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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on May 30, 2022
Investment range
$204,550-$409,100
Revenue potential
$240,000 - $1,200,000 p.a.
Time to build
6 – 12 months
Profit potential
$48,000 - $240,000 p.a.
Industry trend
Declining
Commitment
Full-time
These are the critical aspects you should evaluate when launching your logging business:
Starting a logging business has pros and cons to consider before deciding if it’s right for you.
Trends in the logging industry include:
Challenges in the logging industry include;
Startup costs for a logging business range from $200,000 to $400,000. The main costs are for the equipment and trucks.
Most people learn logging from on-the-job experience. You could work for another logging company for a period of time to learn the business. You could also get a degree or certificate in forest technology from a local trade school.
You’ll need a handful of items to successfully launch your logging business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Rental space deposit | $3,000 - $5,000 | $4,000 |
| Logging equipment | $100,000 - $200,000 | $150,000 |
| Trucks - down payments | $50,000 - $100,000 | $75,000 |
| Operating and labor budget | $50,000 - $100,000 | $75,000 |
| Total | $204,550 - $409,100 | $306,825 |
Prices for large logs vary but could range from $200 to $1,000 depending on the size and quality, for an average of $600. If you get trees from the forestry service or a farmer, you will likely pay them up to 50% of the price of the logs. After all your costs, your profit margin should be about 20%.
In your first year or two, you might sell 10 logs a week, 40 weeks per year, bringing in $240,000 in annual revenue. This would mean $48,000 in profit, assuming that 20% margin. As your business gains traction, sales could climb to 50 logs per week, 40 weeks per year. With annual revenue of $1,200,000, you’d make an outstanding profit of $240,000.
There are a few barriers to entry for a logging business. Your biggest challenges will be:
Now that you know what’s involved in starting a logging business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research logging businesses in your area to examine their products and services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a logging company that sells to pulp mills or contracts with farmers.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as logging forest lands or tree removal for homeowners and landowners.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Your products will be the logs that you’ll sell. You could also make products to sell with smaller logs such as firewood or mulch.
Prices for logs will vary based on the size and quality of the log, as well as current market prices for wood. A large log could sell from $200 to $1,000. After your costs of labor, rent, and overhead, you should aim for a profit margin of about 20%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
You will aim for two target markets. First, you’ll need to find customers to sell you the logs, which could be the forest service or a landowner. Second, you’ll sell your logs to sawmills, paper mills, and even construction companies and furniture makers. You should spread out your marketing to include Instagram, Facebook, and LinkedIn. You should be prepared, however, to make a lot of direct calls to business owners you find on Google or Yelp.
You’ll need a space for an office, and to store your equipment and your logs. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to logging businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your logging business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a logging business. Many lenders offer specific types of equipment financing.
Starting a logging business requires obtaining a number of licenses and permits from local, state, and federal governments. Some states may require certain licenses for logging, including those related to equipment operation. Check with your state for requirements.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your logging business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Jobber, TRACT, or Orbis, to manage your projects, schedule, inventory, and invoicing.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your logging business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your logging business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a logging business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in logging for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in logging. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a logging business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Logging is hard work, but it’s a big industry that offers serious opportunity. You may need to spend some time learning the ropes first, but it could be well worth it. You’ll be providing a product with a wide variety of uses and strong demand, which means logging has the potential to be a lucrative and rewarding career!
You’ve finished the business education part now, so it’s time to put on those work boots and launch your successful logging business.
Yes, a logging company can be very profitable. You’ll just need to find good sources to get your trees, and then sell them to sawmills or construction companies.
Prices for logs will vary based on the size and quality of the log, as well as current market prices for wood. A large log could sell for $200 to $1,000.
The types of logging can include clear-cutting, selective cutting, shelterwood cutting, and coppice logging. Clear-cutting involves removing all trees in an area, selective cutting involves selectively harvesting specific trees, shelterwood cutting is a two or three-stage process to regenerate a forest, and coppice logging involves cutting back certain trees to stimulate new growth.
Clear-cutting is often considered the most common logging method due to its efficiency and cost-effectiveness. It involves the removal of all trees in a designated area, allowing for quick and efficient harvesting of timber.
To differentiate your logging business from competitors, consider the following strategies: emphasize sustainable and responsible logging practices, obtain relevant certifications to demonstrate your commitment to environmental stewardship, and offer additional services such as land restoration or reforestation.
The cheapest logging method can vary depending on factors such as the specific logging project, location, terrain, and market conditions. Generally, clear-cutting tends to be the cheapest method as it allows for efficient harvesting of a large volume of timber. However, the overall cost can also be influenced by factors such as transportation, site preparation, and timber market fluctuations, which need to be considered when evaluating the cost-effectiveness of different logging methods.
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