Considered a new mill

Crossroads · September 20, 2017, 04:58:14 PM

I've been running all over oregon and southern Washington for the last 2 years with my old LT30. The thing is paid for so, the profit margin is pretty good, but I have to pass on quite a few jobs because I can really only cut up to about 30" and I'm limited to 16'. I priced out a new LT40 wide with some upgrades and it's about 35k. I know with the new machine I could raise my prices, but just can't seem to convince myself to drop 35k. With the amount of business I'm getting now, it almost feels like a to good to be true situation. I guess I'm concerned that if I get a new mill and up my prices, the phone will stop ringing. What do y'all think?

terrifictimbersllc · September 20, 2017, 05:11:10 PM

Are you charging hourly, if so then I would think you would be doing jobs faster and more of them with the new mill. If by board foot then you should be finishing jobs faster, or sawing higher volumes of wood with bigger paychecks. Maybe get used to the new mill while deciding what to do with your charging. I'll bet you will see with a new mill that you are doing more sawing and offering more to the customer to justify an increase.

Bert · September 20, 2017, 05:41:39 PM

I think we all go through these things and you not going to know how you really feel about it until you've coughed up that 35k. Might be a sickening feeling at first, but turn out to be just what you needed. Or... you might wish you still had the old mill and better profit. I've won and lost so Im no real help. If i was happy where I'm at though, I'd stay there.

Stuart Caruk · September 20, 2017, 06:44:12 PM

Or you could pretend your a big business and just go lease (to purchase... with a low buyout) a new mill. It will cost you more than outright buying it, but if the business is there, the tax savings can make it a no brainer. If you have the $$$, remember that you can use Section 179 MACRS to wright off the entire cost of the purchase the year you put it into your business operation. This directly offsets your income, reducing the taxes you would otherwise pay. I use the section 179 write off every year to increase my asset base and reduce my income to the point where taxes are not an arm and a leg... This year for example they cost about a liver and a kidney...

78NHTFY · September 20, 2017, 09:48:08 PM

my 2 cents: a paid-for LT 30 in the hand is worth two unpaid-for wide LT40's (old saying?). Answer a few questions for yourself: presently running a profitable business & happy with it? Stay with what you have. Want to get bigger, busier, grow the business, start paying off debt again? Go for it! S.Caruk had great advice on the write off. Keep us posted on what you decide--all the best, Rob.

Crossroads · September 20, 2017, 11:15:42 PM

Thanks guys, those are all good points. At his point, I'm really trying to hold out until the new year for several reasons. One, I'm essentially taking October off to go hunting two, I just bought a 1 ton pickup that I'll write off this year and I'm guessing there might be more interest in my mill in the spring than there might be now. There is a lot to be said about the bird in the hand.... I guess I'm sort of at the crossroads of wanting to go full time and to do that I don't think I can pass up as many jobs as I do now. I'm extremely unhappy at my day job after 23 years and I'm really enjoying most of the people I meet while running the mill, not to mention it's fun making sawdust ;)

woodyone.john · September 21, 2017, 04:11:01 AM

How good is the condition of your current mill,How much time energy money do you put in to keep it that way.
Would a second or older hand super cost less and would you be happy to do the extra initial maintenance.If your mill is good and you know how to maintain a WM you could win all the way round. New is nice ,but at a cost.

Ianab · September 21, 2017, 05:29:54 AM

Yeah, a bit of a tough call.

Do the maths on going full time. The new mill will let you get significantly more production, so don't worry about having to put your hourly rate up. Customer is still getting more value for money, especially if you can saw 2X as much, for 50% more cost.

And as you have an established business, that is turning away work due to not enough hours in the week, that's a good sign the market is there.

But kicking the decision down the road for 6 months isn't a big deal either, especially if you plan to take a month off. Those first 24 months of a new business are usually the make or break period. You might have to put in the extra yards for little return in that time. If you make that period, then long term outlook / repeat business etc starts looking better.

YellowHammer · September 21, 2017, 06:19:30 AM

Does the $35k include the resale of your old mill? WM's have excellent resale, I sold my old one very quickly, and at a great price.

TKehl · September 21, 2017, 01:55:16 PM

Instead of trading for the 40 wide mill, why not add a swing mill to your operation? Would be 1/4 to 1/2 the cost of the 40 (depending on models) and are great for oversize logs.

Crossroads · September 21, 2017, 08:06:46 PM

Quote from: woodyone.john on September 21, 2017, 04:11:01 AM
How good is the condition of your current mill,How much time energy money do you put in to keep it that way.
Would a second or older hand super cost less and would you be happy to do the extra initial maintenance.If your mill is good and you know how to maintain a WM you could win all the way round. New is nice ,but at a cost.

Considering it's a 1985 is in pretty good shape and I'm a millwright by day so, maintenance isn't an issue. Although the size and early designs are limiting.

Crossroads · September 21, 2017, 08:09:39 PM

Quote from: YellowHammer on September 21, 2017, 06:19:30 AM
Does the $35k include the resale of your old mill? WM's have excellent resale, I sold my old one very quickly, and at a great price.

The $35k isn't taking the into consideration the sale of the current mill, that should knock about 10k off the price.

Crossroads · September 21, 2017, 08:15:39 PM

Quote from: TKehl on September 21, 2017, 01:55:16 PM
Instead of trading for the 40 wide mill, why not add a swing mill to your operation? Would be 1/4 to 1/2 the cost of the 40 (depending on models) and are great for oversize logs.

I've seriously considered adding a swing blade, but have decided to stick with the band mill. It's still going to limit me to 36", but I'm okay passing on anything that big for now.

dgdrls · September 21, 2017, 08:18:22 PM

Quote from: TKehl on September 21, 2017, 01:55:16 PM
Instead of trading for the 40 wide mill, why not add a swing mill to your operation? Would be 1/4 to 1/2 the cost of the 40 (depending on models) and are great for oversize logs.

I had the same thought or look to a Dimension mill

D

Bradm · September 21, 2017, 09:00:10 PM

Are you turning down profitable work due to your current limitations and not filling that time with other profitable work? If so, depending on the dollar amount missed, the new work could cover the payment without tapping into your current profits.

scully · September 21, 2017, 09:18:56 PM

Trade in the 35 and get a super 40 wide , don't look back . You won't lose on resale if you decide to unload it . 40 K !

Crossroads · September 22, 2017, 01:36:11 AM

After speaking with my accountant today, it seems that I might be better off making the purchase this year, even more specifically, this month. At least as far as taxes are concerned, since there's a possibility of our tax laws making some serious changes next year. I filled out an application this afternoon and am waiting to see what comes back. In the morning I'm going to call the WM in Portland to see what they have available. Wish me luck ;) and thanks for the responses, you've been helpful! Kevin

Satamax · September 22, 2017, 02:25:36 AM

Quote from: Ianab on September 21, 2017, 05:29:54 AM

Do the maths on going full time. The new mill will let you get significantly more production, so don't worry about having to put your hourly rate up. Customer is still getting more value for money, especially if you can saw 2X as much, for 50% more cost.

Well, Crossroads, i quote Ianab.

What he says is very nice. If, and only if the customers are aware of this. If you put your prices up, and first time customers don't realize they're getting better bang for the bucks. Than when you had the old 35. That's no good. May be printing a little leaflet explaining this would be a good idea. Even for returning customers.

Then, bringing your prices up, is a mater of what the competition does. No competition, no problem. But people will tend to go for the cheapest available on the market usually.

Ianab · September 22, 2017, 02:44:47 AM

QuoteWhat he says is very nice. If, and only if the customers are aware of this. If you put your prices up, and first time customers don't realize they're getting better bang for the bucks. Than when you had the old 35. That's no good. May be printing a little leaflet explaining this would be a good idea. Even for returning customers.

Good point. It would tie in with any advertising you are doing. "New Mill, faster cutting, call now, etc".

But if I need a hole dug, and I can hire an 8 ton digger, or a 20 ton machine. I expect the bigger machine to cost more per hour, but do the job much faster. Same with sawmills, just you may need to actually remind people of this.

Darrel · September 22, 2017, 05:42:05 AM

Quote from: Crossroads on September 22, 2017, 01:36:11 AM
After speaking with my accountant today, it seems that I might be better off making the purchase this year, even more specifically, this month. At least as far as taxes are concerned, since there's a possibility of our tax laws making some serious changes next year. I filled out an application this afternoon and am waiting to see what comes back. In the morning I'm going to call the WM in Portland to see what they have available. Wish me luck ;) and thanks for the responses, you've been helpful! Kevin

I wish you the very best. A new LT 40 is at 3X as much mill as the old LT30. You'll never regret the upgrade.

WV Sawmiller · September 22, 2017, 07:58:45 AM

X-road,

I never saw your answer to the question about whether you are billing hourly or by the bf. Since bf billing would be a moot point we all assume you are billing hourly. Until you get rid of the LT30 you could always advertise 2 rates - one for manual and one for the faster hydraulic mill. I can't imagine anyone wanting the manual option when they realize they get a bigger bang for their buck with the automated mill.

Good luck.

YellowHammer · September 22, 2017, 08:17:57 AM

Crossroads,
You will really get a lot more done, faster, easier, and with less issues. New mill with warranty, and increased capacity.

Congratulations.

Magicman · September 22, 2017, 08:54:41 AM

Crossroads is at the crossroads and the light just turned Green. 8)

Darrel · September 22, 2017, 10:27:38 AM

The LT50 is on sale right now and is only $300 more than a LT40 Super and more bells and whistles come standard on the LT50. Just a thought.

It's easy to sped someone else's money. (Old saying)

Crossroads · September 22, 2017, 05:16:54 PM

Quote from: WV Sawmiller on September 22, 2017, 07:58:45 AM
X-road,

I never saw your answer to the question about whether you are billing hourly or by the bf. Since bf billing would be a moot point we all assume you are billing hourly. Until you get rid of the LT30 you could always advertise 2 rates - one for manual and one for the faster hydraulic mill. I can't imagine anyone wanting the manual option when they realize they get a bigger bang for their buck with the automated mill.

Good luck.

Sorry about that, somehow I missed the billing question. I started out billing by the bf then when I did a job that was old twisted up maple and no way to make it on footage, I billed it by the hour and it worked out well So, I stuck with it because it was easy. Now I might be going back to bf since I should be picking up the new mill early next week:)