What Would You Do?

[Bobus2003]

My Boss approached me and Offered to sell me his logging business. I'll get all his Equipment.. '80 FMC 210CA Track Skidder, '91 CAT 518 Grapple Skidder, '95 Timberjack 450C, '91 Timberline 3530 Delimber, '99 Timberline 3530 Delimber, '96 Timbco 445, Work Trailer (Welder, Air Comp, Pressure washer), 2500 Gallon Fuel Tank, '01 Dodge 2500 Cummins 4x4 work truck and All his Timber Contracts. He offered it to me for what I think is a Steal of a deal, Just not sure how to finance it. Plus with the Timber Industry in its current condition is this a good time to buy? Just kinda at a loss right now as how to pursue it.. I know i have alot of Penciling of cost to do right now

[islandlogger]

Sounds like a opportunity to me!! As Bill Bailey always said "aint nothin ever been got that aint been went out after..." I've lived by that motto for a long time now.
I guess I would wonder how has the business thrived since you have been working with him, and why does he want out? Is he offering the business at a "steal" because he likes you and wants to give you a chance or is he hard up for money?
Yeah the timber industry is tough all round, but it's a smart owner that looks to the future and just keeps things rolling along and fights thru the mud and swims in the honey  and sounds like some nice equipment to start things off, I sure did enjoy the FMC I ran for awhile, man can those things pull some serious turns of wood!!

islandlogger

[mahonda]

Nothing ventured nothing gained. Lots of cheap loans out there if you have good credit a good plan. Lots of areas offer free business plan assistance. A must if your going to try and finance through a bank. Good luck

[T Welsh]

Bobus2003,Sounds like opportunity knocking at your door! 1. are you inclined to keep on making a living in the woods 2.do you know the trade enough to take over the business end and makes things happen. 3. Is the owner willing to stay with you to guide you through the tough times.4. how is he wanting to sell,outright in one lump sum,payments each month. ask yourself the question,s above and truthfully tell yourself the answers,if you can make it work and still have money at the end of the month,think about times when you do not have money at the end of the month and how you are going to make payroll or fix a machine or put food on the table. running a company is not for everyone,I have seen son,s handed a perfectly healthy company and run it into the ground in a couple of years,on the same note,I have seen someone like you handed an opportunity and thrive and take a company to a whole new level. Sit down and talk this over with all involved,the owner,your wife(if married) and talk. and see where this leads you and if it still makes sense to you.start the ball rolling. be carefull,think ahead, and take slow calculated steps. but foremost be truthful with yourself. good luck,Tim

[chevytaHOE5674]

You know the saying "best way to make a million working in the woods is to start with 2....." 

If you can afford it without borrowing too much then it may not be soo bad.

Many of the bigger operators I know around here owe the bank soo much money that they have to be working 5-6 days a week no matter what just to pay for the equipment. If they are broke down for a couple days the payments and insurance bills set them behind with the way the markets are now. They will keep cutting even when the wood isn't worth anything because at least they have some income even if it isn't enough to break even, at least the bills don't have to come entirely out of their personal savings.

[Cedarman]

Make sure you have enough money to pay for a couple major repairs or several months of down time due to weather or unseen conditions.  Will you be able to sell all you can for the next several year? 
What would the downside be if it doesn't work out?

[WDH]

One of the most important considerations is the strength and stability of the market.  To make it work, you need steady take away of wood.  Building and fostering relationships with mills is critical.  If you do not have this in place, you could be the new guy on the block and fall to the bottom of the list and not be allowed to produce at your potential.  In my experience, relationships were the most important variable.

[bill m]

Do you like working in the woods or do you want to be the boss? With that much overhead,equipment,employees,contracts etc. you wont have a lot of time to spend in the woods. I found that out with my tree service. I loved the challenge of tree work but as the business grew I found I was spending less time doing the work I loved and more time being a boss. Managing employees,customers and equipment became a real drag. Now I work alone in the woods every day and no stress. I don't think I could ever go back to being just a boss.

[Meadows Miller]

Gday

Bobus I have had the same types off offers a couple off times over the years when I was younger and the only thing I regret was not taking them Up on it Mate  When I was 21 yo I was offered a sawmill in Queensland not far from where Wisey boy and Sigidi are and Drew the owner was in His late 50s and had got me up there to do some work and get the mill upto speed production wise about 2 weeks in he came to me and said you know what you are doing son how would you like if I sold it to you on terms he had just spent $300grand on a new sawmill and it came with two cylinder treatment plant that had just been revamped with two cat loaders two forklifts all for the grand total off $550000 I was going to get a mill and treatment plant that was turning over about 2.2million a year  I had My ex fiance calling me and wanting to have another go and chose to come home to Victoria and do that instead it was a Poor choice on My part 

He just wanted a break from the day to day grind of keeping everything on the move  and saw someone with drive to work long hours and get the job done he was going to keep one off the offices and do timber brokering for Me on a percentage basis which would have worked out well for Us both 

I think He already knows you are going to find it tight for financing  So it wont hurt for you to ask him if you takeover payments on the equipment and agree a price for the business as a whole that you could probobly come to some agreement  Mate

Put it this way I think He sees something in you to make you a good deal as you said you "think its a steal " Mate 

Another thing to think about is if you can use his capital you could put money into a portable scragg mill to get rid of all those 7" and under top logs moneys where you find it ! and the way I see it theres money being left out there for the taking Mate

They way I see The Timber Industry in The USA is that you are at the bottom Now and that things are only going to pick up from here its not going flat out but good steady growth    So much So that I have No dramas with moving back To Mobile Alabama To start a life with Jesi and to start a Logging & Sawmilling Business there early next year  . Ill be starting with nothing I know it aint gonna be easy for the first few years but I already have strong interest from a couple of big companies  it might be up n down for the first while but as things pick up I aim to be their goto guy and thats when things wil take off Mate 

Best Regards Chris

[Hilltop366]

Take a real good look at what your boss does all day, Things like how many hours a day he works and how many days a week he works, and the kind of work he is doing then plan on doing it longer (learning curve), and the amount of stress involved. Then decide if you want to look at buying the company or not.

[chevytaHOE5674]

Another thing to ask "Why does he want to sell???"

I know a couple of guys that would sell you their entire logging outfit in a heartbeat because its long hard work for sometimes negative income and they just want out......

[Woodhog]

If some institution will bankroll the whole thing with the equipment as collateral you would have nothing to lose.

If you have your own money or assets against the loan you best do your research well.

The industry is in a real mess around here, they run heavy gear 6 days a week 24 hours a day and just earn a headache.

Margins are too small for the investment and operating costs here.

The most important thing about starting a business is how to get out of it, will there be a market for the assets or will you have to sell at a few cents on the dollar just to get out...

Will you be able to sleep soundly at night when you are running the show???

[Corley5]

I'd be nervous about financing a logging operation right now.  I thought long and hard about buying a harvester/processor a year ago and came to the decision that I didn't want to have to work for the machine.  I want the machine working for me    Look hard at the whole picture before you sign the dotted line 

[Autocar]

You can't fail if you don't try, I would go for it if its something you always dreamed about doing. Good Luck Bill

[Cedarman]

Make a serious business plan and get others to check it if you haven't done so.  Emotion can color the view.

[red oaks lumber]

if you decide to go ahead with buying the buisness, put a smiley face on the calendar on the date you do it. that way down the road no matter what happens you can look back and se that you were happy with your decison.
 like cedarman said have someone else look at your plan because, you as well as everyone probbaly have rose colored glasses on.

[Woodhauler]

My Boss approached me and Offered to sell me his logging business. I'll get all his Equipment.. '80 FMC 210CA Track Skidder, '91 CAT 518 Grapple Skidder, '95 Timberjack 450C, '91 Timberline 3530 Delimber, '99 Timberline 3530 Delimber, '96 Timbco 445, Work Trailer (Welder, Air Comp, Pressure washer), 2500 Gallon Fuel Tank, '01 Dodge 2500 Cummins 4x4 work truck and All his Timber Contracts. He offered it to me for what I think is a Steal of a deal, Just not sure how to finance it. Plus with the Timber Industry in its current condition is this a good time to buy? Just kinda at a loss right now as how to pursue it.. I know i have alot of Penciling of cost to do right now

Only you no if you can make this work!  If you feel it in your heart that this is right for you, go for it! When i bought my first truck in the mid 80s i had 0 dollars in my pocket! Borrowed 10 grand off to people for start up costs  and 85 grand off the bank! Qiute a jump for a guy in his mid 20s with a wife and new baby! Still trucking today! Had 6 new trucks and loaders and a few used ones too! Only thing you might watch out for is EMPLOYIES! they can make or break you! That is why i'm only running one truck by myself! I have hade 2-3 guys driving at times and it is always a nightmare!

[Bobus2003]

Well I agree with All thats been said.. Been doin alot of pencil work and think i can make it work.. I'm not afraid of the work or the amount I will have too put in, Just nervous about the amount of money to be borrowed and the not so stable timber industry.. Gonna talk to my boss this coming week about financing options

[woodtroll]

Is sounds like an oppertunity.
Here is somethings to think about in your neck of the woods.
The BH national forest is cutting hard, for now.
The bugs and the Jasper fire have affected the government timber base and will affect the annual cut.
They will not be able to keep this rate up in the long term.
There is 1 major mill company with a handful of other small mills around.
The Hill City area is so hit by bugs it will drastically affect the mill there.
Fuel prices are high, profit margin on hauling logs to the mills can be 0 or worst at a loss.
That is with low dollar fed wood. When that is gone the private wood will require more money to purchase the stumpage, less profit margin.
POL is highly volatile, one day posts are selling good next you can not give them away.
Equipment parts, and tires are up, insurance is high.
There is no telling when the beetles will be done here, and when is the market (housing) going to turn around.

All that being said I wish you the best of luck.  Sometimes the best time to get in is when things are at the bottom.
Markets will change, new opportunities will open up. I am very optimistic about the industry in this area.

[T Welsh]

Bobus2003,You have been listening to years of experience in these threads and all of it is the truth.now for the good part.you did the right thing by asking for advise,some may have scared you,but thats what its all about,life scares you too.after you have made up your mind.STOP and rethink the whole process over in your head again and see if you come to the same conclusion. talking to your boss,is the next step in payment options,and how well do you two get along.if he,s a good man and you like him ask if he is willing to stay on and help you. ask him why he is wanting to sell,is he having a hard time making payments? this will tell you a lot about the health of the business.you seem to have a level head on your shoulders,try to keep it that way and dont get in over your head with out a way out if it all goes south. good luck in the future. Tim