Trying to gear up for next years wood season

[HeX0rz]

Hey guys, so I had a really short firewood season this year. I only managed to get my hands on 3 cord of paper birch during the summer. That sums up my season. A pitiful one at that, and I'm hurting from it. It definitely set me back. Around here its been really hard to find that dead wood that is legally takeable.

Other then that, it would have to be from log truck deliveries. So thats the route I'm going.

I managed to get "in" with the fellas who are running a logging company. They are the nice ones to let me take some of their firewood. At the time, I was going to burn the birch myself. So really, if I had burned it, I would not of had any season this year. Due to me being layed off (AGAIN!) I sold the wood.

Any boy, the man who bought it drove 4 hours one way just to buy it! :biggrin:

Anyways, these men who are running the log op are selling the birch for firewood because around here mills dont want it. So, they get to sell it as firewood instead. They have plenty of it to keep me busy!

They estimate 8-10 cords on a load and they sell it to me for $500 a load. Plus driver to deliver and unload which is about $300. So I total to about $800 for 8-10 cord. This puts me at an $80-100 figure per cord.

Now, seeing that I want a better year, I figure starting earlier this time would keep me busy through the year. I'm trying to push people into getting their firewood earlier instead of letting the winter hit them and they frantically search for their wood and get caught with their pants down and left victim to the roadside warriors.

It seems that this year there were not as many, but those who are around have upped their prices dramatically. Or I'm just seeing the regulars doing their usual business. I was seeing cordwood of tamarack and red fir going for $130 at times! DELIVERED! Now they are pushing their limits selling these species from $175 which I say is reasonable, to $200-$250! Some of these more expensive loads are still in ROUNDS! Its amazing!

So, here is my deal. I put an ad on CL today to see if I can start getting prospects. I had a man bite today 3 hours after I posted the ad. He is located 93 miles from my location. I listed a delivery restriction of no more than 100 miles. That covers my region pretty well.

My dilemma here is not the fact that he wants a good order of 10 cords, but the delivery. I'm in a bit of a pickle with this part. I have a regular bed 3/4 ton cummins and I could only fit 1 cord at a time in the bed. Now that is not going to be the least bit cost effective for either of us to make 1 cord deliveries 93 miles one way.

I really want his business, and hope I'm not getting greedy because of the potential to get me busy soon and off the soup line. I do not own a trailer. This is my problem. I was seriously considering a trailer. I would love to get a gooseneck to haul atleast 3 cord a time, but a good one is gonna cost good money. More than I would make selling the 10 cords to this guy.

I thought about renting a trailer to do this but that may not make it worth doing either. Once I figure in the cost of delivery and the trailer rental, it would be a bad deal.

Even if I could haul 3 cord amounts, it still may not be enough to spread the cost to be reasonable.

I need some suggestions here and whether or not anyone thinks there is a way around this. Besides having the wood fairy use her wand magically transporting it for me...

I have a single axle trailer down to the frame that I was pondering on whether or not I should work on it to make it a useable trailer but it needs work, and I would have to add a 2nd axle. I suppose its better than buying a trailer that costs more than to fix.

Also, anyone have some opinions on delivery charges? Here is my breakdown:

My truck averages 14mpg loaded or unloaded, fancy that...

I figure to make my mpg rating 13 instead to err on safer sides. With a 100 mile restriction, that can be a 200 mile round trip.

I use diesel, not gas. Diesel averages about $4.20 a gallon here. If I use my mileage and fuel price, and instead of charging by compensating for gas and instead figure for the cost per mile I get about $.32 per mile to drive. Dictated by my mpg and fuel costs. If I also factor in wear and tear and drive time, I really would be busting at the seams.

I figure on a conservative estimate I can process a cord from cut, split, stacked in an 8hr period. This works me out to about a $15 an hour pay rate. If I drive 60mph on avg. it would cost $46.50 in drive time to deliver.

As you can see, what should I do? Should I charge for 1-way or round trip? Should I charge for wear, tear, and drive time? Anyone have an idea on how to structure this, or is this it?

I plan on selling the cordwood at $200 a cord. This is cut and split. $150 for just rounds and $250 to palletize. Which also brings me to the fact I would have to rent a forklift... Thats another budget problem.

ugh.... :help:

 

[chopperfreak2k1]

well it's just my opinion, but did you ever think about starting a little smaller? like instead of trying to make your situation match your business expectations, let your situation dictate how much business you can do. just a thought.

 

[Whitespider]

Well, as a business man, I don’t think you thought this out very well before posting your ad on CL.
C’mon, really? Delivery to 100 miles and you don’t have trailer?
Did you include a delivery charge in you CL ad? Did you stipulate how much could be delivered per load/trip?

We (not a firewood business) charge $55.[sup]oo[/sup] per hour, per employee, both ways… So… two guys in one truck, or two guys in two trucks, doesn’t matter… it’s $110.[sup]oo[/sup] per hour both ways. Roughly, that averages out to about a dollar per mile. per employee, both ways… but we do have to account for the cost of an employee just sitting (wages and benefits, as well as time lost for profit generation) on top of vehicle expense. In my thinking, using the guess-timation method, you need to be charging at least $1.[sup]oo[/sup] per loaded mile just to break-even (fuel, wear & tear, maintenance, etc.), and that’s cutting it damn close… certainly not building in any cushion for emergency repairs, and it’s not paying you anything for your time either.

If you charge $1.[sup]oo[/sup] per loaded mile delivery expense is a wash (hopefully) so we’ll leave that out of the equation. You pay $90.[sup]oo[/sup] per cord and sell it at $200.[sup]oo[/sup], leaving you $110.[sup]oo[/sup] per cord profit. So 10-cord comes to $1100.[sup]oo[/sup] total. You say it takes 8-hours to process a cord, times ten cord, equals 80-hours (or two 40-hour weeks). At 1-cord per 186-mile round trip, let’s say you can do two loads per day in 10-hours (includes loading/unloading)… at 10-cord, 5-days that’s another 50-hours (and it will most likely take more time than that). So now you have 130-hours invested, with a return of $1100.[sup]oo[/sup].

$1100.[sup]oo[/sup] / 130 hrs = $8.[sup]46[/sup] per hour…
And that’s if everything goes to plan. If you blow-out a tire, or break down in any way you’ll be looking at something under $5.[sup]oo[/sup] per hour (at best)... and if you require a mechanic and/or a tow to get back on the road you’ll be looking at a cost-per-hour rather than profit-per-hour.

At $200.[sup]oo[/sup] per cord and $1.[sup]oo[/sup] per loaded mile (using a 100-mile radius), delivering 1-cord-at-a-time, you’re gonna’ be lucky to make the same hourly wage as the kid flippin’ burgers at McDonald's. Good Lord Man! You haven’t even figured any mark-up on the wood itself! Good business requires that you get a return on invested money… you’ll have $900.[sup]oo[/sup] invested for a minimum of three weeks. A good business plan would show at least 15% (30% is better) return on capital invested in resale material… at 15% that’s $165.[sup]oo[/sup]… dropping your hourly rate to $7.[sup]20[/sup]… BEST CASE!

My thinking is you should have limited delivery to 30-miles… charging $1.[sup]oo[/sup] per loaded mile for anything over 5-miles. The way it is, you're gonna’ go broke!

 

[avalancher]

Im sorry, your whole post puzzles me to no end. A 100 mile radius for delivery?Are you serious?
I refuse to deliver more than 20 miles for a cord in any direction for even a two cord delivery. The cost to deliver that far would be astronomical, and I really cant see how you would make a dime.

Selling firewood is a game of nickels.Plain and simple. If you dont take into account every single one of those nickels, you are going to end up giving away all your nickels and be left penniless.

To turn a profit, you need to take into account far more than fuel, oil, wear and tear on your truck etc. You need a full accounting of how often you need tires, time on your saws to produce a cord, time on the splitter, etc. I started out years ago thinking the same way you do. I busted my hump all year, and when winter rolled around I was swimming in cash. Gleefully I took my money to the bank in a wheelbarrow, and grinned while I filled out the deposit forms for $700 here, $1200 there, and by the end of the season I was seriously considering quitting my job and doing it full time. After all, I deposited $14,000 in the bank, and that was doing it only part time!

Then the reality hit the next year. My old saw died.No big deal.Bought a new one, and for the hell of it bought three more.After all, I was rich, right?Then a bigger splitter. Then a bigger trailer.Etc.

At the end of the second year, I realized I was not doing a good job of accounting, and started counting them damn nickels. And it was staggering how fast those nickels flowed out.$3 for two files.$15 for a couple gallons of bar oil. And by the time I had hit that second year I was flat broke.

You need to take stock of every nickel it takes to produce a cord of wood, and factor in repairs to the truck, loss of value of all vehicles and equipment as it ages. And it takes planning. The bigger you get, the more potential there is to lose your shirt unless you do. Sure, It may be nice to drive a hundred miles and have a guy hand you a wad of cash, but the only one gaining anything is the guy you sold it to. I have found that there is only one species that pays for me to deliver that far, and that is Pecan. Guy wanted it to stock his smoker, and he paid dearly at $450 per cord, and I delivered two cords to him at 115 miles one way. But I knew damn well that the $900 I shoved in my pocket as I headed home was not all profit, all but $300 went into my account for expenses. And you know what? Didnt take long before the truck needed a new set of tires, a new water pump, an oil change, and a new front drive shaft and that money was history.

You need to narrow your delivery range big time. consider delivering no further than 25 miles one way, and concentrate on local business. Give a good product, well seasoned, and give the customers a cord plus three arm loads and within two years you will have more business than you can handle. A firewood business built over night just does not happen.

 

[avalancher]

ah Whitespider, you beat me to the punch!!!

 

[Whitespider]

Selling firewood is a game of nickels.

Yeah avalancher, I guess I did 'beat you to the punch'... but I believe your apples-to-apples comparison carries a bit more weight.

It's not just the firewood business that's a game of nickels... any business is.
In fact, today's economy makes it a game of pennies!

 

[blackdogon57]

Random observations:

- who the heck would drive 4 hours one way to pick up a load of firewood ?

- 200 a cord is too low a price if you are paying 100 per cord for logs. You will not make money with that margin no
matter what type of equipment you use.

- Driving more than 20-30 miles to deliver wood is generally not a good idea. Not only do you burn a lot of fuel,
you also waste a lot of time. If you were getting 400-500 a cord I could see driving that far.

- Why the big demand for birch firewood ? Is there not better hardwood around ?

 

[Steve NW WI]

IF you really want that business at that far out, consider hiring a big truck to haul it. Certainly there are construction companies that have trucks sitting this time of year, perhaps local farmers with a tandem axle grain truck looking to make some money on the side.

Paying $2/loaded mile for a 5 cord dump truck load to be delivered works out to $.40/mile per cord, and you don't need to invest in much more equipment (gonna need an elevator or conveyor, or a tractor/skid loader to fill the truck though) to get the job done.

Just a thought, if I were in your shoes, it'd be local delivery only, or customer pickup at a small discount.

 

[atlarge54]

WOW------I won't go cut FREE wood if it's over 20 miles away and I've even got a trailer so I can get 3 avg. loads per trip.

 

[Metals406]

Them loggers are going to bring you those loads with a self-loader. Have them deliver it right to the guy who wants 10 cords. Charge the guy $200.00 a cord to go work it up, and go camp at his place for the duration, or charge him $0.35 a mile to drive back and forth for two weeks working it up. At ten cord (he may get a little more from the load or a little less), he'll be paying around $265.00 a cord in the end.

If he doesn't want to do it, he can find someone closer to buy wood from.

Change your damn add, 100 miles is too much. . . Cut it down to 25 miles at cord rate, and $0.35 a mile for anything over that.

Heating isn't free, so if folks aren't going to get their own wood, they have to pay someone else to do it. And unless you want to do it for $5.00 an hour, you have to charge what it costs to make decent money at it. If your customers start questioning the costs, bring your ledger with you and break it down for them.

BTW, you can calculate wood heat per cord into BTU, and convert that into Kwh. . . North Idaho has pretty dang cheap electric rates, so you can compare apples to apples.

 

[Whitespider]

Change your damn add, 100 miles is too much. . . Cut it down to 25 miles at cord rate, and $0.35 a mile for anything over that.

At $200.00 a cord, $0.35 a mile for anything over 25-miles ain't even close to enough... by his own admission his truck costs $0.32 a mile in fuel alone. And that's just one direction, it would also cost $0.32 a mile on the way home. Just the fuel cost to deliver a load 25 miles away from home-base would $16.00, and that ain't figuring anything else. If you figure it takes a [sup]1[/sup]/[sub]2[/sub] hour to load, a [sup]1[/sup]/[sub]2[/sub] hour to unload, a [sup]1[/sup]/[sub]2[/sub] hour to drive there, and a [sup]1[/sup]/[sub]2[/sub] hour to drive back... that's 2-hours in time. What about wear & tear, maintenance, insurance, and whatever else on the truck? At $200.00 a cord, and he says it takes 8-hours to process the cord, that's $15.00 per hour before allowing for the the delivery expense, delivery time, or mark-up on the wood itself.

At $200.00 a cord he needs a base delivery charge plus mileage... say, $25.00 + $1.00 a loaded mile for anything over 5-miles, 30 (or 25) miles maximum. He would then collect $45.00 in delivery fees on a 25-miles-from-home-base load... which is just barely enough to justify it (actually, it wouldn't be enough for me).

 

[stihlrookie]

I live in north idaho too, I will take all of your birch for 200.00 a cord, delivered of course, to my customers, all within 10 miles of my home. I know for fact I could get at least 250.00 per cord.
200.00 is much to low for birch, especially since you know it is near impossible to get your hands on around here, unless you have an in such as you do. You should be selling it for 250-300 per cord, and you will get it. I have been selling buckskin tamarack for that much. Go rent a trailer to haul to your customer that is 93 miles away, charge him for the trailer, many places have them for well less than a 100.00 for a day. Take care of that guy, change your ad on craigs, be realistic, 100 miles is rediculous for delivery.

 

[Metals406]

That works back east, but up north here. . . Most guys are selling the good stuff for $135-$150 a cord delivered.

He'd be overpriced to sell at $200.00 a cord already. There's lots of guys out of work out there cutting up firewood, and they know they'll make 5 bucks an hour doing it, but it's better than nothing for them.

You can't deviate too far from what the local market is, or you don't sell wood.

EDIT: http://www.mountaintrader.com/pg-search.asp

 

[Whitespider]

Most guys are selling the good stuff for $135-$150 a cord delivered.
You can't deviate too far from what the local market is, or you don't sell wood.

Then I wouldn't sell wood...
I'm in business to make a profit... a profit worth my time... enough profit that if a large unexpected expense pops up I'm still gonna' show black ink.
If I can't make that profit it ain't worth the risk... plain and simple.
Sell wood after the simpletons burn-out at $5.00 an hour... shouldn't take long.
Stock-pile your wood and sell it for twice that amount when you're the only seller left standing.

Sometimes ya' haf'ta play the odds.

 

[Metals406]

Then I wouldn't sell wood...
I'm in business to make a profit... a profit worth my time... enough profit that if a large unexpected expense pops up I'm still gonna' show black ink.
If I can't make that profit it ain't worth the risk... plain and simple.
Sell wood after the simpletons burn-out at $5.00 an hour... shouldn't take long.
Stock-pile your wood and sell it for twice that amount when you're the only seller left standing.

Sometimes ya' haf'ta play the odds.

Oh, I agree with ya, I've agreed with ya the whole time. I think we can all agree that 100 miles is way too much, unless he's paid way more for his trouble.

I think it's important to earn a man's wage for doing man's work. Like I said, a lot of these guys aren't hacks, they're just guys that are out of work, and they're trying to pay the bills. . . Beats having them on State Welfare!

If dude can pull $300 a cord out'a the guy for 10 cord, I say more power to him.

 

[HeX0rz]

Whhheeeew! Wow, talk about a response! Thanks for everyones feedback! :msp_thumbsup:

I hear what everyone is saying. Honestly, I have never taken a business management class to understand the total ins-and-outs of it all. Although, I love to look at a standpoint and do all the cost analysis. Although, seems most would say I'm not doing a good job, haha.

I definitely think about how big I'm trying to make it. Yes, I suppose my eyes were bigger than my stomach. Although, at first glance I did not really think it was that big of a deal. Haha, boy 'am I wrong. Since I have received your guys' feecback, I have rescinded my ad on CL and 'am going to rethink this all. I think I will need to rethink how to approach this with a different mindset.

Although, I need to give that guy a call and probably tell him I'm not going to be able to do his wood. Whats funny is my neighbor behind me has a bunch of dump trucks with pups that sit there all day. Hmm...

The local rental place carries a dump trailer that measures 7'x14'x2'. Load capacity is 12,000lb. That means if I stack 2 cord in the trailer I would have 2-3' of wood over the rails. Probably not a good idea. And it costs $109/day or $546/week. Which may not be a terrible price to pay if I can spread the cost over 3 cord deliveries. Although this is the best thats out there at the moment...

The guy who drove 4 hours one way for the wood had bought all 3 cord. His reasoning was due to the fact that he said he could make all 3 cords last 3-4 years. Which leads me to believe he was not burning for heat.

I do plan on getting into biodiesel, which will cut my fuel costs dramatically, but then I will have to factor that all as well. Although, that portion is going to take me a little longer to get going. But I see it as a nice way to get ahead.

The birch is not in a large demand, because people generally cannot get birch as well as they can with the red fir and tamarack. The hardwoods are even harder to come by for heat. Although, if I can supple birch on a steady basis, people prefer it over the red fir and tamarack.

The log truck driver is going to charge about $300 to deliver from about 25 miles away and unload. To drive from their location to this guys place would be 132 miles. I cannot even imagine what they would charge for delivery. Probably would equal out to just as much as it would cost for me to process and deliver... Heck, he said he would not mind processing it if he could get it. So we will see, lol.

I've been mainly trying to think of ways to sell my firewood to the Spokane people. They pay top dollar for their firewood. Most of the time they get screwed over, too. Which leaves me in a good position to gain their business.

Admittedly, $200 a cord in my area is steep. Which surprises me other people in the area are trying to sell theirs for this much and some in rounds! The winter here has been very mild as well. Which may lead to a mediocre year next year as well.

I'm going to re-evaluate my situation. The thing about it, is people in this region are limited. I figure expansion to 100 mile radius covered everyone in the market. If people are willing to pay the price for delivery, then thats them. Just trying to leave the option out there for them. Just need to adjust my delivery rates to make it worth it for me at any distance, and if the people 100 miles away want to pay that rate, thats them.

Once again, thanks for all the feedback fellas. I will keep everyone posted and let you guys know how my situation is developing.