Own business: lumber production

* The calculations use the average data for the World

The production of lumber has always been a fairly profitable area of ​​our own business, because the demand for such materials never significantly decreases, and quality products almost always find their consumers. Consumers are furniture factories, construction companies, manufacturing enterprises of various directions, because wood in many cases is an indispensable material. In the Asian part of Russia there are a lot of forests, the price of wood is relatively low (if compared with many other countries), there should be no problems with raw materials, hence the good prospects for such an undertaking. However, one must understand that competition in this area can be serious, and not every entrepreneur has enough funds and resources to create a successful enterprise from scratch, whose products will be stably bought. To do this, you will have to make a lot of effort, not to mention money.

So, to start your work, you must contact your local tax office to register as a business entity. Next, you will have to get permissions from all managing organizations to conduct your activities, this applies primarily to the production premises, as people will be involved there. In general, the requirements here are standard - that is, you need to contact the Rospotrebnadzor and the Ministry of Emergencies (to their local offices). If you plan to harvest wood yourself, that is, have a piece of wood at your disposal, and for this you need to participate in state auctions. There may be serious difficulties, but in more detail all organizational activities in this direction are considered in the article on forest trade. Here, organization of production is considered in more detail, because not every entrepreneur rents a forest plot, much more often raw materials procured by third-party companies are bought for the enterprise.

So, when organizational issues are resolved, you can begin to search for premises. In general, it’s ideal to find a place somewhere in the suburbs, because there the rental price is much lower, while the proximity of the city allows for the effective implementation of its products. If the entrepreneur owns a plot outside the city, then it makes sense to use it. But still it is better to initially have not only a place, but also infrastructure, because for work you will need several buildings, not only industrial purposes. In general, the area can even occupy several hectares, however, for small enterprises, only a few ares may be sufficient. In general, a site is selected depending on the business plan and available capacities. Today you can open a small enterprise that produces a limited range, but only of those products that are in demand in the region. In general, it should be noted that opening such a business makes sense in those regions where wood suppliers offer a really high-quality product with which there will be no problems in production, which will make it possible to produce good goods. Thus, renting such a large plot can be a very serious item of monthly expenses, it’s very difficult to give even an approximate cost, because it all depends not only on the location, but also on the condition of the premises and, for example, access roads. So, you can even rent a very large complex for several hectares for a relatively small amount of 100 thousand rubles, but almost certainly then you will have to invest several million only in the repair and construction of the road. In other cases, the lease will be very expensive, whence the conclusion is - it is better to own your own land or think about buying it.

The next moment in organizing a business is the acquisition of the necessary equipment. Here, as always, there is an opportunity to save some money if you buy used units, but this option rarely leads to the fact that the production process goes on without interruptions and complications. You also need to understand that today there are a huge number of equipment suppliers, and European or American-made cars will cost the most. But often, the best solution is to contact Russian manufacturers, because they can offer products at a relatively good price, which at the same time does not increase due to customs operations and transportation. However, when assembling the workshop, a huge number of factors must be taken into account. First of all, the optimal performance indicator of the sawmill is calculated, as well as the nature of the process - machines or production line. Today, a rare plant is engaged in the equipment of isolated machines, most often it is in-line production with an established scheme of movement of material flows. Also, gaterling technology is almost no longer used, it was replaced by a band saw. If the machine has the ability to perform the function of a conveyor of finished products within the workshop, this greatly simplifies the process. Already preliminary it is necessary to calculate the invested amount, the possible actual profitability of production and the maturity of loan obligations, if any, the entrepreneur plans to take. The cost of the equipment is approximately 500 thousand rubles for the equipment of a small enterprise - from 150 thousand rubles there is a simple tape sawmill, from 100 thousand - a conveyor, from 50 thousand - a trimming machine, and small equipment is bought for the rest of the funds: a grinding machine (20 thousand), adjustable a machine (10 thousand), a hook (10 thousand) as well as other small devices, mostly auxiliary. However, depending on the planned assortment, other devices may be required, such as: a horizontal disk sawmill (200 thousand rubles), a coal-powered sawmill (200 thousand rubles), a hydraulic wood shredder (100 thousand rubles), a cylinder saw (100 thousand rubles). It is also worth considering the raw material base, because if the region does not have good wood, then it is pointless to produce some types of products (its quality will be too low); as well as the breeds and working diameters of the sawlog, which the machine can process, the rigidity of its requirements for sorting. In addition, we must not forget about how much the products of final processing are in demand on the market, having also calculated the cost of production. The greatest demand is timber and edged and unedged boards. Demand for these products is almost always there; for more complex products, they can fluctuate greatly. Moreover, due to the fact that only the most developed enterprises survive today, an entrepreneur needs to consider the possibility of equipping his production shop taking into account the requirements of the European standard. Then it will be possible to achieve a good coefficient of yield of useful material (more than 60-70% of the volume of raw materials for any type). Having all these calculations, it is already possible to accurately determine the area of ​​the woodworking workshop, because the productivity of the enterprise directly depends on it. As for the internal equipment, then you need to have a reliable electric network, water supply and other communications. The operating temperature of the machines is important for the organization of the production process, because sometimes it is necessary to install additional cooling devices. The next important point is the cost and the average frequency of saw replacement. They are consumables, and a large number of saw blades are constantly needed. The cost of one is from 1 thousand rubles, but they can be more than 10 in the machine, so it makes sense to calculate the complexity of the service. The company must have an experienced sharpener and sawmill, the qualification of which allows you to deal with specialized equipment. In general, you need to understand that different suppliers of saws and other consumables promise different maintainability of spare parts and their cost, therefore, if high-quality consumables are supplied, a good sawmill can make the same saw last very long (several months). Otherwise, you have to constantly buy new ones. And, of course, this reduces the overall complexity and cost of servicing the machine itself. It is also worth noting that the equipment of even a medium-sized enterprise costs several million, not to mention large plants that are designed to produce huge volumes of products.

The next moment in organizing a business is the search for specialists to work at the enterprise. Here, if it is not planned to rent your own forest area, it will be enough to hire personnel who will be engaged in the maintenance of machines. The number of people is determined by what kind of work schedule will be in the enterprise, how many units are installed and what planned performance indicators are set. Also, depending on what kind of equipment is purchased, a different number of people may be required, because there are devices that work fully automatically, and there are those that require constant maintenance, that is, the operator at the workplace behind one machine. But you also need to hire people involved in the administrative sphere, and if some processes are not outsourced - such as bookkeeping or, for example, in the case of non-formation of your own security service - then the staff of the enterprise can be very large. In large enterprises, the number of employees can be more than a hundred, and sometimes several hundred. The entrepreneur himself (or co-founders) can take a leadership position. You also need attendants, that is, those people who are not directly involved in the production process (this does not include sawing rights, because this person is also constantly involved in the production process). For example, an enterprise can deliver its own products or, conversely, bring raw materials for production, that is, have its own fleet, and then you need to hire not only drivers, but also those specialists who monitor the condition of the machines. If we take the average salary equal to 30 thousand rubles, then with a staff of 20 people (from 10 people are people directly employed in production) it turns out that only the salary will amount to 600 thousand rubles of expenses every month, not to mention other social contributions ( up to 20% of this amount). Of course, this applies only to large enterprises, but in any case, you will have to work with a considerable number of people, and payroll is a very important point. This calculation is nevertheless for a small enterprise.

Now we will calculate the amount of starting capital:

Registration of a legal entity - from 20 thousand rubles.

Rent - from 100 thousand rubles.

Equipment - 940 thousand.

Salary - 600 thousand rubles.

Raw materials purchase - 500 thousand rubles.

Total: 2 million 160 thousand rubles. Monthly expenses: 700 thousand rubles. Considering the opening of the sawmill, which does not have its own source of raw materials, it must be said that it is also necessary to find a supplier of wood, and in some regions this can be difficult (therefore, it was said that it is advisable to open such an enterprise in the area where there is a large number of such suppliers, that is, where a considerable territory is covered by forests). Now, with regard to the cost of raw materials - depending on the type of wood, it can change, for example, there is wood that costs less than 1 thousand rubles per cubic meter, and there is one that costs more than 5 thousand for the same volume. But on average, the cost of one cubic meter is two and a half thousand rubles. A certain percentage may be transport costs (depending on the volume of the batch), if the supplier does not assume the possibility of delivery on their own. Thus, more than half of the cost of production will be the cost of raw materials, all other costs are the content of own production, that is, salary and electricity costs. The larger the volume of production - the lower this percentage, hence the consequence that the profitability of production increases with scale. As a result, timber and edged boards made in accordance with GOST are sold at a price of 6-7 thousand rubles per cubic meter, unedged boards are sold much cheaper (from 4 thousand), but this is quite natural, because the cost of its production is much lower. With an average cost of one cubic meter of products of 5 thousand rubles and with the sale of 200 cubic meters per month, the income will be 1 million, operating profit - 300 thousand rubles, net profit under the simplified tax system - 255 thousand rubles.

Such a business cannot be called easy, it requires a considerable amount of investment, and if you do not have your own site, it often turns out to be unprofitable. In any case, the payback period of the project will be very long, because many enterprises even spend their first year of work on building relationships with suppliers and consumers, and occupy their place in the market. But in case of successful development, you can rely on very good profits later on, and if you constantly develop and offer your customers a quality product, if you introduce new positions on the basis of market demands, you can also crowd out competitors. In general, this business is suitable for entrepreneurs with large funds, because it can hardly be classified as small, and sometimes even medium.

Matthias Laudanum

(c) www.clogicsecure.com - A portal to small business business plans and guides.

08/18/2019

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