Profit

[gdh]

I'm not sure if the 27% profit works with a business like firewood, in reality we're all trying to make as much as possible (but probably coming out way under) rather than having a target figure.

 

Ours varies from year to year but it's never got that high, I expect we're like a lot of sellers where we've got x amount going out each month on overheads regardless so it's more dependant on sales than margin per cube.

 

I tend to do all my costings with myself in at a basic wage then if we make anything on top it's a bonus, which admittedly usually gets spent on wood anyway. 

[arboriculturist]

45 minutes ago, gdh said:

I'm not sure if the 27% profit works with a business like firewood, in reality we're all trying to make as much as possible (but probably coming out way under) rather than having a target figure.

 

Ours varies from year to year but it's never got that high, I expect we're like a lot of sellers where we've got x amount going out each month on overheads regardless so it's more dependant on sales than margin per cube.

 

I tend to do all my costings with myself in at a basic wage then if we make anything on top it's a bonus, which admittedly usually gets spent on wood anyway. 

GDH is correct, a lot depends on sales. Last Winter was poor compared to the previous year and as some fixed costs don't alter, the Profit Margin was reduced due to less sales.

 

We have almost reached critical mass - i.e. no further investment is required to increase turnover, however being in a rural area we are able to saturate the market and therefore it is very hard to increase sales.

 

It is not as though we can introduce other products to grow sales, the demand is Firewood and anything with lower value is not viable to deliver free. Always open to ideas though.

Edited May 28, 2019 by arboriculturist

[ash_smith123]

Not sure about the rest of the UK but there's been a lot of grants the last few years in Wales. Usually around 40% so the chances are pretty good they've had one. 
 
We've gone for 2 in the last 10 years and they're obviously a big help but I'm not sure I would go through it again - the paperwork is horrendous as an understatement and there's a lot of conditions attached; you have to create a job, machinery has to be new, multiple quotes through specific websites, keep everything for 5 years etc. On top of that we had to start a separate business as agriculture is exempt and there's still a couple of loans to pay off.
 
Obviously that's no issue though, life is easy on 'Daddys farm' [emoji6]

Not easy.... Easier [emoji57]

[gdh]

9 minutes ago, ash_smith123 said:

Not easy.... Easier

You've probably got a point, we only expanded rapidly because we could rent machinery and sheds off the farm business. There's realistically not many other savings though if you actually cost things properly. We've somehow got ourselves in the position of the firewood supporting the farm business but I think that's more issues with farming than success with firewood if I'm honest.

 

On a side note if you're looking at 50k rent wouldn't you be better off buying a couple of acres and building a shed or is that a non starter with planning? Just thinking that's 250k over 5 years and you could do an amazing yard with that.

[ash_smith123]

You've probably got a point, we only expanded rapidly because we could rent machinery and sheds off the farm business. There's realistically not many other savings though if you actually cost things properly. We've somehow got ourselves in the position of the firewood supporting the farm business but I think that's more issues with farming than success with firewood if I'm honest.
 
On a side note if you're looking at 50k rent wouldn't you be better off buying a couple of acres and building a shed or is that a non starter with planning? Just thinking that's 250k over 5 years and you could do an amazing yard with that.

Yes it's a non starter at the moment with planning being a major issue and having the money upfront to do something like that! We would need a unit 14/15,000sqf minimum really and you probably wouldn't get much change from £100k doing a concrete base and putting up a unit that size maybe more, plus putting 3 phase electric into it.
Land is also quite expensive around here, a nice plot with a few old barns on it came up last year for £375k. On a commercial mortgage we'd need the best part of £150k for a deposit. Plus your £100k+ to build a unit. I wish we had that much cash to throw at it [emoji23]

[arboriculturist]

The original poster said:

'My main job is landscape gardening etc but wanting to do less of this and focus more on the firewood instead but is it worth the switch due to running cost and the price of timber increasing if you can find it?'

Surely to move from Landscape Gardening to Firewood is madness if you live in an area where people have money.

 

It seems that the general consensus on this thread is that even on a large scale, retailing Firewood is not an attractive business as far as profit margins go, even when you become a 'large' producer. A huge investment is required in machinery, running costs are high due to  the amount of labour required, fuel, maintenance, delivery costs etc. etc.

 

Those that kiln dry the wood are now faced with the recent spate of timber price rises, which has dramatically increased the cost of the drying even those on the RHI tarriff. Timber price rises have also reduced our margins, as most of us have been unable to increase our prices in line with the rate at which the timber price has risen.

Actually finding timber is getting harder and harder as we all know, most that is harvested is now going to the biomass electricity plants.

 

You start to wonder if due to the cost of firewood now, people are starting to burn less of it.

 

I havn't heard of anyone new starting up new Firewood businesses for years now in our region of the country, but plenty throwing in the towel! 

 

 

Edited May 29, 2019 by arboriculturist

[ash_smith123]

I would probably get a little unit with a forklift and delivery truck and import everything. If you find a tidy supplier there's still good money in it if you can get the customers but again your right in a minimum of 2000 cube a year to make a good wage. Low starting and running costs.

[neiln]

4 hours ago, arboriculturist said:

 

You start to wonder if due to the cost of firewood now, people are starting to burn less of it.

 

 

For those that burn it for ambience, as a luxury, there is probably some link to increased cost = burn less.  Ironically it likely drives that type of consumer to either burn cheap, wet rubbish, or to cut back from their 2-3 m³ a winter to just a couple of dozen sack fulls from the garden centre. Or they switch to coal/smokeless.

[arboriculturist]

31 minutes ago, neiln said:

For those that burn it for ambience, as a luxury, there is probably some link to increased cost = burn less.  Ironically it likely drives that type of consumer to either burn cheap, wet rubbish, or to cut back from their 2-3 m³ a winter to just a couple of dozen sack fulls from the garden centre. Or they switch to coal/smokeless.

Yes, I've seen some pubs we supplied switch to coal. I think the whole imported kiln dried market will not find it easy in the next year or 2, exchange rate, Brexit and the fact that more people are buying with environmental conscientiousness! 

 

[Gary Prentice]

4 hours ago, arboriculturist said:

Yes, I've seen some pubs we supplied switch to coal. I think the whole imported kiln dried market will not find it easy in the next year or 2, exchange rate, Brexit and the fact that more people are buying with environmental conscientiousness! 

 

Are imported kiln dried logs any worse (forgetting the ecological importance of some of the forests that they are harvested from) than power stations running on woodchip that is transported across the Atlantic from the USA? And don't even mention where some of that is reportedly sourced!!!

 

Not trolling, just asking purely to encourage debate. Personally I'd like to reduce my own carbon footprint but sometimes I'm not sure you can do right for doing wrong.