At the stage of planning a business activity, it is necessary to assess the possibilities of a sawmill as a business. Construction in Russia almost never stops. Any technology uses wood products. also needs quality lumber. It is much more reasonable to process wood than to sell valuable species at the price of raw materials. This article will talk about how to open a sawmill and make it profitable.
You can start your wood processing business with a small budget sawmill costing about 400 thousand rubles. Powerful equipment will require from 1 million to 4 million rubles. total cost the project will cost from 20 million rubles (equipment, land, buildings, transport, wood supplies). In the future, the sawmill can be modernized into a high-tech wood processing enterprise.
Small production has a number of features:
- easier to control the production process;
- you can exit the business with less losses;
- you can gradually purchase additional equipment;
- the profit will be relatively small;
- such production can be mobile (mobile).
Based on the demand for lumber, you need to decide on the assortment. Main products: edged boards, planed timber, furniture panels, lining. Cable reels and fuel pellets improve production efficiency. For their production, waste is used: sawdust, trimmings, shavings. can also be successfully combined with the production of lumber. The main consumers of all of the above products: private developers, construction markets and organizations, as well as furniture manufacturers.
Reviews from experienced entrepreneurs about working with sawmills and woodworking as a business are mostly disapproving. There are problems with unscrupulous suppliers of raw materials. Convenient and high-quality service from the equipment manufacturer is not always available. Prices for foreign machines and spare parts are high.
In winter, demand drops and equipment operates under harsh conditions. Not everyone has heated premises or their own boiler rooms. In 2017, there were changes in laws. Online cash registers and registration of transactions in EGAIS (automated Information system) raises many questions and misunderstanding among loggers and woodworkers. All these features must be taken into account when drawing up a business plan for your own sawmill.
Choosing a location and registering an enterprise
Production must be located no closer than 100 meters to a residential area. Availability of electricity and water is necessary for the operation of the equipment. The size of the territory is selected based on the volume of work. For a large farm you need at least one hectare of land.
Processing a tree near a felling site makes sense from a logistics standpoint. Transport costs for transporting raw materials are reduced, but delivering the goods to the end consumer can be expensive. A compromise must be sought. The outskirts of the city (40-50 km) or an industrial zone are suitable for setting up an enterprise.
You can register either an individual entrepreneur (see action plan) or a limited liability company (see). The first option - individual entrepreneur - gives greater freedom in terms of working with cash, but the entrepreneur has to answer to creditors with personal property.
Attention! At your local tax office, you can select OKVED activity codes suitable for the production and trade of lumber. For sawing, planing, production wooden structures, lumber, carpentry, container manufacturing, the following codes are suitable: 16.10, 16.10.1-16.10.3, 16.23, 16.24.
To get started, you need to do the following actions:
- conduct certification of workplaces;
- appoint a responsible person for safety (HS);
- pass the Ministry of Emergency Situations check fire safety;
- obtain a passport for production waste;
- obtain a sanitary and epidemiological conclusion.
When everything is ready, Rospotrebnadzor should be notified about the launch of wood processing production.
Arrangement of the territory and selection of equipment
On the territory of a wood processing enterprise there must be:
- warehouses for storing raw materials and finished products;
- hangar for processing wood with various equipment;
- drying chambers;
- shed for working on outdoors;
- loader and truck with hydraulic manipulator.
Trucks must have enough space to maneuver. The required power supply varies from 15 kW to 400 kW and directly depends on the peak power of the installed machines and sawmill.
From the right choice Sawmills depend on the quality of material processing. The minimum cut increases the yield of the board. A 2.5 mm cut is more profitable than a 4 mm cut. The output of the board is more band sawmill, but production is more difficult, tapes sometimes break. Machines with a wide belt are 3-5 times more productive than sawmills with a narrow belt.
The human factor, combined with unreliable machine operation, can lead to low quality materials. Therefore, it is necessary to have your own service equipment(sharpening machine and tools for soldering, welding, forging) and your master. Electromechanical log feeding optimizes the process and improves ergonomics. The sawmill should produce at least 15-20 cubic meters of lumber per shift.
Enterprise personnel
Personnel issues are one of the most important when opening a sawmill. In a serious production, there are at least two framers, auxiliary workers, a forklift driver, assemblers of products and structures (pallets, fences, boxes, reels), and operators of drying chambers and machines. Automation of production reduces staff turnover and increases production volumes.
Many entrepreneurs try to save on employee salaries and hire no more than 2-4 people. It is difficult to find skilled workers willing to work for minimum wage. Such savings can turn into trouble. Illiterate workers can destroy equipment in one season. Breakdowns will lead to downtime. For this reason, many sawmills have closed.
Expenses and income
The main raw material used for the production of lumber is wood coniferous species(pine, spruce, cedar). The cost of large and medium round timber of coniferous species is 2700-3500 rubles per cubic meter. m. High-quality lumber is sold at 6,000-8,000 rubles per cubic meter. m. Some of the products are sold at almost the cost of raw materials. The yield of finished products can be increased from 60% to 80% due to additional production. The practical profitability of a sawmill is in a wide range of 40%-70% and depends on the specifics of the business.
The volume of raw materials processed affects profitability. The average productivity of a small sawmill is 30-40 cubic meters. m of lumber per day. With monthly sales of 900-1200 cubic meters. m of products, the income will be approximately 4.5-6 million rubles. At the same time, the cost of purchasing raw materials will be 3.5-4.6 million rubles, current expenses will be 300-400 thousand rubles. The average profit will be 800 thousand rubles. The payback period at such indicators will be from one and a half to three years.
On a note:
The material discusses the main stages of organizing a sawmill: relevance, range, necessary equipment, Feasibility study, calculation of profit and payback.
Old technologies of log buildings are being replaced by houses made of timber or laminated timber. On frame houses necessary a large number of timber of various thicknesses. Wooden blanks are also used to create stairs, roof sheathing, fences, gazebos, etc. Every new resident thinks about the environmental friendliness of their home and apartment building.
The conclusion is simple - the volume of supplies of wooden blanks (edged and unedged boards, timber, etc.) in carpentry and other woodworking shops will increase. Sales volumes at wholesale markets- grow. Therefore, opening a sawmill is promising business an undertaking.
Range
The supplied range of the sawmill in question will include products made from softwood (pine):
- edged board, length 6 m, width 100mm, 150mm, 200mm
first grade;
second grade;
- unedged board;
second grade;
- timber different sizes;
- fuel briquettes or pellets.
Buyers, sales
The main product produced is dried and packaged lumber. Primarily it is used:
- in the production of windows and doors;
- in the construction of houses.
The main buyers of lumber are:
- wholesale centers, warehouses, large stores;
- furniture workshops;
- carpentry shops;
- workshops for the production of laminated veneer lumber (construction of houses from timber).
Required equipment
The following equipment will be used at the sawmill:
The workshop will require additional loading and unloading equipment raw materials and finished products.
To unload and transport sawlogs, use an industrial loader (reloader) EK-18-51 or other similar equipment.
To transport finished products, komatsu FG15T-20 or any similar one is used.
Machine performance:
The main raw materials are logs with a diameter of 18 centimeters. After processing 1 m3 of saw logs, 0.5 m3 of finished product is obtained.
Feasibility study of activities*
* To calculate the performance indicators of the sawmill, all calculations will be made based on 50% of the equipment load:
Capital expenditures
To open a sawmill with a capacity of 352 cubic meters. meters per month, an investment of 4.2 million rubles will be required.
* Costs for repairs and preparation of the premises are not included.
Revenue calculation
The monthly revenue of the sawmill based on the production of 176 cubic meters. meters (50% of the installed capacity) and a price of 5,000 rubles. for 1 cubic meter will be 880 thousand rubles.
Cost calculation
Raw materials (to produce 1 cubic meter of finished products, 2 cubic meters of raw materials are required). Price for 1 cubic meter meter of raw materials (sawn logs) is 1,500 rubles.
Electricity: monthly consumption 8,800 kW.
Calculation s/s: 352 cubic meters. m * 1,500 rubles + 8,800 sq. *4 rubles = 563,200 rubles.
Total expenses per month
Calculation of business profits at a sawmill
880,000 rub. - 563 00 - 160 000 rub. = 157,000 rubles.
The return on investment is 22 months. (When calculating the payback, the costs of repairs and preparation of the workshop premises are not taken into account)
To increase the profitability of the activity, you can install additional (euro firewood) and equipment for the production of pellets (increased profits are generated by processing sawdust into an additional product).
A sawmill is a workshop in which wood is processed using special machines. To date this business can be called one of the most relevant and in demand, which makes such a project attractive. This is associated with an increase in the construction of dachas, houses, bathhouses, as well as prefabricated wooden structures. Below is a business plan for a sawmill with calculations, which can help you understand the features of the direction.
Any business plan begins with market analytics, as well as its main players. This will help you accurately determine the possibility of entering this industry, understand the profitability of the market, understand which competitors you will have to fight with and what methods are used for this. In order to analyze the market, it is recommended to consider the following factors:
- You need to understand whether this industry has prospects. As mentioned above, sawmills are a fairly relevant type of business, which are in demand due to the increased volumes of low-rise construction. However, in different regions the situation may be different.
- How many sawmills and similar enterprises operate in your region? By answering this question, you can understand what competitors you have and how many there are. Among the direct competitors of sawmills are large manufacturing companies that can cover large market volumes.
- How accessible are the raw materials and how easily can the finished product be sold at the desired price? This factor will help you understand how quickly you can get your business up and running, and how soon it will begin to bring you a stable profit.
A good option would be to study not only your direct and secondary competitors, but also logistics in the region. The logging process involves the use of a rather complex logistics system. At the initial stage, the wood is transported to the sawmill; after processing, the materials are sent to the client. Remember that a very important factor will be the availability of good roads and access to the point of business in the region. If this condition is not met, your costs may increase significantly due to logistics costs.
Remember that raw materials must be easily accessible. This is important if you want to establish a continuous supply of timber. In most regions of the Russian Federation, the removal and felling of forests will present some difficulty. Be sure to study local laws when choosing a location.
Summary of the future project of a lumber procurement enterprise
the main objective The project for which a business plan for opening a sawmill with calculations is being written is the creation of an organization for the production of lumber. Lumber is one of the most widely used building materials today. It is used not only for direct construction, but also for external and interior decoration buildings Prerequisites for starting such a business may include:
- shortage of available building materials;
- increased interest of private investors in construction;
- development housing infrastructure;
- low level of competition.
The technological algorithm includes the supply of material for harvesting and scaffolding, its sawing and planing, and then marketing. The material can be sold both wholesale and retail.
Range of products offered
Among the products that the sawmill can offer are the following options:
- edged and unedged boards;
- beam;
- bar;
- rounded log.
Typically, lumber is made from softwood logs using specialized equipment. Finished products must meet GOST requirements. This will show the products in terms of high quality and low rejection rate.
The scope of use of sawmill products, as already indicated, is quite large. The material can also be used for exterior finishing, and for roofing, and for sheathing, and for interior decoration, and for the construction of buildings.
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In addition to the products themselves construction purposes, you can produce products from sawmill waste. Good decision will establish the production of fuel briquettes, which can be sold and receive additional profit. In recent years, fuel briquettes as a fuel have become increasingly popular due to their productivity, environmental friendliness, and low price. This is a great option for earning extra money.
Sales and Marketing
Due to the fact that the products produced by the sawmill fully comply state standards, in addition, it has rather weakly expressed differences in features and characteristics; the company’s main competitive advantages will be the cost of goods, as well as the stability and regularity of supplies. This has already been discussed above. It will be necessary to ensure not only technologically advanced and fast production, but also reliable logistics.
Therefore good competitive advantage will be the development of a flexible pricing policy for the enterprise. A larger number of lumber manufacturing companies ship products under prepayment conditions or upon receipt of goods. You can offer your clients more flexible terms: installment payments, loans. This will be your significant advantage in the difficult economic situation in Russia.
Basic actions and marketing events According to advertising, companies will target wholesale distribution channels:
- creation of a company website;
- registration in catalogs and construction portals;
- advertising on thematic platforms;
- active sales will become the main advertising tool. As part of cold calling, the sales representative advises representatives of other companies on cooperation with you and concludes contracts.
During the first few months, the company should acquire several regular customers. They should account for about 50% of sales.
Organizational and legal aspects of business
The first thing you need to do when opening your own sawmill is to fill out all the necessary paperwork. First of all, you need to register a company in government agencies. For this you will have two options.
- Individual entrepreneur. Using this form of ownership, you will be able to sell products only to individuals.
- OOO. Using the presented form of ownership, you will be able to cooperate with both individuals and legal entities. The advantages of this form of ownership are that it can even cooperate with foreign counterparties.
When registering, you must indicate the appropriate code according to the OKVED classifier. This is 20.1. Sawing and planing wood.
Before you start working, you will need to obtain permission to cut down forest in the selected location and rent a plot. A permit will only be required if you intend to extract raw materials yourself. If you want to organize the purchase of raw materials from suppliers, permission is not required. After you have registered with government authorities, you will need to register with various funds, in particular Pension Fund. Additionally, you may need the following types of documents:
- a plot lease agreement or a certificate of plot ownership. If a lease agreement is used, it must be supported by a logging permit from the owner;
- coordination of actions with local forestry;
- plant inspection report;
- detailed plan for the use of the site;
- if you are going to purchase raw materials, immediately enter into a long-term supply agreement, where all the conditions will be specified.
When opening an LLC, you will need to open a current account in a reliable bank. Remember that a constant and uninterrupted supply of raw materials is your guarantee that the organization will not be idle, and your profits will be just as stable and regular.
Sawmill production business plan
At the initial stage of operation of the sawmill, you will need to select suppliers of raw materials. Deliveries must be carried out regularly, in volumes that will be determined by needs. Production volumes should be adjusted based on the demand forecast for the week ahead. This will make it possible to produce products of the volume that will definitely be purchased, and which will not lie in the workshops. It is advisable that the warehouse turnover be planned at the level of one week. The supplier of raw materials is selected based on:
- equipment quality;
- supplier service quality;
- timing and regularity of equipment delivery;
- flexibility of pricing policy and payment options.
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In addition to raw material suppliers, you will also need to select equipment suppliers. Give preference to those companies that independently arrange the units, start-up and equipment settings, as well as personnel training. The equipment must have a warranty and post-warranty service period.
A good solution would be to purchase a ready-made aggregate production line rather than individual machines. The use of lines allows you to implement a full cycle of work on loading the flow, cutting raw materials in accordance with the task, and removing excess.
Finished products will be stored in a warehouse, which is an unheated warehouse with good ventilation. Remember that if the air in the room does not circulate well, it can cause mold, rot and mildew.
Pay attention to calculate the cost of products. Variable costs should include the cost of raw materials, the cost of their transportation, the cost of transporting finished products, as well as the trade margin, the percentage of which ranges from 15 to 45%. The trade margin allows you to cover fixed costs enterprises that we will talk about below.
An important task for you will be to ensure a high level of occupational safety. Remember that every employee who is engaged in production must undergo training in operating the equipment, certification, and also attend lectures on safety precautions. You must have a number of requirements for employees when hiring. Must have at least 5 years of experience in production, the person must be responsible, he must not have bad habits.
Choosing a location for a sawmill
In order to open your own sawmill, you will need a plot of land with an area of at least 30 acres. If you are going to extract raw materials yourself, there should be a leased area for deforestation near this site. This will help to significantly reduce costs of raw materials and logistics. In any case, make sure that the sites have high-quality access roads for logging vehicles to enter.
It will be necessary to install several buildings:
- production workshops;
- warehouse for finished products;
- area for loading and unloading operations;
- office space where negotiations with contractors will be conducted and documentation is stored;
- employee rest room equipped with a kitchen, shower and toilet.
Production and warehouse premises must have a ceiling height of at least 5 meters. The area of each of them should be about 600 square meters. Each of the premises used must be equipped in full accordance with the requirements of the fire inspection. Fire extinguishing agents must be present. Make sure you have a reliable and high-quality electrical network that can withstand heavy loads. The power of some units is up to 50 kW.
Important: do not open the sawmill on your own summer cottage. Regardless of what form of ownership you choose, the land must be alienated to fund industrial work. If land plot If you just have property, you will not be able to conduct business legally.
Equipment purchase
The list of units used will depend on what type of sawmill you are going to open, what range of tasks to perform, and what kind of products you are going to produce. So, if you are going to extract raw materials yourself, the amount of necessary equipment will increase. The number of units will also increase if you plan to process waste from production for further sale. The following types of equipment may be involved:
- disc machine or band saw with manual or hydraulic system submissions. You can give preference to the first or second type when you decide what type of sawmill you will have - belt or disk. To select the necessary equipment, study the advantages and disadvantages, as well as the features of the products;
- mini machines and frame machines:
- edge trimming machines;
- multi-saw units;
- saw sharpening equipment;
- drying chamber;
- equipment for creating briquettes from sawmill waste;
- hand saws, also chainsaws;
- equipment for loading and unloading.
Project Summary
The goal of the project is to organize an enterprise for the production of lumber (“Pili-Pila”) in the Autonomous Republic of Crimea, in close proximity to the city of Simferopol. The prerequisites for the development of the project are: a shortage of affordable building materials on the territory of the republic, associated with the lack of land communication with the mainland; lack of established supply channels from Russian manufacturers; implementation of the state program for the development of the republic related to infrastructure development, housing construction, etc.; increased interest of private investors in construction in the republic.
Lumber is one of the most widely used building materials, which can be used for exterior and interior decoration of buildings, for the construction of floors, stairs, roofing, etc.
The technological chain of production organization includes the supply of round timber, its sawing and planing on site. Sales - wholesale by regional bases building materials. Some volume may be sold at retail.
A limited liability company was chosen as the legal form; taxation form - simplified tax system.
The project is investment-attractive, which is confirmed by integral efficiency indicators calculated taking into account all costs and planned revenue of the enterprise. The indicators are given in Table. 1.
Table 1. Integral indicators of project effectiveness
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Discount rate (r), % |
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Discount rate (r-month), % |
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Payback period (PP), months. |
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Discounted payback period (DPP), months. |
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Net present value (NPV), rub. |
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Return on Investment Ratio (ARR), % |
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Internal rate of return (IRR), % |
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Profitability Index (PI) |
Description of the industry and company
To date, open sources contain information about only one lumber manufacturer throughout the republic, located in the city of Dzhankoy. 97% of lumber comes to Crimea in finished form from suppliers on the mainland. Moreover, their cost is on average 55-65% higher than the cost of similar materials in other regions of the Russian Federation.
At the same time, the pace of construction is increasing. According to the government development program of the republic, the territory of Simferopol should be expanded 7 times. In addition, the volume of construction and reconstruction of tourism infrastructure is increasing. The organization of a free economic zone (FEZ Crimea) makes the region attractive to investors from other regions.
At the same time, from 50 to 70 building materials bases are present and successfully operate in the region, selling edged and unedged lumber wholesale and retail. Supplies to them are made from producers in the “forest” regions of the mainland of the Russian Federation. All these organizations are potential consumers of the products produced by the project. The total consumption of lumber in the republic and the city of Sevastopol is estimated at 12-15 thousand cubic meters per month.
The most popular type of product is edged boards, which have a wide range of applications. Then - timber, planed board, block house, imitation timber, etc. On edged board accounting for at least 65% of the total market volume or 8.5 thousand cubic meters. In the coming years, demand is expected to grow steadily within 5-10% annually.
Much attention is paid to the choice of supplier. The selection was made according to a number of parameters: quality and price of the material, convenience and cost of logistics, stability of supply of the required volumes. The production is supposed to be located no further than 5 km from the Simferopol - Gruzovoy station, which from the point of view of organizing logistics will be as convenient as possible, because transportation of raw materials is expected to be carried out by rail.
The production facility is selected primarily from the point of view of the possibility of implementing the technological cycle, manipulating workpieces and ready-made material 6 m long, etc. Loading equipment is rented. Considering the seasonal nature of demand for the products in question, this is a more cost-effective option than purchasing property.
The main sales channel is wholesale supplies of lumber to building materials depots located on the peninsula. Minimum order quantity - 30 cubic meters. Delivery is organized by Pili-Pila LLC with the assistance of transport company or private carriers. In addition, it is possible to sell goods at retail, subject to pickup.
Investment costs include, first of all, the purchase technological equipment and the costs of creating an initial supply of raw materials. The list and volumes of investment costs are given in Table. 2.
Table 2. Investment costs of the Pili-Pila project
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Name |
Amount, rub. |
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Warehouse and office equipment |
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Equipment set |
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Purchasing software |
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Working capital |
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Purchase of raw materials |
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Own funds: |
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Required borrowings: |
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Duration, months: |
Description of goods
The range of manufactured products is given in Table. 3.
Table 3. Nomenclature and description of products manufactured by Pili-Pila LLC
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Name |
Characteristic |
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Edged boards, thickness 25, 40, 50 mm; length - 6 m, 3 m |
Edged boards 1-2 grades made of softwood, according to GOST 8486-86 natural humidity |
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Beam 100x100, 150x150 |
Beam made of softwood according to GOST 8486-86 natural humidity |
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Unedged board 25, 50, 60 mm |
Unedged board, grade 1-2, made of softwood, natural moisture |
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Coniferous wood block, natural moisture |
All lumber is produced from softwood logs (spruce, pine) using specialized equipment. The supplier is the logging enterprise “Vyatsky Lesnik”. The raw materials are of high quality and have an extremely low level of rejection.
The scope of application of lumber, as mentioned above, is extremely wide. Partially, the scope of its use depends on humidity. Natural moisture material is most often used for exterior finishing, roofing, lathing, etc.
Finished products are stored in a closed, unheated warehouse on pallets, on which they are then transported to the customer. When storing, a temperature and humidity regime is ensured that does not allow the wood to rot or dry out.
Sales and Marketing
Since these products (subject to GOST compliance) have subtle differences in consumer characteristics, the main competitive advantage is price and stability of supply. Stability is ensured by the territorial proximity of production and the ability to cut materials to order within 24 hours from the date of order. Such terms are unattainable when delivering from the mainland - the delivery time in this case can be at least 10-14 days.
In addition, the competitive advantage of the enterprise as a whole is the ability to implement a more flexible pricing policy. The majority of suppliers of lumber from the mainland ship on the condition of prepayment or payment upon receipt. The presence of employees of Pili-Pila LLC directly on site allows us to assess the assets of each client, his solvency and reputation, which, in turn, allows us to offer more flexible payment terms for goods - installment payment, trade credit, etc. In the difficult economic situation in the country, this is a huge plus.
The main promotion activities are aimed at wholesale distribution channels: advertising in specialized catalogs and construction portals. However, the main tool is active sales. The sales representative establishes contacts and conducts negotiations with managers and specialists of supply departments of wholesale bases, as well as construction companies.
By the end of the first season of the project, the company’s client structure should consist of 2-3 anchor clients, providing up to 60% of sales volume; the remaining 40% should come from 10-20 small clients. Planned revenue results are planned to be achieved by the end of the first construction season, because Thanks to preliminary work, there are already clear agreements with a number of companies in the region regarding cooperation.
Direct shipments are carried out by a sales department specialist located on the territory of the Pili-Pila production and warehouse complex. Shipment is carried out without approval from management upon prepayment. Shipment on postpayment, deferred payment terms, etc. carried out only in agreement with the director of the enterprise. Shipment is carried out within a working day from the moment of confirmation of its possibility, subject to self-pickup, and within 2-3 working days if delivery is required by Pili-Pila LLC.
The competitive environment is represented by only one lumber manufacturer, located in the city of Dzhankoy. However, according to available data, the organization is currently experiencing a serious shortage of working capital. If previously its territorial location was successful from a logistics point of view, then after the closure of the border with Ukraine, such a location becomes inconvenient. There is no information about the incoming prices of this enterprise, but the wholesale price it offers to its customers is known - 8800 rubles. per m 3 edged lumber 1-3 grades of natural humidity. There is also reason to assume that the company does not have a permanent reliable supplier of raw materials, which leads to fluctuations in wholesale prices and profitability, as well as instability in product quality.
Production plan
The production of Pili-Pila lumber is carried out from high-quality round timber, supplied from one of the largest logging companies in the country. Delivery is carried out by rail to the Simferopol - Gruzovoy station in gondola cars. Loading of one gondola car is up to 90 m 3 . The rhythm of deliveries is 2 times a month, the volume depends on the need.
Production volume is adjusted according to the demand forecast for the week ahead. Line productivity - 150 m 3 /shift. The planned equipment load upon reaching planned sales volumes is 80%. Warehouse turnover is planned at 1 week.
The equipment supplier was selected based on detailed analysis technical characteristics machines, cost, delivery conditions, as well as reviews about the quality of equipment and the quality of work of the supplier himself.
Equipment delivery time is 14 calendar days from the date of payment. The supplier carries out installation, commissioning, configuration of equipment and personnel training. The duration of commissioning work is 5 working days. The planned duration of training is 5 working days. In the future, the equipment supplier undertakes to carry out the necessary additional training, work on setting up and repairing equipment not only during the warranty period, but also after. Service conditions during the warranty and post-warranty period are regulated by the service agreement.
In order to increase production efficiency, a decision was made to purchase ready-made aggregate production line instead of separate machines. The line carries out a full cycle of work on loading the stream, removing the slab and crushing it, calibrating the timber and sawing it in accordance with the task.
Finished products are stored in a warehouse, which is a covered unheated room with good ventilation. Lumber is stored in stacks with the obligatory use of wooden slats to ensure sufficient ventilation. Lack of air circulation can lead to the formation of rot, mold and mildew.
Variable costs include the cost of raw materials and transportation costs. The cost of transporting 1 car from the supplier to production is 250,000 rubles with a load of 90 m 3. Thus, with the cost of raw materials within 3,500 rubles/m 3, the cost of transportation will be approximately 2,800 rubles/m 3. In addition, the costs of transshipment of raw materials from the railway station to production are taken into account. Thus, variable costs per 1 m 3 will be 6,500 rubles.
Table 4. Variable costs and formation of the wholesale selling price of goods
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Product/Service |
Expenses |
Trading |
Price |
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Edged board |
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Unedged board |
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Total: |
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Fixed costs consist of rent, advertising, utility payments etc. (Table 5). The required production area is about 200 m2, warehouse space is 300 m2. It is also necessary to provide a staff rest room, toilets and showers, a dining room, and an office space. Thus, total area will be about 600 m 2.
Table 5. Fixed costs
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Name |
Amount per month, rub. |
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Rent |
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Communal payments |
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Telephony and Internet |
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Depreciation |
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Business expenses |
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Administrative expenses |
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Forklift rental |
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Total: |
It is especially important to ensure high level occupational safety. All workers involved in production are required to undergo training, certification and annual recertification in safety precautions. The basic requirements for employees when hiring them are at least 5 years of experience in production (not necessarily woodworking), responsibility, and absence of bad habits.
Organizational plan
When implementing a project, the following main stages can be distinguished: ordering and supplying equipment, installation and configuration of equipment and training of workers, the first stage of project implementation, the second stage of project implementation.
Order and delivery of equipment - 14 calendar days. Installation, commissioning and training - 10 working (14 calendar) days. The first stage of project implementation is understood as the period preceding the achievement of planned sales figures. The second stage of implementation is the direct activity of the enterprise in accordance with established targets. It is planned to enter the second stage by the 6th month of work.
Management functions are carried out by the director - a hired employee with experience in the field of woodworking or in the field of lumber trade. It is critical to have experience as a director (deputy director) of an enterprise.
The work of attracting clients is carried out by sales representatives. The main work occurs in the off-season to prepare the soil for the season. Customer service is provided by sales specialists who process incoming orders, issue invoices and control payments, and organize shipments.
All employees are carefully screened before a hiring decision is made. As a result, recruitment occurs with the goal of long-term cooperation, and not seasonal work. Employees retain their salary even in the off-season, when there is actually no production work or sales of goods.
Table 6. Staffing table and wage fund
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Job title |
Salary, rub. |
Number, persons |
Payroll, rub. |
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Accountant |
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Director |
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Brigadier |
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Sawmill operator |
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Sales Manager |
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Sales Representative |
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Storekeeper |
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Total: |
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Social Security contributions: |
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Total with deductions: |
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Figure 1. Organizational chart of Pili-Pila LLC
Financial plan
The financial plan is designed for a five-year perspective. All types of enterprise costs are taken into account. Based on comparison various options, based on the calculation results, a simplified taxation system with the object “income minus expenses” was selected.
Traffic report Money is given in Appendix 1. The cost structure of the enterprise is reflected in Table. 4, 5, 6. total amount investment costs - 7.17 million rubles. Of these, 2.0 million are own funds. 5.17 million rubles. it is planned to attract in the form of a bank loan at 18% per annum for a period of 48 months. Payments are made in annuity payments with a deferment of the first payment of three months. Investments in working capital amount to 1.5 million rubles. - this will provide the enterprise with working capital until it reaches payback.
Efficiency mark
To assess the investment attractiveness of a project, generally accepted integral indicators are used - net present value, profitability index, internal rate of return, etc. Integral indicators are given in Table. 1.
The discount rate was chosen at 15%, which is typical for organizing new production of non-innovative products; a market for the products already exists. With such a discount rate, all integral indicators have very high values, which allows us to talk about the high investment attractiveness of the project. The payback period is 6 months, and the net profit after the enterprise reaches its planned targets will be 15.65 million rubles. in year.
Risks and guarantees
Since the business area in question is well developed both in global and domestic practice, the risks associated with the implementation of this project, low. Low level competition and high demand for products of this type also suggest good prospects for the project.
However, it is necessary to take into account all possible risks associated with the implementation of the project. Risk assessment and measures to prevent them and/or eliminate consequences are given in Table. 7.
Table 7. Possible risks and measures to prevent them
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Risk |
Probability |
Severity of consequences |
Events |
|
Failure to achieve planned sales volume |
Active work of sales representatives in the first stages of project implementation; active market processing; ensuring competitive prices and delivery conditions |
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Changing geopolitical situation |
Minimization of warehouse stocks; transfer of funds to the most liquid assets |
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Deterioration of the economic situation in the country and region |
Ensuring a relatively high share of sales through budget construction projects, because they are least susceptible to the influence of market conditions |
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Entering the market of a direct competitor |
Ensuring a strong position in the market already at the first stage of project implementation through a flexible pricing policy and delivery conditions; establishing strong partnerships with key clients |
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Interruptions in the supply of raw materials due to the termination of the ferry crossing due to weather conditions |
Ensuring a supply of raw materials for a week and a minimum supply in case of force majeure - for 4 shifts |
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Interruptions in the supply of raw materials due to the fault of the supplier |
Constant market monitoring and maintaining relationships with alternative suppliers |
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Increase in raw material prices |
Indication in the supply contract of the conditions for increasing prices - information at least 1 month in advance, the possibility of fixing prices for a certain volume of goods, etc. |
When taking into account all possible risk factors and implementing measures to prevent them, we can say that the project is low-risk. And, therefore, it is of interest to the investor.
Applications
Cash flow statement and calculation of project performance indicators
Capital investments in business: from RUB 1,000,000.
Payback: from 1 year.
IN last years being closer to nature and striving to take care of the environment has become a real fashion.
What led, among other things, to a rapid surge in popularity wooden houses, cottages and other construction from natural materials.
And this, in turn, led to the fact that sawmill as a business began to attract many entrepreneurs. Including beginners, because this entrepreneurial activity It has a fairly simple start.
The amount of capital investment is also not prohibitive: 1,000,000 rubles is enough to open a full-fledged production.
In general, a sawmill is a special machine that cuts wooden beams or logs (the so-called round wood) along.
But later this word began to be used to name the entire production as a whole, where the sawmill is the main, but not the only piece of equipment.
If this profitable business caught your attention, from the article you will learn all the details and secrets of its organization.
Sawmill as a business today
The surge in popularity of “natural” wood construction has created fertile ground for the opening of a sawmill.
Accordingly, competition between entrepreneurs intensified.
But there is a positive side to this.
For example, those who want to save money at the start can purchase used equipment.
Of course, such a step must be approached wisely. But if you know what and how to choose, you can use this great opportunity reduce the barrier to entry into business.
Also, based on current trends, we can conclude that the crisis, for some reason, does not affect production window frames from natural materials.
This means that the products produced by sawmills will be in demand in any case.
Analysis of the market situation
“When unraveling the secret of success for managers, it is worth looking not at the solution, but at the method that allowed us to arrive at it.”
Justin Menkes
Although the sawmill business is profitable and in demand, these indicators cannot be generalized.
For some regions, the benefits will be less obvious, if not significant at all.
If you are planning to open a sawmill, it is worth assessing the situation using the following indicators:
- How competitive is the wood products market in your region?
- Are there sufficient markets for sales or will the raw materials have to be transported to another region?
- What products are most actively purchased (what should you focus on producing)?
- What suppliers are there in your area and on what terms are they willing to supply raw materials?
- Does the administration of your region issue logging permits?
Is it possible to introduce a ban on activities in the near future?
What is needed to start a sawmill business?
The first thing you need to do before starting any business is to create a business plan.
The document for opening a sawmill needs to highlight the following points:
- wood reserves in the area selected for development,
- where will the products be sold?
- how much does it cost to open a sawmill and what exactly this money will be spent on,
- what equipment is needed for the work,
- how many people will be needed to be hired, and what wage will be established for them,
- calculation of the profitability and payback of this project.
When you analyze the current state of affairs in the wood processing industry in your region, pay special attention to your competitors.
It is necessary to assess their presence in different areas (processing of raw materials, their production, manufacturing of products, etc.).
It is also important to determine the proportion of their presence.
Based on these data, a conclusion is drawn about potential competitive advantages.
For some businesses, a good move will be more affordable price, for others, convenient delivery conditions to customers.
Financial calculations are also a very important section of a sawmill business plan. Perhaps even the most important.
The usual investment to open a sawmill is at least 2 million rubles.
But if you correctly analyze all the above points and develop a work strategy, you can get by with less investment.
The payback in this case will be no more than a year.
Potential sales channels for sawmills
It is important to identify channels for selling sawmill products at the business plan stage.
By the time you open, you should already have a list of sales points. A website has also been prepared to present the company.
It is also important to add information about the organization to thematic portals and relevant printed publications.
Products for sawmills are in demand:
- various furniture factories;
- factories that produce window and door profiles from wood;
- companies that make other wood products;
- building materials stores;
- wholesale points of sale of wooden building materials;
- individual developers and others.
How to open a sawmill: selecting premises
To open a sawmill, you need to buy or find a premises for rent, the size of which will be at least 500-700 sq.m.
It makes sense to look square meters not in the central regions.
This way you can save up to 50% on the cost. Of course, you will have to invest in arranging the entrance to the production and improving the areas.
But due to the short distance between the forest and the workshops, you can further save on the transportation of raw materials.
There should be many production facilities on the territory of the complex:
- the main workshop where production is located;
- workshops where repairs are carried out;
- storage space for raw materials;
- warehouse for manufactured sawmill products;
- hangar;
- administration building;
- personal premises for employees - toilet, shower, kitchen.
How to open a sawmill from scratch: employees
A sawmill is a business that is impossible to open alone.
You will need a team of professionals, which will consist of the following positions:
- administrator,
- machine workers,
- repair workers,
- handymen,
- drivers,
- security (watchmen).
The size of the team will depend on the expected production volumes.
Payment should be set to piecework to create an additional incentive for employees to work.
Risks of opening a sawmill
When drawing up a business development plan, it is important to take into account the potential risks that may arise when opening a sawmill.
There are two main difficulties:
- Opening a sawmill is relatively simple and does not require huge start-up capital.
Therefore, many aspiring entrepreneurs are trying their hand at this area, creating huge competition.
Many sawmills close after the first operating season.
But still, the fact of high competition in the field cannot be canceled. - Another risk that awaits entrepreneurs who decide to open a sawmill is a high level of dependence on the construction industry.
The more demand for construction services falls, the worse things will be at the sawmill.
How much money do you need to open a sawmill?
To open a sawmill you will need at least 1 million rubles.
The largest part of the costs (about 70%) will be for the purchase of equipment.
If you want to save money on this item, you may want to consider buying used machines.
Due to the past crisis, many are on sale high-quality equipment at a very affordable price.
But what you should not do under any circumstances is to buy machines from unreliable manufacturers, which differ only in their cheapness.
After all, the quality of your equipment is the key to success.
One breakdown can stop the sawmill from working, and this is unacceptable.
The opening cost table looks like this:
| Business expense item | Amount (rub.) |
|---|---|
| Total: | From RUB 1,000,000 |
| Purchase of equipment | From 700,000 |
| Setting up and starting the equipment | 20 000 |
| Rental of premises | From 50 000 |
| Repair and arrangement of premises | From 100,000 |
| Advertising campaign | From 10 000 |
| Salary to employees | Piecework |
| Unaccounted expenses | 20 000 |
The video below shows
sawmill operation process:
Is sawmill a profitable business?
Statistically, all investments in a sawmill business will pay off within a year of operation.
The profitability level is at least 40%, and sometimes up to 70%!
And this is a very high figure.
But if you are going to open a sawmill of a more serious level, the numbers will change.
Extensive production will cost the entrepreneur no less than 4,000,000 rubles.
The payback period for the investment will increase to several years.
There is an important detail that will help you get more income from activity.
To do this, you just need to establish a work cycle that will not have waste. After all, about half of the raw materials remain in the form of sawdust, shavings and other small wooden waste.
They can not only heat dryers, but also sell them.
They will “disperse” especially actively in prepared form - that is, as fuel briquettes or pellets.
But they can also be sold as material for companies producing furniture boards.
In any case, you can also make money from seemingly useless sawmill production waste.
And as a bonus, get more loyalty from environmental services.
At the end of all of the above, we can draw a conclusion.
If you have a desire to work in the woodworking industry, and also have a starting capital of at least 1,000,000 rubles, the question is: how to open a sawmill, you will solve it without any problems.
This business does not come with many complications.
Moreover, there are many loopholes that will help you save or increase revenue without harming production.
A sawmill is a profitable business, but highly competitive.
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