Are you wanting to start a firewood business, but don’t know where to begin? If that seems to be the case, you’ve come to the right place! Before you begin selling your product to customers, there are a few things you need to do. Luckily, we’ve compiled an all-inclusive guide to help you begin your fiery business venture.
Starting a firewood business could be a great side hustle or full-time venture, depending on how serious you are.
To get started, you will need to register your business and obtain a license, purchase insurance, determine whether or not you will need a building, get the proper equipment, purchase any needed software, and brand your business.
1.Write A Business Plan
Identify the target market
Business for firewood is much more in demand than one may think. Despite the heating technology of today’s modern world, there are still many instances in which a person may need firewood, including, but not limited to:
- Wood burning stoves
- Camping and campfires
- Backyard fire pits or in-home fireplaces
- Firewood as an emergency heat source
- Personal outdoor building projects
Identify The Best Location
Knowing this information leads us to the question of where the demand for firewood is located. Recent google search statistics show that warmth and coldness have less of an impact than one may think.
Choosing A Location-Based On Weather
Colder states have a need for firewood for warmth, and warmer states have a need for it for fun activities! In the United States, the 5 states with the highest Google search rate for firewood and likely the highest firewood consumption are as follows:
- California at 11.6%
- Texas at 8%
- Illinois at 5.6%
- New York at 5.2%
- Pennsylvania at 4.7%
- The other 45 states at 64.9%
Obviously due to the 64.9% of searches belonging to other states, picking one state over another will most likely not break your business. However, picking one of these top 5 states, especially the smaller ones, could definitely help your wallet.
For instance, California and Texas may have the higher percentages because they are two of the largest states and therefore have a larger, more spread out population. It is not surprising they have the highest individual search rates. Choosing somewhere like New York, Illinois, or Pennsylvania could be great for business as your customer base is more condensed.
If you are worried about demand in your area, or the area you are considering relocating to, it would be helpful to consider the following:
The type of weather that is in your area and if you experience cold seasons.
- The amount of beaches and beach communities.
- The amount of campgrounds and outdoor tourism in the area.
- Whether or not backyard fire pits and indoor fireplaces are popular.
Choosing Based on Area Demographics
Many families consume a good amount of firewood as families often go to beach cabins and camping sites together or have a fire pit or fireplace in their residence. Take note of how many families live in the area, or whether or not families visit the area often and use firewood during their stay.
We would suggest marketing towards the parents rather than the children, but doing so in a family friendly manner that may influence the children to ask their parents to make a purchase.
Identify Your Competition
Identifying your competition is an important part of opening any business. In the firewood business, you will have many competitors. Firewood can be purchased at large chains like Home Depot, Lowe’s, and Walmart and also from smaller businesses that have the same goal as your small business.
Visit your competitors, both large chain and local stores, and scope out what types of wood, equipment, and customers they have. This information can help you to make your business the best it can be, as you can fill any needs they are not filling and see what they are doing poorly that you can improve upon.
A great tip is to pay attention to not only their equipment and stock, but also their customer service, online reviews, and how they treat customers.
Many customers will gladly leave one business to shop at another if they have experienced rude employees, extremely long waiting times for orders, and unprofessionalism. Having amazing customer service could be a way to make your business stand out from the others in the area.
2. Decide On Legal Structure of The Business
Once you figure out your name and branding, you will also need to form an LLC, short for limited liability company. Legally, this solidifies your firewood business as an official business. There are a few reasons you will need to do this. In this section, we will explain what those are, and how to do so.
Why You Should Form an LLC
For one, having an LLC can potentially protect your personal assets. Imagine this scenario: A family has bought some firewood from you to use at their ski cabin’s fireplace during a vacation and unfortunately, the fireplace is faulty and old, and the building catches on fire.
They could potentially go after your personal assets rather than your business assets if you did not have an LLC registered and were selling firewood on the down-low. This does not mean you should not get insurance, but we will touch more on that finding LLC insurance later on.
Having an LLC also makes bookkeeping easier when it comes time for tax season! Separating personal and business expenses by having a separate account will ensure your taxes go as smoothly as possible. We recommend getting a bookkeeper or accountant if you are able to help keep track of expenses.
How to Form an LLC
The procedures and paperwork necessary for forming an LLC slightly vary from state to state, but the steps are roughly the same throughout the US.
You will need to:
- Select the state you are registering your LLC in. For business and revenue purposes, it is smart to choose a state that does not have state taxes if you are able to open the business there.
- Name your LLC. You must include limited liability business, LLC, or L.L.C. somewhere in the name, and cannot use names that would confuse your LLC with a government agency.
- Hire a registered agent service. This is a person or business that sends and receives legal paperwork on your behalf, and is required in most states. Some affordable and well rated recommendations are ZenBusiness, Northwest Registered Agent, Incfile, and Rocket Lawyer.
- File your LLC with your state. The most used name for these documents is the Articles of Organization. They define the structure of your business.
- Create an LLC operating agreement. This is not required in most states, but it is smart to have one. It outlines the ownership and all procedures of operation for your business.
- Obtain an Employer Identification Number, also known as your EIN. To do this, you must fill out a Form SS-4 Application for EIN and mail or fax it to the IRS.
- Lastly, you will need a physical mailing address, and open a business bank account.
The process is quite straightforward. If you struggle with anything, you can always ask your registered agent for advice or help!
3. Decide If To Have a storefront or Not
Next, you will need to identify whether or not you will need a storefront at all. Many firewood businesses operate out of the owner’s home, or out of a large shed or barn on their property. They then typically deliver the wood to customers, rather than the customer coming to a storefront and making a purchase.
We would advise that you start out working out of your home because it is more cost-efficient for start-up costs. If you absolutely must have a storefront, here is a rundown of what maintaining and renting a storefront will cost you in your first year:
Cost for Space
The cost of a rental storefront depends on the location. For the purpose of our example, let’s say you are wanting to open a storefront in a busy shopping area. The average yearly rental price per square foot will cost you roughly $25.
If you are in a less busy area with less traffic, you will be paying an average of $10-$11 per square foot. For a 2,000 square foot rental storefront, you will be paying anywhere between $20,000 to $50,000 per year in rental fees.
If you are wanting to opt for a large shed or barn to work out of, the prices are a little different, as you are making a purchase rather than renting.
For this example, I will be referring to a 10×20 foot shed. A 10×20 foot shed translates to about 200 feet, which will most likely be used for storage of wood rather than running your business. If you have the shed on your property, you have the luxury of running the business from the comfort of your own home!
The average cost of a 10×20 shed can cost you anywhere from $3000 for a basic shed, to $15,000 for a decked-out one. The average cost of a barn is going to run you $15 to $150 per square foot depending on the materials used to build the barn. Metal runs anywhere from $15 to $70 per square foot, and is typically less expensive than wood barns, which run from $30 to $150 per square foot.
Cost of Maintaining Space
Barns and sheds will cost you less to maintain than a rental storefront will. If you opt to use a barn or shed for your firewood business, routine maintenance will only cost you roughly $200 to $500 a year.
This cost will go towards things such as anti-rust materials, protection from bad weather, and maintaining general wear and tear. If you keep up with these costs, you will most likely not have to worry about large and costly repairs down the road.
The cost of maintaining the rental storefront entails many more expenses than the shed or barn. The average yearly cost of maintenance for a facility is roughly $2.23 per square foot for repairs and general wear and tear.
All building utilities will cost you an average of $2.15 per square foot each year. Cleaning will cost roughly $1.68 per square foot every year. Groundskeeping averages $0.24 per square foot, and parking averages $0.58 per square foot. Obviously, there are many more expenses to consider for a storefront than for a work-from-home friendly option like a shed.
4.Get Business and Liability Insurance
Business and liability insurance is important, no matter how large or small your company is. There are a few types of insurance to consider. In this section, we will give a rundown on the types of insurance required of a business, and a few insurance companies to consider in your insurance search.
Although separating your personal assets from your business by registering an LLC makes it less likely that someone will come after you, it does not mean you are fully protected.
There are many circumstances in which you will need insurance to make your protection as likely as possible. Here are the following kinds of liability insurance available for an LLC, be sure to pick one that suits the individual needs of your firewood business:
General Liability Insurance
General liability insurance gives you a broad coverage of protection for your business over a variety of liabilities, including, but not limited to injury and/or accident claims, property damage, or false advertising. This insurance will cover medical expenses, legal expenses, and any court settlements regarding lawsuit incidents.
Workers Compensation Insurance
By law, all businesses are required to have workers compensation insurance. Workers compensation insurance helps to protect your business from any medical expenses or lost pay in the event an employee of yours becomes sick or injured as a result of the job.
Product Liability Insurance
This type of insurance protects any product selling business from claims that products have caused injury or property damage.
This is just needed in the event that you have a vehicle used strictly for business.
Here are a list of some insurance companies we recommend looking into:
- State Farm (For any)
- Nationwide (General Liability Insurance)
- The Hartford (Workers Compensation Insurance)
- Geico (Auto Insurance)
- Progressive (Auto Insurance)
5.Grow Your Brand
Branding and advertising are both incredibly important when starting up your business! When you start branding and then advertising, there are many factors to consider. These include who your customers are, where you are located, what identity you want your business to have, and how you want to be perceived as a brand. Branding your business is essentially building its personality.
Because many customers are families, a great way to go would be a family-friendly branding method that plays on the aspect of firewood. A few branding ideas would be to design a firewood or fire character to act as a mascot.
You can also use this in your logo, on uniforms, or on fun merchandise! This would make kids more likely to want to use your firewood over somewhere like Lowe’s or a boring competitor, and more likely to ask their parents to buy from you.
Continuing on using the fire and firewood theme to develop your brand, you could also make your business’ name a fun play on words! Incorporating a fun theme in your branding makes the business more attractive to customers, and makes you seem more friendly and personable.
This brand is also something that could be built upon in advertising and marketing. If you are wanting to display how well your product works while also gaining new customers, you could host an event with a popular local campsite or beach site and supply the firewood as well as things to make you memorable – such as fixings for smores and T-shirts for the whole family.
Giving out t-shirts for people to wear is literally creating walking advertising for you, which is never a bad thing! Never be afraid to get creative with your advertising and marketing methods in order to make yourself stand out. If you play things right, it will pay off in the long run.
6.Establish Online Presences
It is also important to create a website for selling and advertising your product. Make sure you also create social media platforms to interact with the local communities, collaborate with other businesses, and raise awareness for your business. Here are a few platforms you can easily build a website on:
These are the most important websites to maintain social media presences on:
7. Purchase The Right Equipment
This section is a basic rundown of any and all equipment items you may need. You can purchase all of these tools on Amazon, at Home Depot, or Lowe’s with the exception of a vehicle. If you are interested in purchasing a vehicle, we recommend finding a used starter truck on craigslist or at a local used car lot until you can afford something better.
If you are harvesting your own wood from a tree supply, you will absolutely need tools to cut said trees down. Educate yourself before using any dangerous tools like this one and others on this list in order to practice safe tool use and avoid injuries. We recommend a saw that is at least 18 inches.
A log splitter is much safer and more time-efficient than using an axe to split wood.
If you are also selling kindling to help customers get their fires started, a kindler splitter could come in handy for making small pieces of wood, and save time and effort.
Axe or Hatchet
This is a staple of woodcutting, and you will probably need one at some point, even if you use your other tools for the majority of the work.
Firewood cord strapping kit
This will tie your wood together and give your product a polished and professional look.
Skimping on good-quality gloves will be noticeable fast, as bad ones will not last long. These will also protect your hands from getting calluses.
Truck and/or trailer
A trucker and/or trailer will be helpful if you plan on delivering wood to your customers, and for helping move wood from where you cut it.
8.Find Good Sources Of Wood
There are many places you can get your lumber from:
- Buy a plot of land and cut down the trees.
- Look on craigslist for lumber people are selling or giving away.
- List an ad on craigslist asking for people’s unwanted lumber.
- Inquire at local lumber mills for rejected wood
9.Decide On The Right Software
Every business that sells a product needs software to collect digital payment, and software to create spreadsheets. Here are some recommendations for each:
- Due (Payment)
- Square (Payment)
- Wave (Payment)
- Google Sheets (Spreadsheets)
- Microsoft Excel (Spreadsheets)
- Quip (Spreadsheets)
Firewood business Costs
In this breakdown, we are assuming you are opting to not have a storefront or warehouse, as it is the smarter financial decision at the beginning of your business.
Log Splitter $500.00
Kindling Splitter $100.00
High-Quality Axe $75.00
High-Quality Hatchet $35.00
Cord Strapping Kit $300.00
Sturdy Leather Gloves $40.00
Utility Trailer $500.00
5 Gallons of Gas $25.00
Misc. Licenses and fees $100.00
Total Startup cost $2,225.00
What is the typical yearly profit?
Your yearly startup profit will vary depending on where you are located. Cord bundles of firewood will be sold for around $175 to $225 depending on your pricing, and additional income can come from your set delivery fees.
Your yearly profit will depend on how much you are able to sell. If you are selling 2 cords per day, every day of the year, you can expect to earn roughly $146,000 annually before taxes.
Ruben has been doing online marketing for the last 4 years. Prior to that, he spent 15 years managing different brick-and-mortar businesses, in the home improvement and logistics industries. Overall, he has 20 years of business experience under his belt. Recently, he added SEO, affiliate marketing, and link building to his business skills.