How to Start a Swamp Logger Business

Saturday, June 29, 2013

How to Start a Swamp Logger Business

Swamp logging is a specialized niche sector of the timber business. The swamp logging business requires both specialized heavy equipment and specialized knowledge. In addition, you will need specific knowledge of timber species and the value each species has based on timber being -- a saw log (log sawn into lumber), pulp wood (log used for paper) or veneer-grade logs (logs made into veneer for furniture). Additional knowledge essential to success is the difference between hard and soft woods, as well as the value of the different species of hardwood logs.

Step 1

Register your business name with the secretary of state's office in your state. File legal documents that include articles of incorporation ( for C and S corporations) or articles of organization (for LLCs) and company bylaws. Use a name that indicates what your business does or your particular industry.

Step 2

Draft a business plan that includes the type of business, business market size (annual dollar value of your product), products, markets, customer list, sales projections, expenses, capital requirements, management experience, competition and a use of funds section. The use of funds is crucial because it tells the investor that you have a plan for the capital and you know exactly where the funds are being invested and how much.

Step 3

Develop your financial projections, which include: a beginning balance sheet (indicates assets, liabilities and shareholder equity), statement of cash flows, income statement and projected profit and loss statement. Include graphs indicating annual market size, your expected annual growth rate and the availability of raw material. Research the costs of equipment and operating capital needs.

Step 4

Develop your miscellaneous equipment list and costs. Some of the equipment needed will be welders, metal cutting torches, compressors, generators, a pickup truck with large refueling tank, air hoses, impact wrenches and other general mechanics tools for heavy equipment.

Step 5

Develop your major equipment list and cost per piece of equipment. Determine whether you will buy used, buy new or lease new equipment with the option to buy and then capture the lease tax benefit. Your major equipment will consist of a track feller buncher (tree harvesting machine), skidder (hauls many logs at one time), bulldozer (for building roads), log loader (loads many logs at a time onto log trucks), log trucks and log truck weigh scales.

Step 6

Put your logging team together. You will need a feller buncher operator, a log loader operator, skidder operator and truck driver with appropriate licensing. This is the minimum number of people you will need to begin operations. This team also needs to be experienced in swamp timber harvesting operations.

Step 7

Obtain logging contracts. Through logging contracts you obtain funding. Logging contracts indicate that you have business and contacts in the industry. In addition, you will have a basis on which to substantiate cash flow, margins and profits.

Step 8

Raise capital for your business. At this point you are going to need a minimum of $500,000 in equipment and operating capital predicated on the assumption that you are leasing major equipment, buying used equipment and subcontracting log hauling operations. Part of your operating expenses will be road bonding, insurance, fuel and wages.

Tips

Meet with angel investors in order to capitalize your company. Leverage your logging contracts. Lease or buy the best equipment you can because any downtime due to equipment failure will cost you more money in the long run.
You will need capital for fuel and spare parts, which are the critical to maintain operations.
Have a very good site heavy equipment mechanic lined up.

Warning

Hire lawyers familiar with the the logging business to set up your company. Logging is one of the most dangerous professions in the world. In addition to the logging dangers, swamps pose additional threats such as poisonous snakes and equipment malfunctions. Make certain to have fire extinguishers, snake anti-venom and first-aid kit.

References (4)

Resources (1)

Forest Service Employees For Environmental Ethics

About the Author

Grant Houston has been writing since 2000, covering various political, business and market events. With a Bachelor of Arts in economics and political science, he has written articles for "Political Economic Review," UmarKit, LLC and Shadow Company. Houston has also authored business plans and consulted with companies on capital acquisition strategies.

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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Saturday, June 29, 2013