Starting a Small Scale Logging Business: Can It Work?
For many in the industry, logging isn’t just a job—it’s a way of life. Those who were once in the industry and left often find themselves dreaming of sawdust and mountain air, longing to return. A great many more who have never lifted a saw find themselves drawn to the idea. But it isn’t all romance. There are many things to not like about the logging industry, such as the stress that comes with managing large and expensive equipment and the damage that comes to the land from driving heavy machinery on soft ground. As a result, many have dream of a solution: Starting a small-scale logging business. The idea is that by using smaller, less expensive machines, you can make a living by logging smaller properties and creating a higher quality outcome than would otherwise be possible. Is such a plan realistic, or is it just a head-in-the-clouds delusion? Despite likely skepticism, it is absolutely possible, but it takes effort in marketing and communicating your value proposition as well as knowing the numbers of your business and your economic limits. But before we discuss how to make it work, it’s important to understand exactly what the purpose of such a business model would be.
The Benefits of Small Scale Logging
I worked in the world of large-scale, industrial forestry for many years. These days, I work on my own property with a compact tractor and forwarding trailer, pictured above. I can tell you from experience that a small scale logging business model can have tremendous benefits for both the landowner and the operator
Benefits for the Landowner.
The core measure of any harvest should be the benefits to the landowner and their forest, as this is ultimately the consumer, and businesses rise and fall on the value they produce for consumers. The value a small-scale logging system can provide for a landowner is unmatched. Full-scale harvesting systems, while economically efficient, can be incredibly destructive to the land. By the end of a harvest, as much as 30% of the total acreage can be occupied by 20-foot-wide trails, and those trails can be compacted or full of ruts, which can permanently scar the land. What’s more, the residual trees can be heavily scarred and damaged, leading to decimated value and even catastrophic mortality. Whatever economic efficiency is gained from larger equipment during harvest is too often eaten away with the quality of future growth.
As an example of this dynamic, you can see the difference between a stand harvested with a full-sized Komatsu processor (bottom) and a much smaller Vimek 404 (top) in the photo below. The two pictures beside each machine represent the width of the trails as seen in the crowns and from the ground. Clearly, the smaller machine was able to leave much smaller trails. More importantly, not long after these photos were taken, a massive windstorm came through the area. Most of the trees in the Komatsu stand were blown down due to the increased vulnerability and root damage that came from larger trails. The Vimek stand was virtually untouched.
While this is an example of a commercial thinning in a softwood stand, the difference in a hardwood stand can be even more impactful, as hardwood trees are more dependent on quality for value. To learn more about this silvicultural dynamic, what brings value to timber, and why small scale logging can preserve that value, check out our free forestry guide that covers this topic, which you can get with the link below. If you are thinking of starting such a business, you are definitely going to want to study up on such principles.
Benefits to the Logger
The benefits are not limited to the landowner and forest. A logger has much to gain from investing in smaller-scale machinery. Traditional machinery is large, complicated, and incredibly expensive. Machines can cost as much as three quarters of a million dollars, and repairs can easily run to the tune of twenty thousand. Running a business under such conditions is incredibly stressful, and I’ve personally met many loggers who had lost a part of themselves over the years thanks largely to that stress. Rates of divorce and mental health problems are high.
Starting a small-scale logging business comes with its own challenges to be sure. Logging is never an easy business, but the investment is far more minimal. A well-equipped operation can be established at the cost of forty thousand dollars, potentially far less depending on how small you want to go. Minimal start up expenses also mean minimal depreciation. Simpler equipment means less costly and easier repairs. The cost of labor (your own time) is by far the largest variable cost. It’s a low-stakes game, which means you have more control over when you work, the conditions under which you work, and the jobs you take. Put simply, full-size equipment has to be a full time job due to all the debt payments that have to be made. With small scale equipment, it can be your full time job or a side gig. The cost of keeping the equipment idle is almost non-existent.
In a world were businesses everywhere are hurting for labor, maybe a business with such flexibility is a more sustainable model.
Don’t Compete
In Zero to One, a must-read book for all entrepreneurs, Silicon Valley giant Peter Thiel lays out his case for what makes start-ups successful. One of his key tenets is that successful businesses escape competition by being sufficiently unique. The product they create is novel to such a degree that there is no alternative. Otherwise, competition will whither away margins and stretch your resources thin.
I am not going to argue that small scale logging has never been done before, but by owning such small equipment, you can easily out-class other loggers in your area. When you are creating super-narrow trails and deftly weaving in and around high-value residual timber, you stop being an industrial worker and start to resemble something of an artist. Your work is high-value and totally incomparable to that of other loggers. Unlike other jobs that often look displeasing after harvest, you can make a forest look better. Moreover, the future forest will be much higher value as a result of the minimal damage and a drastically decreased trail footprint.
When you are selling such an incomparable service, you have much more ability to command a price. The standard in the logging industry is that 50% of log revenue is shared with the landowner. As a small scale logger doing high quality work, you can easily command a 70% share. In situations where timber is smaller and the operation is an investment in the future growth of the forest, you might even be able to command 100% and still be producing ample value for the landowner.
Monopolize Small Parcels
Standard logging equipment is also incredibly expensive to move. Up to four pieces of heavy equipment need to be brought in, landings need to be built, and other infrastructure arranged. As a result, most loggers won’t even look at a property unless it is a minimum size (usually 10-20 acres). But the problem is that in most parts of the country most parcels are small, and the average parcel size gets smaller year after year due to subdivisions. These landowners are left with little means to harvest their property unless they want to pick up a chainsaw themselves. That’s where you come in. It is easy and inexpensive to bring in a tractor, ATV, or other piece of inexpensive equipment. Thus, you can command a higher premium by being one of the few available options. Maybe the only available option.
Is there a Market for It?
That all sounds great on paper, but is there actually a market for it? Will people recognize these advantages? Absolutely. As proof, Here is a paper from the Maine Organic Farmers and Gardeners Association detailing the problems they see with large scale equipment and the need for paying loggers on the basis of harvest quality. Anecdotally, after I bought my equipment (which I did not initially market to others) and made a post about it on social media, a non-forest-industry friend reached out to me. He explained his struggles in finding a logger to harvest his small property, and asked if I could help him out. The clients are out there. You just need to find them.
This is going to be the key to success as a small scale logging business–marketing. You must be able to communicate the value you provide to potential clients and explain why they should choose you over the “competition.” This is an area where most loggers, big or small, fall short. Marketing activities in the industry are minimal. As proof, that’s how I was able to get you onto my website so easily. I’m one of the few in the industry actually writing about these topics. So think how much you could do with nice, informational brochures with good imagery to hand out to clients. One word of advice: in forestry and logging, pictures go a long way. A decent camera and a cheap drone can capture stunning images to really show potential clients why you deserve to be trusted with their land.
Know Your Numbers and Capabilities
As with any logging business, a key to success is going to be how well you know your capabilities, costs, and productivity. Obviously, a smaller machine is going to have more limited capabilities than a full scale machine and far less production, so you probably won’t want to try logging on the side of a mountain or in a stand of 36-inch diameter oak trees. It’s important you understand the limits of your equipment to avoid poor productivity, repairs, and even outright destruction of your machine.
Moreover, it is important to understand factors that affect your productivity, namely the size of the trees, skid distance, and terrain. Knowing these factors and how they affect costs and productivity are critical for assessing the productivity of a stand before you agree on a price. To research this more, I highly recommend you check out the work of Steve Bick out of Northeast Forests LLC. He has a tremendous amount of tools and free materials to help loggers understand the economics of their business, including the PATH 3.0 tool, which is a must-have tool for estimating your operations cost per productive machine hour.
How to Get Started
Take it from someone who has started multiple businesses: Your first client/customer is always the hardest, unless it is your mom. The same will be true of a small scale logging business. Without a proven track record, you may have a hard time finding a client initially, but don’t let this discourage you. It will get much easier, and with good work, you may find yourself turning down clients due to an overflow of interest in not much time.
My advice for getting the first few clients is to accept taking a loss. It may even be wise to return to the landowner 80-100% of revenues, if you can afford it. That’s because at first you will be moving slowly, learning, and making mistakes, so a discount rate can entice customers to take a chance on you. Moreover, any photos or referrals you can get from the first job will be worth much more than what you can be provided in terms of revenue.
But don’t be discouraged if the first job is awful. That’s logging. Process improvement is key, and in time you will be operating at peak efficiency, doing beautiful work, and commanding high premiums! Over time, you can build a small scale logging business to be proud of.
