I love hearing you guys talk my language being a retired CPA/ operating accountant this is interesting but most people are not taught to think like us. I guess other people need to think about these things before spending large amounts of money.
As an accountant as well, this is a video that is surely needed. Hard to run a profitable business without understanding the numbers. I'm sure there are people out there selling firewood that don't know if they truly made a profit at the end of the year. 👍👍
My take on firewood is most markets are undersupplied, its more about who’s turn it is to sell the wood they produced, the weekend warriors get to sell their wood first then the small and medium producers and then the large suppliers and the ones who make the most $$ are the big box stores that sell 1 small pallet of kiln dry for 150$ for 1/8 of a cord all of them sellout in the end 😊
By the numbers is a eye opener, the variables have to countered with some great vision of knowledge of where you are now and where you’d like to be to maintain time/profit values, short and long term. Thank to both of you for bringing your skills forward and incorporating knowledge that makes us aware of the path forward. 😀👍👍👍
I built a lot of these spreadsheets over the years. When I retired I missed doing this cost analysis. I still use spreadsheets for my living and home expenses and I still find them to be a very valuable tool. Once you get a functional spreadsheet built it simply becomes a process of entering data and numbers with one cell giving you a final number for what you are analyzing. Thanks I enjoy this kind of content from time to time. The other thing I do is keep a monthly tax spreadsheet which I use to prepare my taxes each year. I then don't have to wait at the end of the year for my brokerage and social security statements. Thanks.
I wrote up "Authorization for Expenditures" all the time as a Manufacturing Engineering Manager. It meant going through cash flow analysis of every capital expenditure I wanted to make. Of course it had to be signed off by God and everyone else including the VP of Finance. He always asked the most interesting questions. I was buying $10K in new drill bits for a CNC Machining Center. He didn't understand why I needed so many different sizes. I told him that's what the engineers design. Then he asked why they can't just make one size hole or maybe just a few?? Now Adam, how do you answer a question like that?
Love how you ran the numbers. I'd have liked to see the formulas used to produce the numbers, just because I use spreadsheets a lot for the business I work in, figuring out costs for our BOM and doing projections on units sold etc. I found myself pausing different portions of the video (which I vary rarely do) to do my own analysis. Thanks for sharing.
I typically work in Engineering/Purchasing and often cost auromotive parts (should costs). I started ckearing my fully wooded property for deer hunting. So I thought I'd sell some extra wood. I ran the numbers on a processor, and it was obvious I couldnt feed it without a logger bringing me loads. I quickly realized I'd be better off bot scaling. Free wood increases my hourly rate quite a bit. Im at 3.5 hours with my setup to process 1 bush cord into a large open bin. 40-50 bush cords a year max is not bad.
Sunday morning viewer here ~ found this very interesting getting Matt's view with Adam softening it for a "regular firewood guy" Valuable information for my next purchase decision....Or right now I am considering selling a Box splitter. This Vid provide me other avenues to view decisions Thank you Thank you! Keith aka Cowboy Joy and the Rough Cuts'
I had a guy do my firewood last year with a Multitek. I had a mix of log diameters, but what I noticed is that the smaller logs you speak of in the $900 loads didn't seem to affect his productivity. As a matter of fact they may have been slightly faster. He simply bucked up the entire log (or until the splitter chamber was full) and only cycled the splitter that one time.
I'm not an accountant but have experience estimating automotive parts manufacturing. Standard time depends on the type of equipment. Generally, you can write it off in 4 years, that would be standard according to accounting principles. Some equipment may be 10 years. Generally, the standard is to consider useful life. This typically means that you wrote it off completely (depreciate it) a number of years where the capital overhead (depreciation, financing costs, etc) is less than the maintenance costs/overhead. If the machine gets old and breaks down a lot, then available hours reduces and increases the hourly rate, and worst of all, might stop a customer from getting a delivery.
hi there very interesting . do a spread sheet on wood splitters , box wedge VS , ther faster but you may need more man hrs to reach max out out , but also more clean up and mabe 10 -20 % wood loss as well . . good show john
For a purchase this large waiting until after the election may change your numbers as well , considering who wins and what incentives are available for small business to either increase or decrease costs right across the board ... good video .
Excellent video Adam, we're tossing the idea of going into firewood production. We already do rental equipment, I'm going to be plagiarizing your spreadsheet. Hope both of your processors stay sharp! Mark at the Cay 🇨🇦🇺🇸🌴🪵👍🧮
Another intangible to consider is the physical side. Bucking and cutting that much wood by hand puts wear and tear on your body and workers comp claim risks on your employees.
Those are some great figures to consider when purchasing a firewood Processor.. but are limited to just the cost of the processor and not all related cost of running a 1000 cord operation.. any chance you can run some numbers on the day to day expenses such as, delivery truck, loaders and such??
This video took me back 50+ years when I took accounting as part of by BBA in marketing. 🤓 Was it ‘debits’ to the windows and ‘credits’ to the door or other way around? 🤔 Nice job guys.
should i finance a new dump truck 74k, or buy another 10k or so junker, ive spent 1.5k this year on truck but i need to put at leat 5k into truck to keep it running another 2 years at best, another 10k truck might be a lemon, some worries about 30k used truck from a dealer to as having hidden repairs that turn a used truck into an expensive...er used truck quick.........ive been in buisness 11 yrs and always bought 7-10k trucks but times have changed and what i used to buy is not out there like it used to be......what should i due??
A wise man once shared this piece of advice on used trucks specifically "rarely do people sell trucks that make money" take from that what you want to. Every used truck I've ever bought I've had to put a significant amount of work into to make it reliable. I'm not saying by new but build in a hidden issues number to your purchase price.
Great , lots of indirect costs, ie buildings,forklifts, containers, fuel, wear and tear, operator screw-ups . eye opener on costs and break even ? Lots to think about , enjoyment of not been hunched over a desk all day!
With my 401k kicking butt at 21% average over the past 3yrs, is it time to quit firewood and invest more into my retirement? For a processor to make sense, even one around $40k I'd have to be at 200 cords a year. Thie os making me think of retirement from growing firewood sales and just do my own.
As a retired CPA, I appreciate this type of video where you get into the numbers. Maybe I missed it, but did you consider the income tax savings on purchasing a piece of equipment?
Does purchasing a 40c stand alone or do you need to consider support equipment in the spreadsheet? I suppose it depends if you have loaders, kilns, cribs and other support assets or need them to keep up with the increase in production. Same with a supplier of logs. Can you really acquire a constant supply of quality logs of 1000/3000 cords per year? Can you sell that much finished product?
Great analysis, but you don't share what markup you put on a cord of wood. What is considered reasonable in a competitive market? How do you compete with the weekend producer?
What's he selling each cord for? If his profit with the new machine and the expensive wood vs a different machine and the less expensive wood is more than that difference per cord, I would think it would make sense to buy it to crank out as many cords as possible.
He is selling wood in many different quantities so that’s a hard question to answer. The single pallet 1/3 of a cord delivered to the customers garage is way more per cord compared to a dump trailer load dumped in your yard. I’d imagine he is selling wood for $400/ cord or more if you multiplied it out. He also has some accounts for whole semi loads of wrapped wood at a time. If you multiply his price per bundle to a whole cord it’s probably even higher.
I'd wondered if $300/cord made sense. Now I now it does. The question is quality. Clearly in this production, quality is pretty high. Anybody know where I can get quality fire wood near Virginia Beach? What I see, does not inspire me. Ideas?
What does a chord sell for in that area? Production cost seems really high at $220 ish per chord. We can buy a chord delivered for $200 all day long around my area.
So when purchasing a processor at this level wouldn't it make sense to look at other processors . An have you looked at wood cutta machines they use in Europe were they are autmated.
I'm curious why you'd only run 1000 cords a year on it. It seems the market is there for more firewood. So why not run it a full 8 hours everyday for however many working days per year? The Unit of Production only had 400 hours a year, which would nominally be 1/5 of it's potential output, less downtime for maintenance and other stop actions.
I don’t disagree with the math. BUT, math only proves math. I think of firewood splitting tools like this: Splitting wood is for an Axe or Maul. Every thing else is a tool to buy back my time.
Kiln dried, packaged firewood goes $225/facecord, delivered ($205 + $20 skid deposit) Or $425 for a full cord, kiln dried, loose, delivered. Seasoned (not kiln dried) goes for $360/cord...and the guy is barely keeping up with demand!
14:09 You also have to think about the people who are buying the wood...are you selling to people who have wood stoves..people that [HEAT] their house with wood or are you selling to people who just burn for fun in their fireplace or firepit in their backyard? I mean it's not guaranteed that you are going to sell that amount of wood per year... your going to have some off years and then some nice years... PA is not even on the top 10 list of states that have the most wood stoves in households... Vermont is first by the way.
Theres just too many utube stars out there know a days selling junk underrated firewood that is completely crap no quality at all to justify buying all this nice equipment why would you want to work like that just to turn dollars over it doesn't make sense everyone one of these warriors have screwed the markets up in every city very sad
I love hearing you guys talk my language being a retired CPA/ operating accountant this is interesting but most people are not taught to think like us. I guess other people need to think about these things before spending large amounts of money.
As an accountant as well, this is a video that is surely needed. Hard to run a profitable business without understanding the numbers. I'm sure there are people out there selling firewood that don't know if they truly made a profit at the end of the year. 👍👍
Numbers are dry to most but Matt knows his stuff! Which = a successful businessman!
LOL, I picked a bad week to quit drinking! There is a reason I was a criminal justice major.
Another great video.
Very interesting, enjoyable and easy to understand analysis. Thanks for sharing! Good luck Matt with your decision.
Sooooo FAKE
My take on firewood is most markets are undersupplied, its more about who’s turn it is to sell the wood they produced, the weekend warriors get to sell their wood first then the small and medium producers and then the large suppliers and the ones who make the most $$ are the big box stores that sell 1 small pallet of kiln dry for 150$ for 1/8 of a cord all of them sellout in the end 😊
I'm no accountant, but this was interesting. Thank you.
Thanks for this info, appreciate the time you guys took for this!
By the numbers is a eye opener, the variables have to countered with some great vision of knowledge of where you are now and where you’d like to be to maintain time/profit values, short and long term. Thank to both of you for bringing your skills forward and incorporating knowledge that makes us aware of the path forward. 😀👍👍👍
I wish I had that spreadsheet. That is a great tool for any small business.
AWESOME MACHINES!
I built a lot of these spreadsheets over the years. When I retired I missed doing this cost analysis. I still use spreadsheets for my living and home expenses and I still find them to be a very valuable tool. Once you get a functional spreadsheet built it simply becomes a process of entering data and numbers with one cell giving you a final number for what you are analyzing. Thanks I enjoy this kind of content from time to time.
The other thing I do is keep a monthly tax spreadsheet which I use to prepare my taxes each year. I then don't have to wait at the end of the year for my brokerage and social security statements. Thanks.
I would love to have your sheet for my rental taxes. I need to do mine monthly an be ready...
Very good video Adam. I really found it to be interesting.
I wrote up "Authorization for Expenditures" all the time as a Manufacturing Engineering Manager. It meant going through cash flow analysis of every capital expenditure I wanted to make. Of course it had to be signed off by God and everyone else including the VP of Finance. He always asked the most interesting questions. I was buying $10K in new drill bits for a CNC Machining Center. He didn't understand why I needed so many different sizes. I told him that's what the engineers design. Then he asked why they can't just make one size hole or maybe just a few?? Now Adam, how do you answer a question like that?
Love how you ran the numbers. I'd have liked to see the formulas used to produce the numbers, just because I use spreadsheets a lot for the business I work in, figuring out costs for our BOM and doing projections on units sold etc. I found myself pausing different portions of the video (which I vary rarely do) to do my own analysis. Thanks for sharing.
I typically work in Engineering/Purchasing and often cost auromotive parts (should costs). I started ckearing my fully wooded property for deer hunting. So I thought I'd sell some extra wood. I ran the numbers on a processor, and it was obvious I couldnt feed it without a logger bringing me loads. I quickly realized I'd be better off bot scaling. Free wood increases my hourly rate quite a bit. Im at 3.5 hours with my setup to process 1 bush cord into a large open bin. 40-50 bush cords a year max is not bad.
Sunday morning viewer here ~ found this very interesting getting Matt's view with Adam softening it for a "regular firewood guy" Valuable information for my next purchase decision....Or right now I am considering selling a Box splitter. This Vid provide me other avenues to view decisions Thank you Thank you! Keith aka Cowboy Joy and the Rough Cuts'
THANK YOU 2 FOR THIS VIDEO AS A GUIDE OR WAYS TO LOOK AT IT!...
I would also purchase likely needed spare parts and maintenance items during the equipment purchase and count those as capital costs as well.
I had a guy do my firewood last year with a Multitek. I had a mix of log diameters, but what I noticed is that the smaller logs you speak of in the $900 loads didn't seem to affect his productivity. As a matter of fact they may have been slightly faster. He simply bucked up the entire log (or until the splitter chamber was full) and only cycled the splitter that one time.
Great video! Thanks for sharing
Great conversation
Good stuff, interesting idea to make a video about box store splitters compared to commercial splitters for homeowners making two or so cords a year.
I actually enjoyed this one. So what is the ROI and does he have a standard time for equipment to be paid back?
I'm not an accountant but have experience estimating automotive parts manufacturing. Standard time depends on the type of equipment. Generally, you can write it off in 4 years, that would be standard according to accounting principles. Some equipment may be 10 years. Generally, the standard is to consider useful life. This typically means that you wrote it off completely (depreciate it) a number of years where the capital overhead (depreciation, financing costs, etc) is less than the maintenance costs/overhead. If the machine gets old and breaks down a lot, then available hours reduces and increases the hourly rate, and worst of all, might stop a customer from getting a delivery.
hi there very interesting . do a spread sheet on wood splitters , box wedge VS , ther faster but you may need more man hrs to reach max out out , but also more clean up and mabe 10 -20 % wood loss as well . . good show john
For a purchase this large waiting until after the election may change your numbers as well , considering who wins and what incentives are available for small business to either increase or decrease costs right across the board ... good video .
Pretty cool info.
Really great video guys!
Excellent video Adam, we're tossing the idea of going into firewood production. We already do rental equipment, I'm going to be plagiarizing your spreadsheet. Hope both of your processors stay sharp! Mark at the Cay 🇨🇦🇺🇸🌴🪵👍🧮
I liked this video!
You guys should build an App for our phones so we can plug in numbers for our firewood operations. I would buy that app
Great stuff!
If it were me, Id do a cost analysis of an electric only firewood processor. Many advantages beyond just fuel/energy savings and maintenance.
Another intangible to consider is the physical side. Bucking and cutting that much wood by hand puts wear and tear on your body and workers comp claim risks on your employees.
Those are some great figures to consider when purchasing a firewood Processor.. but are limited to just the cost of the processor and not all related cost of running a 1000 cord operation.. any chance you can run some numbers on the day to day expenses such as, delivery truck, loaders and such??
Nice. I am guessing his cords/year is much higher and his cost/cord much lower. But, that's the secret sauce I wouldn't disclose either.
No doubt - it'd be difficult to run a production like that at those costs! As a homeowner I'm paying $900 cash for that same tri-axle load of logs
This video took me back 50+ years when I took accounting as part of by BBA in marketing. 🤓 Was it ‘debits’ to the windows and ‘credits’ to the door or other way around? 🤔 Nice job guys.
That is truly the definition of buying a job.
Be interesting to see the numbers at are local power rate of 0.0719
About half the average rate.
I am a little confused by the triax load of wood for 1250.00. Wouldn't that be for approximately 12 full cords of logs?
No that's about right based on weight limitations...a semi truck load of logs is what you're thinking
It would be nice to be able to have access to that blank spreadsheet
should i finance a new dump truck 74k, or buy another 10k or so junker,
ive spent 1.5k this year on truck but i need to put at leat 5k into truck to keep it running another 2 years at best, another 10k truck might be a lemon, some worries about 30k used truck from a dealer to as having hidden repairs that turn a used truck into an expensive...er used truck quick.........ive been in buisness 11 yrs and always bought 7-10k trucks but times have changed and what i used to buy is not out there like it used to be......what should i due??
A wise man once shared this piece of advice on used trucks specifically "rarely do people sell trucks that make money" take from that what you want to. Every used truck I've ever bought I've had to put a significant amount of work into to make it reliable. I'm not saying by new but build in a hidden issues number to your purchase price.
@@firewoodguy3016 thanks for your advice
OUTSTANDING : o .....
Never stop. Teaching the world for free. 🦾☀️⚡️❤️🔥🔥
Great , lots of indirect costs, ie buildings,forklifts, containers, fuel, wear and tear, operator screw-ups . eye opener on costs and break even ? Lots to think about , enjoyment of not been hunched over a desk all day!
With my 401k kicking butt at 21% average over the past 3yrs, is it time to quit firewood and invest more into my retirement? For a processor to make sense, even one around $40k I'd have to be at 200 cords a year. Thie os making me think of retirement from growing firewood sales and just do my own.
Now that we know the production cost, what's the mark up? Does it allow for better competitive pricing or increased profit or both?
As a retired CPA, I appreciate this type of video where you get into the numbers. Maybe I missed it, but did you consider the income tax savings on purchasing a piece of equipment?
No that was not a part of the calculation but it would certainly be an additional savings
What happened to all the poles you had stacked out back from the land you had timbered? It was a lot of trees...
I’m about halfway through them
Have you thought about leasing a processor? I think it would be a 100% business expense..
Howdy Adam!
Does purchasing a 40c stand alone or do you need to consider support equipment in the spreadsheet? I suppose it depends if you have loaders, kilns, cribs and other support assets or need them to keep up with the increase in production. Same with a supplier of logs. Can you really acquire a constant supply of quality logs of 1000/3000 cords per year? Can you sell that much finished product?
Two plus two does not equal five, unless you want it to.
Can you link me to your spreadsheet I would like something like this
Great analysis, but you don't share what markup you put on a cord of wood. What is considered reasonable in a competitive market? How do you compete with the weekend producer?
I put a link to his website in the description. All prices are listed there
Sorry, but that did not answer my question. His listed prices have no tie back to the spreadsheet in the video.
What's he selling each cord for? If his profit with the new machine and the expensive wood vs a different machine and the less expensive wood is more than that difference per cord, I would think it would make sense to buy it to crank out as many cords as possible.
He is selling wood in many different quantities so that’s a hard question to answer. The single pallet 1/3 of a cord delivered to the customers garage is way more per cord compared to a dump trailer load dumped in your yard. I’d imagine he is selling wood for $400/ cord or more if you multiplied it out. He also has some accounts for whole semi loads of wrapped wood at a time. If you multiply his price per bundle to a whole cord it’s probably even higher.
I'd wondered if $300/cord made sense. Now I now it does. The question is quality. Clearly in this production, quality is pretty high. Anybody know where I can get quality fire wood near Virginia Beach? What I see, does not inspire me. Ideas?
What does a chord sell for in that area? Production cost seems really high at $220 ish per chord. We can buy a chord delivered for $200 all day long around my area.
So when purchasing a processor at this level wouldn't it make sense to look at other processors . An have you looked at wood cutta machines they use in Europe were they are autmated.
Does the cost of the machine include any sales tax or tariffs? I.e. is this the delivered to door total?
That was the delivered total
I'm curious why you'd only run 1000 cords a year on it. It seems the market is there for more firewood. So why not run it a full 8 hours everyday for however many working days per year? The Unit of Production only had 400 hours a year, which would nominally be 1/5 of it's potential output, less downtime for maintenance and other stop actions.
Just like Ben Affleck no doubt.
Get a Multitek and be done
I don’t disagree with the math. BUT, math only proves math.
I think of firewood splitting tools like this:
Splitting wood is for an Axe or Maul. Every thing else is a tool to buy back my time.
How much is the firewood guy selling a cord for? Minus $225/cord cost = profit 🤔
Kiln dried, packaged firewood goes $225/facecord, delivered ($205 + $20 skid deposit) Or $425 for a full cord, kiln dried, loose, delivered. Seasoned (not kiln dried) goes for $360/cord...and the guy is barely keeping up with demand!
3 cords per hour??? it say the machine will do 9 cords per hour????
14:09 You also have to think about the people who are buying the wood...are you selling to people who have wood stoves..people that [HEAT] their house with wood or are you selling to people who just burn for fun in their fireplace or firepit in their backyard? I mean it's not guaranteed that you are going to sell that amount of wood per year... your going to have some off years and then some nice years... PA is not even on the top 10 list of states that have the most wood stoves in households... Vermont is first by the way.
Theres just too many utube stars out there know a days selling junk underrated firewood that is completely crap no quality at all to justify buying all this nice equipment why would you want to work like that just to turn dollars over it doesn't make sense everyone one of these warriors have screwed the markets up in every city very sad
WARNING:
There will be math.
Baaaahahahahahohohohohehehehe!
I will pass on this not my cupa tea.
boring