Starting a firewood business can be a rewarding venture for those who appreciate hard work and have a passion for the outdoors. Whether you’re looking to generate a side income or build a full-fledged enterprise, this guide will provide you with valuable insights and practical steps to help you get started. There is a steady demand for quality firewood, so with some hard work and smart planning, you can build a successful small business.
In this guide, we’ll give you an overview of the firewood industry and what’s involved in starting your own operation.
Business Overview
A firewood business involves sourcing, processing, and selling firewood to customers. Potential customers range from homeowners using firewood to heat their homes, to businesses such as restaurants and hotels using wood-fired ovens. The business encompasses various elements, including sourcing sustainable wood, understanding the seasoning process, and ensuring a constant supply to meet the demands.
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Industry Summary
The firewood industry is driven by the demand for sustainable and cost-effective heating solutions. With growing environmental concerns and rising energy costs, many individuals and businesses are turning to firewood as an alternative or supplementary heat source. The industry is highly localized, with regional variations in demand, pricing, and regulations. By understanding the dynamics of the industry in your specific area, you can better position your business to meet the needs of your target market.
In addition to home heating, firepits are very popular, as are campgrounds full of people who need firewood. It is an industry that can be somewhat affected by economic fluctuations because it is not a necessary expense for most unless it is for a home heated by a wood-burning stove.
Steps To Start A Firewood Business
Starting a firewood business takes more than just being able to chop wood and deliver it. You also need strong business, planning, and customer service skills. This guide provides the information you need to evaluate if a firewood business is right for you.
Step 1: Research Local Regulations
Many people don’t realize there are a lot of restrictions on selling firewood, so the very first step in launching your firewood business is to understand the local regulations that govern the forestry and firewood industry. The United States Department of Agriculture Forest Service and individual states have requirements for harvesting trees and selling firewood outside certain areas. Additionally, some permitting is required of businesses selling firewood.
Here’s a few ways on how you can go about researching the local regulations for firewood:
- Consult official government websites: Visit the websites of relevant government agencies responsible for forestry, agriculture, or environmental conservation in your region. Look for sections or resources specifically addressing firewood regulations, movement restrictions, and any required permits.
- Contact local authorities: Reach out to your local city or county authorities, such as zoning boards or environmental departments, to inquire about the regulations pertaining to the storage, processing, and sale of firewood. They can provide you with detailed information and guidance.
- Use online resources: Explore online resources like the Don’t Move Firewood website, which provides an interactive map allowing you to click on your state or province to learn more about local regulations and responsible firewood use.
- Join industry associations: Joining industry associations and networking with fellow firewood business owners can provide valuable insights into local regulations. These associations often have resources or forums where members can exchange information and discuss regulatory requirements.
- Consult local experts: Seek advice from professionals in the field, such as arborists, forestry consultants, or experienced firewood business owners in your area. Their expertise and experience can help you navigate the regulatory landscape and ensure compliance.
Firewood regulations can vary from state to state or even within different regions of the same state. It’s essential to conduct thorough research and stay updated on any changes in regulations that may impact your business operations. By understanding and adhering to local regulations, you can operate your firewood business responsibly and minimize any potential legal issues.
Step 2: Find Reliable Sources of Wood
After researching local regulations, and there is nothing stopping you from moving ahead, the next step is to make sure there is a steady supply of raw wood materials available. Without access to an affordable and consistent source of logs, it will be very difficult to keep your business running. If you don’t already have a reliable supply, here are some suggestions for locating good firewood sources.
First, you could talk to people who deal a lot with, like tree care companies and arborists who often have an abundance of logs and tree trimmings they need to dispose of from their job sites. Contact them to ask if you can collect this wood waste for your firewood business. This collaboration helps both parties.
Another idea is to keep an eye on ads in the newspaper or on social media. Sometimes, people and logging operations sell wood through these ads, and you can get good deals. Visiting places where they cut and store large amounts of wood, like timber yards, could also be a great idea. They might sell you wood in large quantities, which means you won’t run out of your ‘ingredients’ too quickly!
Many governmental forestry services allow individuals to gather deadwood from forests with a permit. Apply for a collection permit to access this supply of fallen branches and trees. Make sure to follow all guidelines for tree species and harvesting methods.
Also, you can check with local farms or landowners: Contact owners of large rural properties to ask if you can collect unused or fallen wood on their land. Offer to split the profits or provide free firewood in return.
Step 3: Register the Business
In addition to being registered to legally sell firewood, there are a number of general local, state, and federal business registrations to research. A few of these include forming a business structure, having a sales tax permit, obtaining an Employer Identification Number, and possibly others.
Business structure: Determine the most suitable business structure for your firewood business. The four common types of structures are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). Each structure has its own advantages and considerations.
Related: Comparison of business structures
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
Obtain business licenses and permits: Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, and Employer Identification Number (EIN).
Related: What licenses does a firewood business need?
Step 4: Purchase Equipment
Once you have secured funding and registered your firewood business, it’s time to equip yourself with the necessary tools and equipment.
Knowing exactly what equipment you need will help you budget accurately and avoid unnecessary expenses. So, create a list of essential tools and machinery such as log splitters, chainsaws, trucks for transportation, and safety gear. Take stock of what you already have and purchase the rest.
Be sure to keep receipts for any equipment, as this is a deductible business expense!
Step 5: Secure a Storage Facility
When you’re in the firewood business, having a place to store wood properly is a big deal. It’s not just about piling wood; it involves selecting an area to ensure the wood remains dry, safe, and ready for sale.
Your personal residence will probably be the most common location to store firewood ready for sale. Firewood needs proper ventilation to prevent mold, mildew, and decay, so keep this in mind when setting up a place to store the wood to season.
Step 6: Create a Marketing Plan
As you move closer to starting your business, it’s time to finalize plans to let people know that you have firewood to sell. Selling firewood is typically a seasonal business, but there may be a market year-round in some areas. Campfires and firepits will need firewood in the warmer months, while indoor fireplace customers will buy in the colder months.
Your marketing strategy will vary depending on who you plan to sell wood to, but some common marketing techniques for a firewood business include social media marketing and online advertising on places like Craigslist, as well as flyers and postcard mailers. Having an informative website that ranks high in search engines for relevant keywords like “firewood delivery” or “where to buy firewood” makes it easy for potential customers to find you online. Also, maintaining active pages on Facebook and Instagram allows you to share photos of your wood piles, promote specials, and interact with potential customers.
Although digital marketing is popular, traditional marketing methods still hold value in the firewood industry. You can distribute business cards or flyers on local bulletin boards or place eye-catching signs near the roadside to advertise firewood for sale, which can be very effective.
Related: Low-cost ideas to market a new business
Step 7: Prepare to Launch!
Before starting your firewood service, there are several remaining steps you may need to consider:
Business insurance: Protect your business from potential risks and liabilities by obtaining appropriate business insurance coverage, such as general liability insurance, to protect against property damage, accidents, and other risks. We recommend getting at least three insurance quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.
Bookkeeping: Set up an accounting system to track income, expenses, and profit/loss. Wave Accounting (FREE) or Quickbooks are popular software programs, but even Excel or pen and paper can work for basic record-keeping needs.
Bank bank account: Establish a dedicated business bank account to separate your personal and business finances. This will help keep your financial records organized and simplify tax reporting.
Pricing strategy: Research going rates in your area and factor in costs of wood, labor, and delivery. Most businesses charge by the cord, half cord, pickup truck load, etc.
Accepting credit cards: Explore credit card processing options to provide convenient payment methods for your customers. Services like Square or Stripe can enable you to accept credit card payments securely on the go.
Common Questions When Starting A Firewood Business
How much does it cost to start a firewood business?
Assuming you are starting from scratch, the average firewood company costs between $13,000 and $30,000 to start. Here are some key costs to consider:
Chainsaw: $300 to $600 for a professional-grade gas chainsaw. This is the primary tool for harvesting trees and slicing logs.
Log splitter: $1,200 to $3,000 for a gas-powered hydraulic splitter to increase splitting efficiency.
Truck: A used heavy-duty pickup can cost between $8,000 to $15,000.
Storage: Land, shed construction, or shipping containers for drying and stockpiling wood. Around $2,000 to $5,000.
Safety gear: $500 for chainsaw-proof chaps, gloves, goggles, ear protection, and first aid equipment.
Insurance: General liability coverage will likely be $1,000 or more annually.
Licensing & legal: $100 to $1,500 for business licensing, permits, etc.
Marketing: $500 to $5,000 for website, logo, business cards, and online ads.
How profitable is a firewood business?
A common rule of thumb is that one cord of firewood (a stack measuring 4x4x8 feet) yields a profit between $100 to $200 when sold. This factors in the costs of wood harvesting, transportation, splitting, drying, storage, and delivery to customers.
So, for example, if a business sells 500 cords annually at an average cost of $150 per cord, the total annual revenue would be $75,000 (500 cords x $150 profit per cord).
Now, let’s deduct the estimated expenses from this revenue to calculate the potential profit. Expenses may include costs such as raw materials, equipment, transportation, labor, marketing, insurance, and overhead.
For the sake of simplicity, let’s assume the wood is being purchased and there are no employees. Industry averages show that the cost of sales averages about 60% of sales when purchasing from a firewood processor, while other overhead expenses (assuming no labor) are about 10% of sales. In this scenario, expenses would be 70% of the revenue ($75,000 x 0.7 = $52,500).
Subtracting the expenses from the revenue, the potential profit of this firewood business would be $22,500 ($75,000 – $52,500).
Of course, there are some key variables that affect net income, a few of which include:
– Wholesale log prices when purchasing source wood
– Efficiency of splitting/processing workflow
– Delivery range and associated transportation fees
– Ability to consistently meet local firewood demand
– Premiums charged for properly seasoned wood
It’s important to note that these calculations are based on rough estimates and assumptions. The actual profit of a firewood business can vary significantly depending on factors such as market demand, pricing strategy, operational efficiency, and cost management.
What skills are useful when running a firewood business?
Several skills are useful in running a firewood business. Here are some key skills that can contribute to success in this industry:
Business knowledge: Having a basic understanding of marketing, finance/accounting, and human resources is important. This knowledge can help you effectively manage various aspects of your firewood business, such as developing marketing strategies, handling financial transactions, and managing employees.
Organizational skills: Good organizational skills are essential for keeping track of stock, client orders, and deliveries. This includes managing inventory, scheduling deliveries, and maintaining accurate records.
Customer service: Providing excellent customer service is crucial for building a loyal customer base. Being able to effectively communicate with customers, address their needs, and handle inquiries or complaints professionally can help establish a positive reputation for your business.
Logging skills: While not mandatory, having some logging skills can be advantageous. Understanding different wood species, proper tree felling techniques, and safe chainsaw operation can aid in sourcing and processing firewood efficiently.
Problem-solving abilities: Running a firewood business requires the ability to solve problems quickly and efficiently. This skill is especially important when facing challenges such as equipment malfunctions, supplier issues, or unexpected changes in demand.
Physical stamina: Physical stamina is necessary for tasks such as cutting, splitting, stacking, and delivering firewood. Being physically fit and enduring long hours of labor-intensive work can contribute to productivity and efficiency in your operations.
Marketing skills: Basic marketing skills can help you promote your firewood business effectively. This includes understanding target markets, developing marketing strategies, utilizing online platforms, and implementing branding techniques to differentiate your business from competitors.
Remember, while these skills are beneficial, it’s also possible to acquire or develop them over time.
What is the NAICS code for a firewood business?
The NAICS code for a firewood business is 454310, which is classified under Fuel Dealers.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
