How To Start And Operate A Firewood Supply Business

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Unpredictable fuel costs and the necessity of keeping warm in the
winter have resulted in "boom sales" for manufacturers of wood
burning stoves. There has also been a return to the use of the
fireplace as a form of supplementary heat and as a luxury that
promotes the "cosy" atmosphere sought after by both middle class
and affluent families. This renaissance in the popularity of wood
heat, and upward spiralling sales of associated equipment, has
created a demand for firewood that's almost impossible to fulfil!

A very important element: This demand has caused the price of
firewood to almost double over the past several years. Whatever
the "going price" for firewood in your area, you can expect it to
increase by 20 to 30 percent each year for the next ten years or
so.

Your potential market is as varied as the weather; it is also
somewhat dependent on the weather. You'll find buyers among flat
dwellers as well as home owners. The rich are buying firewood
perhaps more than the poor; those concerned with the purity of the
environment and the so-called "voluntary simplicity" folk seeking
a return to the "pioneering" life are all part of your market.

One of the secrets of success in this business is understanding
why the people in your area burn firewood. Then it's a matter of
learning when and how often they need it, and positioning yourself
to fill those needs.

It doesn't take special education or training to become a
successful firewood supplier. Just for the record, the
backgrounds of people operating businesses of this kind range from
farmers to unemployed factory workers to doctors, lawyers, and
even university professors.

The kind of equipment you'll need varies according to the type of
business you want to establish, and the kind of wood you will be
supplying.

The first prerequisite to the establishment of your business is to
decide what kind of business - wholesale to retail outlets, or
retail to the general public - you want to operate.

Next, you'll have to decide on the type of firewood you will sell.
There are three major categories: 1) mill ends or sawed up scrap
lumber and kindling, 2) whole logs for the buyer to cut according
to his own specifications, 3) fireplace and stove wood, cut and
split according to the general requirements of your market area.

Your next step is to line up a source of supply. Actually, it's
best to "lock in" a number of sources of supply. Later on, as
your business develops and grows, you may want to offer several
different kinds of firewood, that is, become a full service dealer
offering firewood to meet everyone's needs and fancies in your
area. We'll discuss different categories of wood in demand, so
that you can explore sources of supply and costs.

MILL ENDS: Your best source of supply for this type of wood is
the sawmills in your area. If you live in a city, take a few
weekend trips to the small towns in the countryside. With a
little bit of initiative on your part, you should be able to
discover any number of small sawmill operations within reasonable
distance of your home.

What you'll want to do is buy a truckload of mill ends, take them
home and package them into sacks of firewood. Thus, a load of
mill ends that you might buy for œ50 would be broken down into
perhaps 200 sackfuls that you sell for œ5 a sack. Multiply these
200 sacks of firewood times œ5 each, and you have a gross income
of 31,000 for a load of wood costing you only œ50. You wouldn't
have to be very smart to realise that's pretty good, providing
your sources of supply can keep up with the demand.

The beauty of mill ends is that they are clean, burn easily and
fast, put out a lot of heat, and when broken down into sackfuls
are ideal for flat occupants, as well as people who only need a
minimal amount for each winter. Until you have a large full
service firewood supply operation, it's suggested that you leave
the sale of truckload supplies of mill ends to the larger, more
established firewood suppliers. My advice here is that you should
stay within your capabilities of supplying the buying demands of
your market, and further concentrate on selling what brings you
the greatest profit. However, as your operation grows, the supply
of truckloads of mill end firewood is definitely worth
considering.

Other sources of supply for mill end lumber will be your local
lumber yards, woodworking or furniture manufacturing firms, and
home building or remodeling contractors. In many instances, you
can offer to stop by these places about once a week and clean up
the worksite by hauling away the scrap lumber, and they'll let you
have it without cost. It is possible to even get paid for doing
this. The only drawback will be that you'll have to sort this
wood, and then saw it up into the sizes you want for your bundles
or sacks. This is no big deal, because you can handle a trailer
load with a power saw in just a couple of hours.
When you have the wood ready to package into sacks, you'll save
time and increase your profits by hiring a couple of college
students. Contact the counsellors at one of the local colleges,
explain that you need a couple of students for part time work
sacking firewood, and you'll have all the help you need.

As for how much to pay them, establish a pay rate for 100 full
sacks. Of two students, one would hold open a sack while the
other uses a shovel to pick up the wood and dump it into the sack.
Between them, they can gather the top of the sack and tie it with
twine. The full sacks, of course, must be stacked on a pallet or
in an area ready for selling. Check the time it takes two good
students, working at a reasonable fast rate, to load 100 sacks.
Knowing the current minimum hourly wage rate, you can then
determine the labour value of 100 loaded sacks.

For a supply of the bags to put the wood into, check with a
farmers' feed store. If you buy in quantity, you can get them at
a very reasonable price. You can purchase twine for tying the
sacks at the same place.

WHOLE LOGS: Many people have chain saws and fancy themselves as
"do it yourselfers", but they don't have the time to go out into
the woods and bring back firewood. If you can supply these people
with a location not too far from home, where they can saw and
split their own firewood, you'll have a steady stream of
customers. You'll need a large vacant site - about half to a
whole acre - and preferably on the outskirts of your area. The
first thing will be to put up a 6 foot fence around your ground,
and then a small garden shed type building to serve as your
office.

Contact a sawmill or logging operation not too far from where you
want to open your business. Arrange with them to deliver whole
logs (lumber rejects) to your wood lot. Your costs shouldn't run
much more than œ10 per log, even for premium wood, but will depend
upon the size and number delivered in each load.

Still another source of supply is the farmers in your area. Talk
with them, and offer to "thin out" areas of standing timber, and
the downed trees. Sometimes, you can get this wood at no cost
other than offering the land owner a share of the timber you take
out. He may even consider your "thinning" and hauling an even
exchange for the logs.

Don't forget about the road building construction companies, and
commercial and residential developers as sources of supply.
Actually, once you get into this business, you'll find sources of
supply virtually unlimited, and restricted only by your own
initiative in making contact with the property owners.

Once you have a supply of logs within your wood lot, there are
many things you can do to attract customers. Run an advertisement
in your local paper inviting "do it yourselfers" to come out and
cut their own firewood. You charge them twice as much per log as
your cost, and they do the sawing, the splitting, the loading, and
provide their own car or truck to take them home. You are there
only to supervise and receive payment.

You could also rent chain saws, axes, and the use of your power
splitter. Allow the customer to select the log of his choice,
and then have the hired help - students, perhaps - who would saw,
split and load this wood into the buyer's vehicle. The ultimate,
of course, would be to include delivery and stacking of this wood
at the customer's home.

FIREWOOD AND STOVE WOOD: In running a programme of pre-cut and
split fireplace and stove wood, you combine all the principles
we've discussed so far, into either a wholesale or retail firewood
supply sales outlet.

The easiest and most profitable operating procedure is to set up a
wood lot where whole logs are delivered to your location. Part
time workers saw these logs into 16 to 24 inch lengths for you,
and stack the wood onto pallets.

If you can set your business up along these lines, you'll realise
the greatest profits and not have to get involved in the physical
part of the business. The big thing to remember is that - as the
business owner and operator - your time should be devoted to
selling the end product.

If you decide to be a wholesale supplier, and sell to retailers,
advertise for and hire commission sales people to call on the
retail outlets in your area. You'll need help in covering all the
possible opportunities for retail sales of your firewood.

You should be selling sacks and pallet loads of firewood.
Remember: the more you can divide a basic cord of firewood into
sacks or pallet loads, the greater profit you're going to make
from each cord of wood you sell.

You'll have most people buying cords or truck load quantities of
firewood before cold weather sets in, and after that, people will
buy in quantities only large enough to get by, or to last out a
sudden cold spell. If you should also sell bags and pallets of
wood to the general public, after setting up retail sales outlets,
be sure that your prices at least "average" those being charged by
the retail sellers. Never "undercut" the price your retail people
are charging.

If you decide to do all the selling yourself - in other words, act
as your own retail outlet - you'll need to advertise.

Start out with a large three-column wide, by four inch deep
display ad in your local paper. Unless you've had advertising
experience, get the paper to help you with the layout and writing
of this ad.

Plan the appearance of this advertisement for a Saturday morning
paper. Make your opening a big event - much the same as a grand
opening or special anniversary sale - with free drinks, snacks,
and balloons for the kids. Ideally, the opening of this kind of
business should be staged on a weekend in late September or early
October, and designed to acquaint the people in your area with
your firewood business.

Get the name, address and phone number of everyone who shows up.
This can be handled very unobtrusively by giving away free prizes
requiring the attendees to your event to fill out simple prize
draw forms. The prizes can be a free log of wood, dinner for two
in a local restaurant, or even cinema passes.

The whole purpose of your grand opening show is to let people know
that you're open to serve their needs; to get them to discover
your location; and to implant in their minds the memory that you
can supply them with the means to keep warm when the weather turns
cold.

Quite naturally, many will find your services to be more
convenient, time-saving and less bother than whatever methods
they're currently using. As you talk with your customers, listen
to their "complaints" about their present methods of firewood
procurement, and then alleviate those problems with the services
you provide.

After your grand opening, a small 2 by 4 inches display ad in the
yellow pages of your telephone directory plus the posting of
advertising circulars and business cards left with woodstove and
fireplace suppliers, insulation and remodelling contractors and
lumber yards in your area is about all the advertising you'll need
to do. However, it would be wise to follow the lead of the "snow
tyre" people, and whenever the weather forecast shows a cold front
or winter storm moving in, again invest some money in radio and
newspaper advertising.

Statistics prove that 20 percent of your potential market will
prepare for cold weather by purchasing before the cold weather
sets in. Another 30 percent of the market will wait until the
first cold weather spell hits, then buy from the first supplier
that comes to mind. Finally, the remaining people will have to be
"sold" via suggestion of the benefits your business provides.

This is the period when you begin profiting from those names,
addresses and telephone numbers of people who turned out for your
big opening event. Simply set up a telephone selling programme
utilising the services of commission telephone sales people, and
follow up on those who had registered.

You can conceivably operate this business from your home or
backyard, and definitely on a part time basis, but the prospects
of immediate success, with outstanding profits, are so great that
it would be wise to plan on a big operation from the start.

A receipt pad for taking orders, a "daily diary" or ledger type of
book-keeping system, a calculator and a telephone should suffice
for office supplies and equipment. Until you're over the hump on
the profit side, you can keep your sales receipts on a shoebox or
daily staple together and store in chronological order.

A couple of other points to remember: Hardwood burns the longest
and gives off the most heat; firewood that has been cut in the
spring and seasoned through the summer is the kind most people
will be willing to pay premium prices for; and giving the customer
a "little extra" for his money will result in greater and longer
success than quick profit schemes.

Once you've got your basic firewood supply business on a
profitable basis and running smoothly, you'll find your facilities
and business expertise ideally suited to adding extra profit
producing lines such as the sale of firewood accessories,
woodstoves, built in fireplaces, home insulation, or weathering
services, recycling, and perhaps even home remodelling.
:FRANCISEIDEA
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3309 HOW TO GET MONEY FOR A FRANCHISE IDEA
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How often have you thumbed through a business opportunity
magazine, noticed a franchise opportunity advertisement, and felt
you'd really like to get in on that ... if only you had the money?
If you're like most who are seeking greater opportunity and
wealth, this probably happens with you more often than you care to
admit, except perhaps in strictly private conversations.

When the average person sees one of these opportunities, or comes
up with a similar idea of his own, the problems of start-up
capital may seem formidable. But in reality, they may not be. In
fact, just about anyone with a good credit record and an
"insider's sense of business" can get the capital he or she needs,
whenever it's needed. The secret is in knowing how to put
together a proper proposal, and to present it to the right person.
These are the "how-to" instructions we're going to give you in
this report.

The first thing you're going to need is a complete business plan.
This is a complete and detailed description of exactly how you
intend to operate the proposed business. Your business plan
should detail precisely the product or products you plan to sell;
how you're going to produce or manufacture the product; your costs
(inventory costs if you're purchasing them from a supplier); who
is going to sell those products for you; how they're going to be
sold; the attendant costs; when you expect to recoup your initial
investment; your plans for growth or expansion; and the total
amount you're going to need to make it all work according to your
plan. Your business plan must be detailed -- complete with
projected income and expense figures -- through at least the first
three years of business.

Now, assuming you have your business plan all worked out, put
together and ready for presentation with your request for capital,
let's talk about your capitalisation proposal.

First, keep in mind that whenever you ask somebody for money,
whether it's for a small personal loan or a large amount of money
to fiance a business, you're involved in a selling situation. You
have to prepare a "sales presentation" just as if you were getting
ready to sell an car or fridge. Within this sales presentation
you must have all the facts and figures; you must anticipate the
questions and the possible objections of the prospective lender
with answers or explanations; and you must "package" it as
impressively as you would yourself for an audience with the
president of British Telecom, or IBM.

The more money you ask for, the more "in the know" will be the
people you want to borrow from, and so the more detailed and
organised your proposal must be. This shouldn't cause you too
much worry however, because you can hire a CPA to help you put it
together properly, once you've got the facts and have a business
plan he can work from.

Look at it this way: the more money you request for your business,
the more your lenders or prospective investors are going to want
to know about you, your planning, and your business. They want to
be impressed with the fact that you've done your homework; they
want to be impressed with the fact that you've researched
everything and documented your facts and figures; they want to be
assured by your presentatiron that investing in your business will
make money for them. It's just that simple at the bottom line.
Unless you can instill confidence in them with your business plan
and loan or investment proposal, they're just not going to give
much positive thought to your request for capitalisation.

So you'll need a balance sheet describing your net worth -- the
worth of what you own compared to the amount of money you owe.
You'll also have to prove your stability and money management
talents relative to how successful you've been in paying off past
obligations. If you have had credit problems in the past, get
them "cleaned up", or at least explained on your files at the
national credit bureaus. Under the law, credit bureaus are
required to give you all the information they have about you in
their files, and it's your right to correct any errors or enter
explanations regarding negative reports on your credit. Do this
without fail because prospective lenders or investors will
definitely check your credit history.

So, now you have your balance sheet preapred; your credit history
organised in a light that's favourable to you; your business plan
(with costs and income projected over the coming three years), and
you're ready to start looking for lenders or investors.

Almost all franchisors offer help in setting up with one of their
franchises. Most will go out of their way to assist you in
getting the financing you need. Some will lend you the entire
amount, with payments coming out of the income they expect you to
make from their franchise operation. Many will carry this loan
themselves, while others will carry part of it and find you a
lender to finance the remainder.
Franchisors have two objectives in mind when they offer franchises
to the public: They are trying to expand their operation, thus
increasing their profit, and they are trying to raise capital for
themselves. Generally speaking, if you have a good credit
history, and if they feel you have the necessary business
personality to achieve success with one of their operations,
they'll do everything within their power to get you in a franchise
outlet. Keep this in mind the next time you see an advertisemenet
for a promising franchise opportunity requiring a substantial
amount of cash outlay. You don't necessary have to have all the
money. They want you, and they'll help you!

Many people seem to be unaware that most of today's largest
corporations started on a shoestring -- on borrowed money. Many
people seem to think that unless they've got it all "in hand" in
savings, then they'll just have to keep plugging away until they
can save up enough to take the big plunge. Nothing could be
further from the truth. Just a quick bit of research will show
that 999 out of every 1,000 businesses were begun on borrowed
money.

Look to your family and friends for financial help. Approach them
in a business-like manner; tell them about your idea or plans, and
ask them for a loan. Agree to sign a formal statement to pay them
back in three, five or ten years, with interest.

When you have your proposal assembled, you might even want to
think of a limited partnership or even a general partnership
arrangement as a way to finance your project. In any kind of
partnership, each partner shares in the profits of the company,
but in a limited partnership, each person's loss liability is
limited to the amount of money he initially invested. The truth
is, in this kind of a situation, you'll be doing all the work and
sharing your gain with your partners, but then it's a fairly sure
way to obtain needed financing.

In every instance where you run into reluctance on the part of a
lender to lend you the money you need, explore the feasibilities
of "two-name" or "co-signed" loans. You can have the franchisor
sign with you, or even one of your suppliers, a business
associate, or even a friend. Often you can borrow or rent
collateral such as business equipment or property, and in this way
give greater confidence to the lender in your abilities to repay
the loan. Whenever you can show a contract from someone who has
agreed to purcahse a certain number of your products or services
over a specified period of time, you have another important piece
of paper that most lenders will accept as collateral. Still
another possibility might be to get a bank or a firm that has
loaned you money in the past to guarantee your loan. They simply
guarantee that they'll lend you money if the need should arise.

Going straight to your local bank, applying for a business loan
and walking out with the money is just about the most unlikely of
all your possibilities. Banks want to lend money, and they must
lend money in order to stay in business, but most banks are
notoriously conservative and extremely reluctant to lend you money
unless you have a "regular income" that "guarantees" repayment.
If and when you approach a bank for a business loan, you'll need
all your papers in order -- your financial statement, your
business plan, credit history, and all the endorsements you can
get relative to your succeeding with your planned enterprise. In
addition, it would be a good idea to take along your accountant
just to assure the banker that your plan is verifiable. In the
end, you'll find that it all boils down to whether or not the bank
officer studying your application is sold on you as a good credit
risk. Thus you must impress your banker -- not only with your
proposal, but with your appearance and personality as well. In
dealing with bankers, never show an attirude of doubt or apology.
Always be positive and sure of yourself. However, don't come on
so strong to them that you're either demanding or overbearing.
Just look good, know your stuff, and project an attitude of
determination to succeed.

When you're looking for money to move on a business deal, it does
not really matter where the money comes from, or how it all comes
about. It's important that you get the money, and at terms that
are suitable to you. Thus, don't overlook the possibilities of an
advertisement for a lender or investor in your local papers.
Place your ad as well in national publications reaching people
looking for investments. Other avenues to seriously consider are
foundations that offer grants, local dental and medical investment
groups, legal investment grups, business associations, trust
companies, and other groups or organisations looking for tax
shelters.

Basically, it isn't a good idea to go to a finance company or
other commercial lender of this type for a business loan. The
most obvious reason is the high interest rates you have to pay.
These companies borrow money from larger money lenders and then
turn around and lend it to you at a high interest rate that they
pay. Herein lies the means by which they make money from granting
loans to you. The more it costs them to privide the money for
you, the more it's going to cost you to borrow their money. The
only element in your favour when borrowing from one of these
agencies is that most will generally lend you money against
collateral other lenders won't always accept. Insurance
companies and pension funds are not too out of sight with their
interest rates, but they generally will not even consider talking
to you unless you're requesting œ500,000 or more. They'll require
that your business proposal be backed by the best possible plan.
Finally, the bottom line is this: You must have a well-researched
and detailed business plan; you must have all your documents and
projections put together in an impressive presentation; and then,
you will have to be the one who does the final selling of your
proposal to the investor or lender. This means your appearance,
personality and attitude, because --- make no mistake about it ---
before anyone lends you any sizeable amount of money, they're
going to want to take a close look at you personally before they
hand over the money.

Actually, the different ways of financing a franchise opportunity
are as many and varied as your own creativity. The sources of
obtaining money are virtually limitless, and available to anyone
with an idea.

One word of caution before you jump into any franchise purchase
agreement: the price you pay to participate in a franchise
operation is not always the total cost involved in getting the
business off the ground. With some franchise operations, you may
find other costs such as down payments on the purchase of
property, building construction costs, remodelling or site
improvements, equipment, fixtures, signs, advertising, and
training. Virtually all franchise deals require that in addition
to the purchase price or the licence fee of the franchise, you're
required to give a certain percentage of your gross business
income to the franchisor, plus extra payments for promotion and
administrative costs. Above all else, before you get involved in
a franchise, or any business venture for that matter, make sure
you've conducted a complete and thorough investigation of the
opportunity presented. If it's a good deal, then go with it; but
if you have any doubts or feel as though you're getting in over
your head, back off and look around for something not quite so
ambitious, or perhaps expensive.

There are a lot of good franchise opportunities, and some not so
good. It's important that you be sure of what you're investing
in, and that you can make money with it. From there, preparing
the proper business plan and the necessary financing, while not
always easy, can be done. Now's the time to do it! We wish you
outstanding success with your franchise business.