may have to give up that "luxury" and spend an hour or so in the coffee shop, networking with others who are having a hard go of it.  There just might be a logger or a landowner that needs to move some logs bad enough to wait a couple of weeks for his money.  None of us here know what your local situation is like you and your neighbors do.  Think outside the box, and while you're out there, move around in places you wouldn't normally go.  There may be an angel wandering around somewhere, but he probably won't look anything like what you expect.

While I'm rambling, I have a question for all you bidnesspeople.  What do you mean when you say "there is no money in it", or "you can't make money" doing something?  Should one take that literally, or do you just mean there isn't very much money in it?  Sawing pallet lumber for a dime isn't very good when there is 50¢ lumber to be sawn, but it can save the day when there is nothing else.  I just don't want whoever reads this thread in the future to be confused by little things like that.

[Cedarman]

For me,"there's no money it" means that when all is said and done, I spent more money processing the log than the increase in value for what I did to the log.

[Bill Gaiche]

DanG, I believe you have hit the nail on the head perfectly. I also believe that if there is a will there is a way. Hopefully what you have said will bring that angel the very way you mentioned. bg

[Raider Bill]

Not knowing anything about logging and sawing what does a load of logs cost? I know there's all kinds, hardwood, softwood, oak, whatever but give me a idea.
For instance......

[SwampDonkey]

I'm posting this case study link here, as it might be an interesting read for some folks. ;)


http://aics.acadiau.ca/case_studies/atlanticlumbertraders.html

[Busy Beaver Lumber]

Arky and Dan

Focusing on the matter at hand and trying to think outside the box, I offer up the following suggestion on how to gain access to capital. Dan, remember you asked us to think out of the box.

1. If you have orders, but do not have the money to get logs, would it be out of the question to ask the person that has placed the order to put a deposit down equal to what it cost you to buy the logs. We do it all the time with our embroidery and sign business. Lets say a customer want $8000 worth of embroidered shirts and the shirts cost us $3000, We would require a $3000 deposit before even beginning the job and ordering the shirts. This way we don't have our capital tied up.

2. If you were sure you could get paid within 30 days, would it be out of the question to buy the logs using a credit card and making the payment through payal? With certain cards like Discover, you would actually get 1% cash back on the purchase and make a few extra dollars doing so. In the example above, we would use Discover to buy the $3000 in shirts once we got the deposit from the customer and make another $30 on the cash back bonus to boot.

3. In this day and age when banks are paying about 2% interest, you would think it would not take much convincing to find private investors willing to accept a 5% rate of return. Have you tried running an ad on line offering to sign a promisory note paying 5% to get the capital you need? Could you possibly convince the log sellers to accept a promissory note saying they will get paid in 30 days with 5% interest, using the logs you obtained as collateral.

4. What about incorporating and selling shares of stock in your company which is the way many companies raise venture capital. The benefit of doing this is that although investors expect a rate of return in the form of either stock appreciation or dividends, you are not under any obligation to pay dividends as it is at the boards discretion as to whether or not to do so. Of course, if you wish to see the price of the stock rise and be able to get more for each additional shares issued, ideally you would like to see both stock appreciation and the payment of dividends. You would keep the majority of shares (over 50%) in your control so that you alone could influence the direction of the company just as you are currently doing, but if you hit it big, the value of your shares go up as well and makes for a nice retirement income when you decide to divest yourself of the business.

[SwampDonkey]

1. You kidding? I have worked at a marketing board and sometimes the wood receipts from mills purchasing wood were 3 months to 1 year behind let alone making a deposit to match what we paid in full to the producer and trucker by weeks end. Did up to $12M in sales and between bank interest and service charges it cost somewhere around $3500 a month to pay the guy with the saw and truck and then wait for the cheques from mills.

2. Refer to #1. That 1% cashback only works in your favour if you zero out your balance on your statement, paying interest at $15-24% pretty much kills that after 21 days grace.

3. If the banks won't lend it, you gotta have some nice friends willing to risk their hard earned cash.

4. The margins are too slim for the small scale sawyer, it's pretty much a cut throat business it seems.


Sorry to dash hopes.  :-\

[Busy Beaver Lumber]

Swampdonkey

All due respect:

If you read Arky's post, he is not talking about waiting 3 months to a year to get paid. He is saying he has to wait a week or two to get paid and has to sit idle during that time. Using the credit card and paying it off during the grace period appears feasible when you are talking 2 weeks to get paid. If you pay it off in the grace period, you would see the 1% cash back.

I personally would not do business with any company that took 3 months to a year to pay. I am not a bank. If they want someone to finance their inventory, they should go to the bank and take a loan themselves. I delivered over $50,000 in firewood last year alone and it is always cash or check on delivery. If someone does not agree with those terms, they can take it down the road to someone else.

So far as friends being willing to invest their hard earned dollars, that comes down to trust and is a personal issue they must decide. Arky does not come off as a man that would mislead his friends just to gain access to capital. I do not think he would borrow money that he did not feel he could pay back in good faith and if he has a backlog of orders, they serves as an insurance policy to assure them they will get repaid. It would be one thing if he was looking to borrow money without any concrete way to pay it back, but he says he has the orders needed to generate income, just not the money to get the raw materials to fill the orders. Having said that, he would actually be doing them a favor by giving them a 5% return if the best they are getting from the bank is 2% or so.

I agree that the profit margins are slim for the small scale sawyer, but I do not think that he falls in the category of a small scale sawyer running 3 saws and having $369,000 in sales a few years ago. Given the right capital, I think he has the ability to be one of the big guns.