How to Start a Firewood Business
Do you have experience cutting trees or split your own firewood? If you have access to a lot of wood on your own property, or even if you don’t, you can start a firewood business as either a part-time or full-time home business. You can get started quickly and easily, make some extra money, and be your own boss.
A firewood business cuts trees into firewood and sells it in packages to customers for use in a home fireplace, a firepit, or campfires. Some work with wood from trees on their own land or wood they obtain as a tree removal service. Wood can also be purchased from logging companies and made into firewood.
According to MarketResearch.com, the firewood dealers industry has a market size of $200 million and has grown 4.9% annually for the last three years. There are 213 companies in that industry in the United States. These numbers do not include small, local firewood sellers.
Firewood is still in demand in spite of the trend toward gas fireplaces. Firepits are very popular, and campgrounds are 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.
Your target market will be people who have fireplaces, wood-burning stoves, fire pits, or those who camp.
Additionally, campgrounds and local retailers like gas stations and bait shops may be interested in selling small bundles of firewood to their customers.
Skills, Experience, and Education Useful in Running a Firewood Business
There are several specific skills that you will need to open a firewood business.
- Experience. Experience turning logs into firewood safely is helpful, although you can learn.
- Business knowledge and experience. You will need to have some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Firewood Business
If you’re thinking about starting your own firewood business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write a Business Plan
After coming up with the business idea, the next step in starting your firewood business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect firewood business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a firewood business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
The location of your firewood business will probably be your home. If you do not have land with a lot of trees, you will need to find a logging company to partner with, so look for one near you so that you can get the wood conveniently. You can sell your wood online, through partner stores such as hardware stores, from a roadside stand, or you can even set up booths at flea markets.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are several regulations to be aware of when selling firewood. The United States Department of Agriculture Forest Service and states have requirements for harvesting trees and selling firewood outside of certain areas. Additionally, some permitting is required of businesses selling firewood.
In addition, there are some other common local, state, and federal registrations to research, including a sales tax permit and an Employer Identification Number.
Step 6: Find Financing
Fortunately, the cost to start a firewood business is small, and most people purchase equipment with personal funds. If a loan is needed, the borrower(s) will need to have good credit and invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
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. Developing a website can be a significant expense, but it can also give your firewood business greater visibility online.
Selling firewood is typically a seasonal business, but in some areas, there may be a market year-round. Campfires and firepits will need firewood in the warmer months, while indoor fireplace customers will buy in the colder months.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a firewood business. A couple of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost to insure a firewood business will vary depending on a number of factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You may need to hire employees to help you run your firewood business if you grow a large customer base.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your firewood business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a firewood business?
Here are some of the typical costs you will face when you open a firewood business.
– Tools including a chainsaw, axe, and a log splitter $1,000 +
– Pickup truck or van $5,000 +
– Utility trailer for hauling $500 +
– First year of insuarnce $600 – $1,000
How much does a firewood business owner make?
The price for a cord of wood is about $175-200 (and sometimes higher for quality hardwood), but you could make more per cord if you sell the cords in smaller bundles. A cord is a stack of wood measuring four feet high, four feet wide, and eight feet long and will fill 128 cubic feet.
If you sell 5 cords per week in bundles for an average revenue of $250 per cord, you would make $65,000 per year before expenses.
If you don’t have access to wood on your property, a logging company or tree cutting service are good sources to buy excess firewood from. To guarantee sufficient inventory, you can also purchase seasoned wood from a firewood processor, though the margins are smaller.
Either of these options will raise the cost of operating the business versus having access to your own wood, so be sure to do the math and sell at a price that allows you to make an adquate profit.
Also consider your time (or the time of an employee) in unloading and stacking firewood at the customer’s location. If you can’t park close, there will be a lot of time walking back and forth.
Are there grants to start a firewood business?
It’s extremely rare to find a grant to start a firewood business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
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.