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Author Topic: Business Plan?  (Read 1776 times)

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Offline 2StateTrigger

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Business Plan?
« on: November 18, 2015, 07:56:02 PM »
Good evening All,

I JUST put in a request with SCORE to meet with a mentor regarding the formulation of a business plan for the biz I wish to open some time next year (yes, a part-time milling operation).

Has anyone here sat down and actually created a business plan for their sawmilling business?  I'm curious in knowing if someone has. 

If you have would you plz reply here?  I'd like to chat/correspond with you. 

If any others have a biz plan they'd like to share or suggestions plz feel free to reply as well. 

Thx in advance.
Molon Labe

Offline beenthere

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Re: Business Plan?
« Reply #1 on: November 18, 2015, 08:28:24 PM »
What is SCORE? 

There have been threads on this forum discussing what to put together for a business plan. Read some of Ron Wenrich posts as well as use the search function for some additional and helpful suggestions.

I'll be frank, but if your business plan is anything like some of your ideas for a building I read, then I think you will need to come back to earth a bit. Not meant to discourage you, but need to be quite realistic, IMO.
south central Wisconsin
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Offline 4x4American

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Re: Business Plan?
« Reply #2 on: November 18, 2015, 08:40:48 PM »
What is SCORE? 


noun, plural scores, score for 11.
1.
the record of points or strokes made by the competitors in a game ormatch.
2.
the total points or strokes made by one side, individual, play, game,etc.
3.
an act or instance of making or earning a point or points.
4.
Education, Psychology. the performance of an individual or sometimesof a group on an examination or test, expressed by a number, letter,or other symbol.
5.
a notch, scratch, or incision; a stroke or line.
6.
a notch or mark for keeping an account or record.
Boy, back in my day..

Offline North River Energy

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Re: Business Plan?
« Reply #3 on: November 18, 2015, 08:54:21 PM »
Perhaps the sanctioning body of the BAJA 1000?
https://en.wikipedia.org/wiki/SCORE_International

More than likely the Service Corps of  Retired Executives:
https://en.wikipedia.org/wiki/SCORE_Association
Whew! That was a tough one.

Generally speaking, find an unexploited niche in the marketplace, come to terms with your aptitudes (or lack thereof), then combine the two (or not) in a methodical manner to earn a living and then some.

Offline Ozarker

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Re: Business Plan?
« Reply #4 on: November 18, 2015, 08:57:35 PM »
Service Corp Of Retired Executives

I've done a couple of business plans but not for a sawmill operation. Do yourself a favor, and be really thorough. A business plan is a lot of work but worth it, as you'll have a good idea of what's required, especially cash flow. Over-estimate costs yet be conservative with your cash flow estimates, and you'll give yourself some breathing room for the inevitably unseen circumstances that will arise. Best wishes for your new endeavor!

Online Cedarman

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Re: Business Plan?
« Reply #5 on: November 18, 2015, 09:20:41 PM »
When we started our Boligee Al mill in 1998, we made a full blown business plan.  22 pages long.
In 2006, we closed the Boligee mill and started the mulch operation  in Ok.  Made another full blown business plan.
Both plans helped us focus on the important things necessary to have a good business.
Even at a small scale there are 3 important components.
Material acquisition. What are you going to saw? Where will you get what you are going to saw?  Custom sawing just means material will be your customers.
Production.  What is necessary to take the logs and make the final product?  Equipment, location, labor. Sawdust and waste removal. Everything involved to change the log into product.
Sales and marketing. How will you turn the product into cash?  Custom sawing takes care of itself.
It takes time to find logs, takes time to saw, takes time to market and sell.
As this forum demonstrates, there are several college degrees worth of information that can be useful in a sawmill business.
To make a successful business takes an awful lot of effort.
I am in the pink when sawing cedar.

Offline BradMarks

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Re: Business Plan?
« Reply #6 on: November 20, 2015, 11:35:28 AM »
"Over-estimate costs yet be conservative with your cash flow estimates", probably the very best advice. Many an overly ambitious plan has led to business failure. And have at least a years cash reserve for your living expenses, as in NO income from your new business (if it were full time).  Start up costs almost always exceed expectations.  With a part time business (disclaimer: I have no experience with part time biz, it's been all or nothing), my question would be "how will you juggle that with your regular job" and what are the expectations, which is right back at the need for the business plan. Meeting with the SCORE person is a fantastic resource, as these are successfully retired business people. And I believe it is free, which says these people are giving back to the community in a way they know how.

Offline Ozarker

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Re: Business Plan?
« Reply #7 on: November 21, 2015, 07:40:14 AM »
Too true, Brad. I've seen many people who've scrimped and saved to start a business, yet didn't have the reserves on hand out of which to live, got a rude awakening from thinking they'd be making enough money on which to live from the business. This is an unreal expectation. As you stated, "Start up costs almost always exceed expectations." I've always figured the first three years of a business were a write-off, as all the money was plowed back into the business, one way or another. That's not to say that some money didn't come out for my own use, but that I wasn't using it as living expenses, and I was loathe to take that money out, for fear it would be needed later.

Learning how to write a comprehensive business plan, as big a pain as that is, is time well spent. It allows one to see what's what, and make any adjustments prior to actual occurrences, but also during the business process such that the outcomes may be seen and accounted for. I suspect, these days, that there is software for business plans, which would greatly shorten the learning curve as well the process of writing it.

I do know some highly successful mill operators, who started small and grew their businesses. They have very little waste to the process. Right now, they are cutting ties, selling the side lumber (they know where this is going, so it's not just sitting on the yard waiting to be bought) and the cut-offs (for firewood), grinding the waste and selling it to a pellet factory, along with their sawdust. A couple of mills don't have the ability to grind, so bundle slabs and the waste and truck to the factory. I'll also mention that these operators have a high work-ethic, and tend to operate efficiently.

I don't know that they ever intended to be as big as they are (not that these are huge operations). I tend to think that opportunities came along which were seized upon, which then required growth of the business. They may well have been satisfied to continue as they started, but saw the potential when it came their way, then stepped into that.

But, there are mills around with stacked lumber, slabs, etc., waiting to be bought. I don't know their stories, so have no idea their success, but do know they've been around for many years so assume they're managing to make do.


Offline Ron Wenrich

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Re: Business Plan?
« Reply #8 on: November 21, 2015, 12:10:35 PM »
A business plan can be about a whole operation, or just a part of an operation.  If you want to add a piece of equipment, it often a good idea to sit down and put the numbers to the test to see if it is viable or if it is a waste of time and money.

The first thing you need is a business model.  If you are looking at a huge, sprawling model, then you'll end up having to break it down into pieces.  Magicman has a business model of providing a service of breaking logs down to lumber for owners of logs.  Usually they're landowners.  His model does not buy logs or sell lumber.  Cedarman has a much larger operation and his model is quite different from Magicman's.  Think about what it is you are trying to do.  Be flexible.

As stated above, you have 3 different areas that you're going to address in your plan.  One is resource.  If you're looking at free logs, for example, you're going to have to have the data to back up that you can get enough to feed your operation.  Point out the pitfalls in the process, as well as the costs.  I worked with one outfit that did get free logs, and it turned out to be a problem because of their procurement practices.  Know your marketplace.  If you are buying logs, then who from, and at what price.  Resource procurement is one area that cause many mills to fail.

Another area is where are you going to sell your material.  You're going to need to know what you can sell and to who.  Also, expect that someone is going to ask about market capacity.  If you're looking at niche markets, how big is it and why can you fulfill the market?   Be prepared to have market prices that you can sell.  Also, figure out what you're going to do with your waste.  If you can't sell it, then it becomes a liability and a cost.

Finally, there is production.  How are you going to address the market?  How much are equipment costs, maintenance, fuel, taxes, labor, etc.  Don't forget taxes.  If you are holding lumber, don't forget to add in costs for degrade.  These numbers a very important, so don't skimp on them.  If you are going to get financing, you will need all these numbers and be able to defend them.

The more realistic data you get, the better the plan.  That includes every facet of the plan.
Never under estimate the power of stupid people in large groups.

Offline SLawyer Dave

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Re: Business Plan?
« Reply #9 on: November 21, 2015, 08:15:26 PM »
I don't remember what the acronym SCORE specifically stands for, but it is a non-profit association for retired business people and professionals wherein they will assist individuals and small businesses by giving advice and assistance in business and commercial endeavors.  Non-profit does not mean free.  I have heard both good and bad reviews from people who have worked with SCORE.  Like in most professional settings, I believe your experience will depend on the specific adviser that you will be working with.  Some are great and can really help, while others, "not so much". 

Good Luck

Offline landscraper

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Re: Business Plan?
« Reply #10 on: November 21, 2015, 09:10:37 PM »
In my opinion the first and most basic question that should be answered before formulating any business plan: is the business viable in the area in which you plan to operate?  Meaning - is there enough on-going demand for the goods or service at a rate that can be profitable?  If there was someone that could give a prospective business owner a 100% accurate answer to that question they would be rich.  Once you think you know the answer to that first question you can start writing a business plan that is a roadmap of how to access that profitability.  Or you can do what many small business owners do, go out on a limb on nothing more than a hunch.  The limb breaks for many of those people within the first couple years though.


Firewood is energy independence on a personal scale.

Offline 2StateTrigger

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Re: Business Plan?
« Reply #11 on: November 22, 2015, 05:47:02 PM »
Yes, SCORE =  Service Corps of Retired Executives, sorry I did not include that in the initial post.  Guess I was a tad too focused on writing the actual post.....

So the initial meeting is set for Tuesday, 24 November 15 at 1000......Cant wait to talk to this Executive for about an hour so as to gather some important info.

Not having been through something like this should prove to be rather interesting.  Just hope I'm able to get some solid advice and get to the authoring of a decent biz plan that actually works.

So please, if you wish to offer some advice of your own I would definitely welcome your input.  Type away!!!!!


Thx
JB

Molon Labe

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Re: Business Plan?
« Reply #12 on: November 23, 2015, 11:18:54 PM »
Business plans are not works of fiction, but must reflect reality, as much as you know.  The more effort and research you out into it, the better it will be.

There are parts of the plan that you will have difficulty quantifying, so you will have to make an educated guess, but make sure it's a realistic guess.

The most important thing to remember: "It's all about Net Profit"


HobbyHardwoodAlabama.com

Offline customsawyer

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Re: Business Plan?
« Reply #13 on: November 24, 2015, 04:08:59 AM »
One thing you need to keep in mind while writing your plan is freight. It don't much matter which way you go from that part of Colorado you are going to have to go over a mountain pass. Winter months can get long unless you are a ski instructor.  ;D
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Offline Woodhauler

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Re: Business Plan?
« Reply #14 on: November 24, 2015, 05:47:43 AM »
I had a plan when I started hauling wood 35 or so years ago, Make money,pay payments, stay out of bankrupty court. So for I have hit two of my goals, make payments and not go bankrupt! ;D
2013 westernstar tri-axle with 2015 rotobec elite 80 loader!Sold 2000 westernstar tractor with stairs air ride trailer and a 1985 huskybrute 175 T/L loader!

Offline Klunker

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Re: Business Plan?
« Reply #15 on: November 25, 2015, 12:33:24 AM »
I owned and ran a small biz for approx 15 yrs before I sold it and retired.
never did a biz plan, a budget or any "on paper" planing.
figured that at best it all would be educated guessing. Things change fast, didn't want to try and steer the ship based on some best case paper guess scripted out 2 months ago.
In my situation I bought an existing biz and so I had customers and work on day one but I borrowed big and put everything I had in hock so I could of lost big if I failed. But I grew the biz approx 5x in sales.
When I found a use or a machine that fit my biz I would noodle it over and buy or not. never did any justification.
now before anyone gets all up in their panties I ran a very successful biz, emyployed 10-12, sales of 3 million at peak, always had a net profit, low of 9% to a high of 60 some percent.

My secret to success? everything I did was a one off custom job. worked for industries/businesses, never the general public. So customers were few in quantity but if you satisfied them they would be back. know your market.
my 1st concern was making a product that the customers were happy with, second I worked to get it done on time and third I worked to make money.
If you don't do the first 2 the third doesn't matter. I lost money on jobs at times but in the long run the customers were happy so they came back, always got another bite of the apple. Too many people worry about making money on every job and in the mean time they scrimp on quality to make money. pisses off customers, one bad taste and they are willing to give the next guy a try and your gone. Same with delv. I knew that the biz i was in delv was always a standing joke for the most part. I didn't play that game, I always made it a point to do what I said I would do. your word then counts and it earns you loyalty.

Always under promise and over deliver.

Offline Ron Wenrich

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Re: Business Plan?
« Reply #16 on: November 25, 2015, 06:54:44 AM »
Buying an existing business means that the business plan was already in place.  What you did after that was to tweak it.   

Starting from scratch means you might need a bit more market research.  The last mill I worked with had the unrealistic expectation of selling wood for $3/bf while the market was closer to $0.80/bf.  Throw in the high cost of rent, poor equipment choices, poor mill layout, high production costs and high transportation costs and you will find a business plan that was off base.  That's why the underscoring data is so important.  The model wasn't a bad one, but the plan was based on faulty data, and failed.

No one should expect that every piece of production will produce a profit.  But, you want to reduce the amount of losing production as much as you can.  At one mill, we found that producing lumber from small timber resulted in higher production costs and a lower product price.  We directed the small logs into firewood, which had a lower production cost.  We didn't write out a formal plan, just some back of the envelope calculations.  But, they already had established markets and were tweaking their original plan.
Never under estimate the power of stupid people in large groups.

Offline jdtuttle

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Re: Business Plan?
« Reply #17 on: November 25, 2015, 07:58:56 AM »
Hi JB,
Welcome to the forum. I have a business plan I started in 2009 I would be willing to share with you. It started out as a plan for me after I retire. I still tweak it on occasion when things change. PM me if you would like a copy.
Jim
Have a great day


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