How to run a logging company...

[AlexInman06]

Id like to see someone put it into words how they think a logging company should be run and how to make it profitable...

[Ken]

Cut trees, deliver to a market that pays more than your cost to produce said trees and repeat as necessary ;).  Just poking fun. Not sure there is an easy answer.

[Gary_C]

I doubt anyone can write a blueprint or "how to" for running any business other than the generic things like start early every day, work hard and long, do good work, find good jobs, be lucky, and pray for the best outcome. And no two sucess stories would be alike.

Since I detect a note of frustration in your question, you might get better advice if you spill your story so to speak. But even then no business is guaranteed to suceed. And sometimes it's just bad timing, bad jobs, bad markets, etc.

Most sucessful busines owners have failed previously and then found opportunity after that difficult time. You just never stop looking for the next opportunity.

[240b]

I would say the biggest thing is marketing your products. Not cutting more wood.. Sort sort sort.. Its the only thing you can do.. Buy your own stumpage. Pass up jobs which aren't profitable..

[jd540b]

I think many of us can tell you how to run a logging business.......the profitability part may take some pondering.  
All joking aside in my opinion one word comes to mind above all others DIVERSIFY your business as much as you can.

Don't be afraid to keep trying either.  I read something that said "Failure is a dress rehearsal for success."  I buy it.

[smwwoody]

not the answer you are looking for but once i was told how to make a small fortune logging.  "start with a very large fortune"

[sawguy21]

I believe one of the biggest reasons for falling flat is not keeping a close eye on costs. Don't be so cheap that you don't get good value for the dollar spent but do spend wisely to cover your needs. Pay yourself fairly and have enough left over to re invest.
If you can't do that examine the way you are doing business. Maybe the market won't support what you are doing. Maybe you need to find another product or change the way you operate. Don't try to be everything to everybody. Do you run your own equipment stump to dump, a huge capital investment, or do you contract out? Lots of questions.

[logging pete]

Be patient, it takes time to find out what you have knack for. Learn the things that fustrate you and gets your pressure up. Pay some one to do the things you can't but do everything else yourself. Do not try to force an outcome you desire, it's like pushing a rope. Be prepared to act when it comes to you.  Keep a handle on your costs,resist bright shining things. That is how you trap cats or fox or loggers. We all run used equipment. Be able to walk away from any of your markets, you may be asked some day to compromise your principles for money or larger quota. Don't. You are young, but you will never earn enough in a lifetime to buy integrity if you lose it. Be optimistic, see the best in any situation, no matter how bad things are they could be worse. Before you throw that wrench, jerk that chain, tear off those hoses, or ram that stump one more time, remember you are your own man working in the forest of one of the greatest spots on earth doing what you love.

[Autocar]

I believe everyone has given good answers, I work alone with older equipment thats paid for and I sort different logs for different mills, for sure Ive never gotten rich but Ive always tried to be fair with customers and fell Ive been treated the same way  ;). Hang in there !

[Mark K]

I'm like Autocar, I run older equipment. I only work with one mill though when it comes to hardwood. Main reason is when I'm not cutting my own sales the mill keeps me going with contract wood. Knock on wood I very rarely ever set. Now that I've been working for the same mill for a while, I'm allowed to some extent to pick my jobs. I have turned down jobs that I new I would lose money on and sometimes the mill will throw a little more money out there. Back when I first started I'd cut any job thrown at me. Been in the poor house many times!

[Corley5]

Know your fixed expenses and anticipate others.  Have a contingency fund for the unexpected.  Pencil things out.  See if it works on paper first.  Don't pay someone else to do it if you can do it yourself but there are times when it's more cost effective to pay.   Know what those times are. If you have employees be sure they are worth it.  Keep your chin up 

[CTL logger]

I've got twenty years professional experience in this business, when I was growing up my uncle had a farm and we cut logs and ash bolts in the summer skidded with a JD 350 and loaded the ash bolts on his one ton Chevy and delivered them to a bat mill. I think everyone has great answers mine is probably don't be afraid to put time in my first truck I put 4000 hrs on it in one year and that's off the hour meter doesn't count for maintenance I do as much as I can parts cost enough without a big labor bill on top of it. We work 6 days a week if we can't skid the processor is cutting rain or shine. I've lived and breathed logging for my whole life guess I don't know anything else you definitely need to love it, I don't plan on being rich just get paid to do what you love.

[GATreeGrower]

Coming from the perspective of a tree farmer.....just do a good job.  Maintain roads, shut down if it gets too wet, don't skin a bunch of trees.  Leave a fairly clean site that won't be too difficult to prep and plant.  Of course all cuts are different but if you always leave good looking woods behind the work will eventually come to you.

[mikeb1079]

i'm not a logger or even close but that post from logging pete is applicable to any profession and life in general.  well said sir....

[Paul_H]

Be flexible as possible and try to save any profits for lesser years.
There are so many variables that you can't control by hard work alone.In 1992 our Diesel fuel bill for the year was $450.000 and Gasoline was $90.000 and the price per litre then was about 50 cents a litre if I remember correctly.A good Doug Fir standard sawlog sort sold at over $120 per cubic metre.Our total log volume that year was around 45000 cubic metres
In 2001 Fuel was up around 80-90 cents per litre and our standard log prices were down to around 85-90 dollars a metre.
Our total volume that year was about 40000 metres.

[log cutter]

 First you need to know you cost. There are several places online that will help.  Virginia Tech has several good spreadsheets that help with figuring out ones cost.There are others also. Google  "Am I making any money"  Also talk to your accountant ,he should be more than willing to help.
Once you establish what your cost are per unit. (cord,per M. or ton). Then you will know what to charge for your work.
The numbers tell a story, which way the cash is flowing, where it is going.

Financial information is the most important tool  that we use today.

[Ianab]

First you need to know you cost

True, that's the starting point for ANY business.

Then you need to know your income. 

Per day, per week, per year, per truckload, per acre... Whatever units you happen to work in.

If costs are less than income then you have a chance of succeeding. If not, then you might be working hard, and loosing $10 for each load of wood you cut. Will take a while to go broke, but it will happen eventually.

Now if you work you your costs, and income, and you aren't making a profit then you need to stop back and decide what you can change.

Increase production (without increasing costs)? Tricky

Cut costs? (without loosing production or doing shoddy work)? Tricky.

Increase income through better marketing? Maybe. Make sure you are getting the best price for those logs. 10% might not sound like much, but could be the difference between making a small profit, and a small loss on the job.

Pay less for product? You still need to meet the market prices of course. Sometimes you might pay more for premium trees as there is a better margin?

Pass on that job and find one you can some make money on?

But until you know those costs, you are only guessing. What others are buying and selling for isn't the question, it's what can YOU buy and sell, for what price, that's important.

Ian

[Tmac47]

I would say the biggest thing is marketing your products.

Did someone say marketing?

I've found that every level of the timber industry is notoriously bad at marketing their product.

I've probably talked to about 3,000 landowners in the last few months and have found that only 15% of them are actually managing their timber, when timber management could increase the return of their timber investment by 20% and more.

The majority of landowners are uneducated and have no idea that they should be thinning and burning.  I started my company with the need for marketing in mind.  I essentially do the marketing for timber companies and take a cut of their sales.

Here's one of my latest videos.  I'd be interested to hear what folks outside of my network, who are in the industry, think about it:

http://youtu.be/novDbfo811U

[beenthere]

Is TimberUpdate your company that you built the website for?, or that you work for?

Interesting sales pitch on the video. Some good shots, but couldn't figure the reason for the whistling. 

[240b]

What is a timber company, and what do you market?  Nice video production.    Yeah, the landowner really needs to know expect and the contractor, landowner and forester need to be on the same page to start off with. 

  I was speaking of, that the Logger needs to be able to make the highest value products the he can get out of the tree and sell them to the best buyer he can find. If your contracted to a mill than that isn't really an option and the only way to increase income is to increase production. Which can become a trap. Basicly you end up wearing out the iron for nothing. If your not making a profit to begin with; increasing production isn't going to help. I've seen this with logging,dairy farming,even building contractors.. I have found after 20 years working alone, is that the only way for me to make what I feel I need to get, is to buy my own sales /deal directly with the seller (landowner) and market the products off the job to the best market buying at the time.
   I think regional differences in how industry operates sometimes creates some confusion around here.

[ClarkF66]

Great tread! Alex; you got some good answers here. If it where me I would look them over real close and try to apply what the guys are saying to my situation. And put down your thoughts on paper, it really helps you getting a better overview.
I had a machine at one time that drained money from my company. At first I thought it was great, production was up and my workdays where easier, the operators loved it, but I could't keep a healthy profit. After about two years I figured out I had to sell it and take a step down in production. That sure helped. The company went from several hundred thousand in debt to mony in the bank i two-tree years.

Best of luck to you 


 

[snowstorm]

find a niche besides cutting wood. i plow roads also. its recession proof the check comes every month. and it pays far better than cutting wood

[Ed_K]

I'm agree with snowstorm, I work for the town highway during snow time and do Timber stand improvement in summer.I also learned the hard way,how to say NO.Put a pencil to the work ahead and know your cost.Even while I'm working a job,I track the cost sometimes down to the min.That way you can change something small to work to an avantage.
Maybe a talk with your local chamber of commerce and see if they have a mentor program,I used this when I started out.It helped me find people that could explain in terms I could understand how to run a business.Till 98 I'd always worked for others.We're in a hard down fall right now,maybe it's at the bottom but coming up is still a long ways off.

[Tmac47]

Is TimberUpdate your company that you built the website for?, or that you work for?

Interesting sales pitch on the video. Some good shots, but couldn't figure the reason for the whistling. 

It's both.  I designed the website, hired a programmer to code it, and produce the content on the site.  The foresters in our network write the blog articles.

Haha...yeah, the whistling came with the song.  It's expensive (thousands of dollars) to use well-known music in videos.

What is a timber company, and what do you market?  Nice video production.    Yeah, the landowner really needs to know expect and the contractor, landowner and forester need to be on the same page to start off with.

A timber company ranges from a forester to a buyer, so depending on what a landowner wants/needs, we'll either hook them up with a consultant or with a dealer directly.

Let's say a landowner knows they want to sale their timber, they just want multiple bids on the timber.  We'll connect them with multiple buyers.

If a landowner doesn't really know what they want, but they want to be responsible with their land, we'll connect them with a consulting forester.

------------

The biggest reason I started the company was because I noticed a few trends in the industry.

1. Foresters and timber companies are not good marketers. The best example of this is the Green Movement and how most people think cutting down trees is bad and the timber industry isn't doing a *DanG thing to try and curb this misinformation.

2. People are looking online for timber management advice, but no one is providing it.  I have a VERY low presence on the web and yet my site is ranked #4-5 on Google for timber prices and other keywords.  I'm actually ranking higher than government sites with hundreds of links.

3. The majority of landowners are in their 60's-70's, so within the next 5-10 years you're going to see a massive shift in the avg age of landowners. These new landowners are going to Google to find answers.

3a. I actually have college kids calling landowners in their 60's and 70's and connecting them with timber companies in my network. Ha.

4. Landowner's feel like they're outsiders in an industry that can't survive without them. This is the worst problem I've noticed, because this negatively effects the view of the timber industry from the outside in and reduces the amount of available wood, because most landowners aren't willing to deal with people they don't trust.

So, to sum it up, the timber industry is doing a terrible job of:

• educating landowners on proper management
• conveying the value of the work timber companies do
• selling their services
• marketing the fact that timber management is good for your land

I'm trying to combat this.

[240b]

Sounds like your a consultating forester.