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A collection of stories and articles about Wood-Mizer sawmills in use around the world, new business ideas, and available market niches in the wood industry

How to begin your own wood sawmilling or timber production

How to begin your own wood sawmilling or timber production Below you’ll find good basic information that has come from Wood-Mizer in-house business managers and also successful owners/sawyers in the USA and Europe. While it does not contain everything there is to know about marketing, customer service, financial planning, sawing, etc, the information presented should assist you in getting started on the road to success.

Listed below are a few categories to consider as you begin your new wood working, wood cutting or timber processing business with the Wood-Mizer Sawmill.

Custom Saw Other People’s Timber
Who would use your cutting service?
What is the local demand for custom cutting?
What are the going rates in your area for custom cutting?
Are there other people providing a similar service?

Buy Logs and Cut Lumber
Contact potential customers for your lumber. How much would they use? What species/dimensions?
Research local log costs and availability.
Research local lumber selling prices and preferred sizes/species.
Check into the value of drying and further processing.
Research log sources.
Attend log-grading workshops.

Cut Your Own Logs
Contact potential customers for your lumber. How much would they use? What species/dimensions?
Research local lumber selling prices and preferred sizes/species.
Check into the value of drying and further processing.
Learn appropriate characteristics of various species, i.e., decay resistance, structural properties, workability, etc. Some Wood-Mizer owners do all three, but investigating your local market will show you the best cutting method for you.

How Do I Charge?
There are no limits to the different approaches you can use to charge for your cutting services. The three most common methods are to charge by the hour, by the volume cut in a day, or by sharing the finished lumber. All three have their place, but the key is to anticipate which method would be the best pricing policy for that specific job. This will be easier to assess as you are exposed to more and more cutting situations.

The key to making money is obviously your individual capability to produce a certain volume of lumber each day.

By the Hour
The most stable or secure method for pricing for the mill owner is a flat, hourly rate. Rates vary from location and range from $30-$75/hour (as reported the current Wood-Mizer owners in USA), depending on equipment, number of assistants, species and local conditions. You will know how much you make in any given day (other than a small variation in operating costs) before going out to cut. Eight hours work means eight hours of pay regardless of the amount produced.

Pricing on an hourly basis transfers all the risks of daily output to the customer. It encourages the customer to have his logs clean and easily accessible, and to provide a person to help handle the material to get the most value for his money.

Depending on the situation, however, the customer may feel he did not get a "good deal".

Example 1. Unless you adjust your hourly rate to compensate for mill or blade problems incurred during the day that reduced your production, the customer will not have received as much lumber as if you had a trouble-free day.

Example 2. If you had a good, high-volume day, you may have missed the opportunity to make significantly more money by charging by volume produced. You may have been underpaid for the services you rendered.

By the Board Foot
Charging by the volume produced is the most common method used in the industry. This pricing method gives you the ability to make the greatest return in a day, but potentially exposes you to the lowest returns as well. Many owners in USA routinely cut between 2-3000 board feet a day (4.5 to 7.0sawn M3) for as much as 2- cents per board foot for a total return of $400-600 per day, even more on our Super Series mills. There are some sawyers, however, who struggle to cut 1,000 board feet (2.25M3) for a maximum return of $200.

This pricing method places of all the risk of productivity on the sawyer since the customer is only paying for the lumber he receives. That is why this method is preferred by a great number of businesses in the industry. This may be the only method of pricing available to you until you establish a track record of offering reasonable value on an hourly basis.

You don’t always have control of certain factors. Production levels can be reduced by having to cut muddy or overly-seasoned lumber, by customers who "get in the way", by having an impossible working area, or any other factors that obstruct efficient operation of the mill. It is vitally important that you recognize these factors before you start cutting so that any adjustments to your rate can be discussed and negotiated prior to starting the day’s work. Hourly fees for cleaning logs and/or charges for moving the sawmill can be agreed upon ahead of time so that both parties are satisfied with the charges. It is also important to consider the size of the logs, the species being cut, and the dimension of the lumber that the customer is requesting.

The price to cut large, dimensional framing lumber out of clear pine should not be the same as for cutting quarter sawn white oak. It’s obvious that these factors affect the amount of volume you can produce in a day, so the charges should vary accordingly. US sawmill owners report cutting rates ranging from 10 to 30 cents per board foot for cutting general grade hardwoods. Don’t feel like you have to match the price of the lowest production circular mill in your area.

The customer needs to remember that you are giving more yield per log, eliminating two-way hauling costs, giving faster turnaround, and sawing more accurate lumber if your mill is properly operated. These advantages can be used to justify charging a higher volume rate.

On a Share Basis
One of the most lucrative approaches to charging for custom cutting can be to accept a percentage of the finished lumber from the owner of the logs. In most circumstances, this pricing method is advantageous to both you and the customer.

With the pricing method, the customer doesn’t need to pay any money up front to have his lumber cut. The mill owner, in many cases, can get significantly more money by selling a portion of the lumber on the open market. Generally, the percentage of the shares varies with the species cut.

Example 3. When cutting a stand of valuable high-grade hardwoods, a 30 percent share may be more profitable than charging by volume or by the hour. A higher percentage share would be required as the value of the lumber decreases. It is not uncommon for customers to report 50/50 shares on lumber even in high-grade hardwoods. If you could cut high-grade walnut on a 70/30 share basis at a production level of only 1000 board feet (2.3M3)per day, the 300 board feet of green walnut could sell for over $600 in many markets. Cutting at a higher production level on a 50/50 basis could generate over $2,000 of income in a single day. This kind of opportunity may sound very unrealistic to achieve, but you shouldn’t overlook the possibilities that exist under these arrangements.

The Little Things That Count
Most of the US Wood-Mizer owners that share their success and "horror" stories about starting their custom cutting businesses wish they had known many of the little things that make them successful today, but that they completely overlooked when they were new in the business.

Being aware of some of these small details will not only allow you to generate more income, but also help you avoid awkward situations with customers that could damage your reputation.

Clearly define in advance the cost to a customer when an embedded foreign object (i.e., nail, fence wire, etc.) is hit while cutting a log. This will give you the money to cover the damaged blade and make the customer aware of potential additional charges. Common charges for damaging a blade range in USA from $10-$30. This charge can vary depending on whether a blade is completely destroyed or just requires sharpening.

Explain to the customer in advance any charges he will be charged in addition to volume-rate charges.

Example 4.
A customer may want you to cut a 38’’ diameter log. You need an hour to trim it with a chain saw to the mill’s 36’’ capacity, thus significantly decreasing your productivity. Hitting a railroad spike in a log may result in the loss of one-half hour of production time to remove the blade that is jammed in a cut. Both of these occurrences are examples of things that a customer should be expected to pay for since they are the responsibility of the log owner.

Set an hourly surcharge
for cleaning muddy or rock-embedded logs.

Establish a mileage charge
if the cutting site is beyond a specified distance from your location.

Charge a small setup fee
(ranging from $5-$25 in USA) for each time the mill must be moved at a particular cutting site.

Consider requiring the owner of the logs
to supply a person to help off-bear. (Many owners prefer to be there or have an associate there while logs are being cut anyway.)

Five Factors Necessary for a Successful Business
Many ideas customers have shared appear, in hindsight, to be common sense but were only realized after considerable expenditure of time and experience. Every Wood-Mizer owner who has been operating his saw as a bu
siness for a long period of time has learned many small details that significantly increased profits. Here, Wood-Mizer would share some of these general tips and suggestions:

Reputation. Without exception, the key element to long-term success for every mill owner has been a reputation for performing a quality service for the customer.

Quality. Quality extends to a clearly defined pricing structure so that the customer knows what he will be paying and what he will be receiving for his money. It also includes meeting schedule commitments.

Professional Attitude.
The professional way in which the business is transacted is also vitally important to maintaining a proper image and developing customer confidence. Every customer will be looking for something different when they contract for a mill to cut lumber. Some are interested in volume, others in accuracy, while others are more concerned about getting the widest boards or some unique cuts that only a band mill can yield. Knowing what the customer wants and the best way to price the job allows you to make a reasonable profit and have a satisfied customer at the end of the day. As a sawyer, you want to cut the lumber as quickly as possible to get the highest return. From the customer’s point of view, you are expected to spend a considerable amount of time on each board to get exactly what he wants. Neither party is satisfied if both angles are not discussed before actual cutting begins. Deciding what will make a customer satisfied before going into the job will determine how you approach each cutting situation.

"Word-of-Mouth" Advertising.
If an owner experiences problems on a particular day, it is better to lose a little money on that particular job. This attitude will demonstrate concern in giving every customer value for his money. There is nothing that will generate more business over a long period of time than "word-of-mouth" advertising from satisfied customers.

Some of the greatest opportunities to make money with a Wood-Mizer Sawmill center around the flexibility of the cutting system. In addition to cutting flexibilities, there is the element of personal flexibility. The flexibility of how you operate your business and the flexibility of the mill are equally important to capitalize on money making opportunities. Too many times mill owners feel that the only the way they can get enough business to compete is on a volume-price only basis. The flexibility of the Wood-Mizer and how you operate it are what can keep you out of that situation.

What About Liability?
With the current climate of unbelievable settlements in personal inquiry lawsuits, many mill owners are concerned about their personal liability when operating their Wood-Mizer. Insurance for the mills can be difficult to almost impossible to find in some areas. Some customers have found that the mill can be simply added to their homeowner’s liability policy or to a liability policy that currently covers their farm or business.

Tips to Limit Your Exposure to Liability
Observe routine safety procedures when operating the equipment. A primary concern in this area would be to keep the area clear of people.

Keep all guards and covers on the mill to reduce any risk of inquiry.

Require eye and ear protection for the operator and anyone off-bearing lumber.

Be cautious when handling the logs and the lumber as most injuries result from handling rather than the actual operation of the saw.

Use a cutting contract that contains a clause stating that it is the log owner’s (or property owner’s) responsibility to keep the area clear of people. This contract will not automatically cancel your responsibility in cases of injury, but will demonstrate that you made a clear attempt to advise the owner that he also must assume the responsibility in keeping the cutting area safe.

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