How to Start a Firewood Business | SkillsAndTech

Firewood has many uses in America. People use it when they go camping and for their fireplaces, grills, and bonfires. So if there is significant demand for firewood in your area, becoming a firewood dealer could be a lucrative opportunity.  

In this guide, we’ll cover everything you need to know about starting a firewood business. From understanding the industry, all the way to hiring your first employee, we’ll leave no stone unturned. 

See Also: How to Start a Rental Property Business

Let’s get started!

Decide if the Business Is Right for You

Before you start your firewood business, it’s a good idea to understand the industry as a whole so you can find the best opportunities. 

Pros and cons

See Also: How to Start a Pool Cleaning Business

To gain a balanced view of the firewood industry, you should consider both the pros and cons.

Pros

• Simple business model — sell wood for money
• Steady demand in many areas
• You’re the boss — work full or part-time

Cons

• Demand is low in some areas
• Preparing the wood can be labor-intensive
• Danger of sharp tools and machinery

Firewood industry trends

See Also: How To Start Samosa Making Business

About 2% of US homes rely on wood for heating, according to the US Census Bureau ((https://www.census.gov/library/stories/2018/02/who-knew-wood-burning-fuel.html)). While this may seem like a small amount, in some US counties as much as 60% of homes are heated by a wood stove. Also, many other homes have fireplaces, and a good number of people and restaurants use wood for grilling and cooking. 

Industry size and growth

• Industry size and past growth – The US firewood industry took in $100 million in 2021, a decline from the previous year although it grew around 5% over the three years to 2019.
• Number of businesses – There are around 200 firewood retailers in the US.

See Also: How to Start a Window Washing Business

Trends and challenges

The latest industry trends include:

• Oil price spike causes surge in demand for firewood
• Soaring prices due to strong demand

Some challenges faced by the industry are:

• Supply chain problems
• Environmental problems

Consumer spending

See Also: How to Start an Airbnb Business

• Potential customer base – The US Energy Information Administration estimates that 1.7 million households used firewood or wood pellets as primary heating source in 2021, while 8% of the US population used wood as secondary heating source.
• Average prices – A cord of seasoned firewood was sold for $200 to $475 in 2021.

How much does it cost to start a firewood business?

Starting a firewood business will likely cost between $8,500 and $60,000, with an average upfront investment of $30,000. 

See Also: How to Start a Recruiting Business

Your costs will vary depending on the brand and condition of the equipment you buy. But here’s an estimated cost breakdown for starting a firewood business, excluding the cost of a production facility:

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 – $200	175
Business licenses and permits	$100 – $300	200
Business cards and brochures	$200 – $300	250
Used truck	$2,000 – $5,000	3500
Tools and equipment	$2,500 – $4,000	$3,250
Insurance	$100 – $300	200
Website setup	$1,000 – $3,000	2000
Total	$6,050 – $13,100	$9,575

How much can you earn from a firewood business?

See Also: How to Start a Pet Store Business

A cord is a stack of firewood measuring 128 cubic feet, or about 4 feet high, 4 feet wide, and 8 feet long. On average, a cord of ready-to-burn hardwood sells for $120 to $180, depending on your location and the wood quality. In some areas, when demand is high, a cord can be sold for as much as $400. So you’ll need to do some research to see what you can expect in your local area. 

In your first year or two, you could work from home and sell 10 cords a week at $150 each,  bringing in almost $80,000 in annual revenue. This would mean $40,000 in profit, assuming a 50% margin. As your brand gains recognition, sales could climb to 30 cords a week. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 40%. With annual revenue of around $230,000, you’d make a tidy profit of more than  $90,000.

See Also: How to Start a plumbing Business

You could also sell firewood bundles which are much smaller—about 0.75 cubic feet. This will involve more work to wrap and deliver, but you can also charge more for your firewood. 

What barriers to entry are there?

Like many industries, there are a few barriers to overcome when selling firewood: 

• Obtaining inventory
• License to cut trees 
• Low local demand

Related Business Ideas

See Also: How To Start Cookies business

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

Hone Your Idea

Now that you’ve learned a bit more about the industry, it’s time to start brainstorming the details of your business. 

Why? Identify an opportunity

See Also: How to Start an Estate Sale Business

Your competition will depend on who you decide to supply with firewood. If you want to sell directly to the public, then your competition could be grocery stores and other local wood sellers. 

If you want to supply grocery stores and convenience stores, then your competition will be other firewood wholesalers. 

Once you figure out who your competition will be, it’s time to do some research. Find out information such as the quality and type of firewood they sell, how much they charge, and who their main customers are. 

Knowing this information will help you find gaps in the market, improve your customer targeting and create a better brand. 

See Also: How to Start a Credit Repair Business

What? Determine your products or services

In general, starting a firewood business is already quite a niche market. But there may be options to specialize further depending on local demand. 

One of these ways is by selling kiln-dried firewood. This is a way to treat your firewood that ensures it’s free from insects and improves the firewood quality. One major benefit of this niche is that it’ll be easier for you to sell your firewood outside of your state because your wood could not lead to insect infestation. 

You could also specialize in the type of wood you sell, such as maple, oak, ash, and birch.

See Also: How to Start a Live Scan Fingerprinting Business

Above all, choosing a niche will help you build a brand identity and help you market your business. 

How much should you charge for firewood?

How much you charge will depend on the quality, type, and quantity of split firewood you sell at one time. Since the price of a cord of firewood can range from $120 – $400, it’s hard to give you a definite number.

See Also: How to Start a Drone Business

Another factor to consider is delivery fees. You could offer free delivery and price the difference into your product or add a fee depending on the distance. The choice is yours. 

You’ll need to determine an acceptable average price for your local market and then tweak it based on the costs to produce your firewood. 

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.

Who? Identify your target market

See Also: How to Start an Embroidery Business

Once you’ve got a niche, you can start thinking about who your ideal target market will be. If you live in a small town, though, this might not be possible due to a lower population, so you’ll have to service multiple types of customers. 

But to give you an idea of the different firewood markets, here is a list: 

• Grocery stores – You can wholesale your seasoned firewood to local grocery stores. While you’ll need to sell your wood at a lower price, you’ll be able to make up the difference through sheer volume. 
• People who use wood for heating – These customers may require large amounts of wood since they’ll be using their stove daily. 
• Casual users – These may be people who want to make a backyard fire on the weekend, campers, or people who want to hang out at the beach for a night.

By having a target market, you can focus your marketing and branding towards them specifically.

In turn, this will help increase your conversions and customer satisfaction. 

See Also: How to Start a Financial Coaching Business

Where? Choose your business premises

You’ll want a business location that has enough space for storage and processing, yet is also close to your customers. 

In the early stages, you may want to run your business from home to keep costs low, but make sure that your property is suitable. As your business grows, you’ll likely need to hire workers for various roles and may need to rent out a production facility. 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:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Brainstorm a Business Name

See Also: How to Start an Estate Sale Business

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “wood” or “fire”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

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. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

See Also: How to Start a plumbing Business

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 set 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.

Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

See Also: How To Start Cookies business

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your firewood and your services in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Register Your Business

See Also: How to Start an Embroidery Business

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! 

Choose where to register your company

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 are planning to expand, you might consider looking elsewhere, as some states offer real advantages when it comes to firewood. 

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. 

See Also: How to Start a Sticker Business

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your firewood business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

See Also: How to Start a Karaoke Business

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 ZenBusiness’s 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. 

Register for Taxes

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.

See Also: How to Start a Printing Business

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 are completing them correctly.

Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a firewood business. You might also try crowdfunding if you have an innovative concept. 

See Also: How to Start an Import Export Business

Apply for Licenses/Permits

Starting a firewood business requires obtaining a number of licenses and permits from local, state, and federal governments. 

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 such as a seller’s permit and a firewood cutting permit if you cut trees on public land. 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. 

See Also: How to Start a Used Tire Shop

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.

Step 9: Open a Business Bank Account

See Also: How to Start a Shaved Ice Business

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 firewood 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.

Get Business Insurance

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.

See Also: How to Start a Wine Business

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Prepare to Launch

See Also: How to Start an IV Hydration Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

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 GoCanvas and Arborgold to track sales and manage your business.

Accounting

See Also: How to Start a Live Scan Fingerprinting Business

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now.” This can sharply increase purchases.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

See Also: How to Start a Credit Repair Business

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as a 10% discount when buying 2 cords or more. 
• Signage – Put up eye-catching signage at your store and website 
• Flyering – Distribute flyers in your neighborhood and at industry events 
• In-Person Sales – Offer your products/services at local markets, trade shows. 
• Post a video – Post a video about your firewood business. Use humor and maybe it will go viral!
• Seek out referrals – Offer incentives to generate customer referrals to new clients.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
• Create infographics – Post infographics and include them in your content. 

Develop your website

See Also: How to Start an Estate Sale Business

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. 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. 

You can create your own website using services like WordPress, Wix, or Squarespace. 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.

Focus on USPs

See Also: How to Start a plumbing Business

Unique selling propositions, or USPs, are the characteristics of a product or service that set 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 firewood 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.” Some signature USPs for your firewood business could be:

• The best ash and maple around
• Fastest firewood delivery service 
• Big discounts for bulk orders 
• Subscription service for weekly/monthly deliveries 

Networking

See Also: How To Start Cookies business

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 firewood 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 firewood. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Build Your Team

See Also: How To Start Livestock Farming Business

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 firewood business would include:

• General labor – stacks and packs firewood
• Driver – delivers firewood to customers
• Marketing Lead – generates new clients

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. 

See Also: How To Start A Film Production Business

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. 

Start Making Money!

You’re now ready to start your entrepreneurial journey with your firewood business. Firewood should be easy to sell because most people need it, especially during cold days and nights. But you might expect a few bumps in the road in your first year or two, while you’re still learning the ropes and building up your business. 

It’s important that you go the extra mile for your customers to develop a good business reputation and inspire customer loyalty. You’ll get new customers too without having to spend more on advertising and marketing.