How to Start a Successful Small to Medium Sawmilling Business

Evaluating the local species that will be available to you is a key aspect for deciding what kind of a mill you will be.

Whether in an urban or rural environment, people are making money starting a sawmill business.

Some fell into the sawmilling business because they started milling their wood to cut costs. Others have more personal motivations, like wanting to work outside or dedicating themselves to conservation.

Whatever your reasons might be, the milling business is like any other; you have to look before you leap if you want to set yourself up for long-term success. Otherwise, the day-in, day-out workload could overwhelm you, and your new sawmill might end up unused.

Since we want you and your business to succeed, we’ve gathered a list of things to consider when starting up a sawmilling business.

Understanding the challenges of operating a sawmill

Opening a new business, regardless of industry, is always a risk. We can’t cover all the challenges and risks of opening a sawmilling business, but here are some common ones to think about:

Managing capital and cash flow

Not having enough working capital—or poorly managing cash flow—is one of the biggest drivers in small businesses closing.

You can risk your entire operation if you don’t have enough operating capital to cover your costs while experiencing limited or no cash flow. In other words, don’t plan on immediate success to cover your equipment leasing or loan costs.

Gathering timber

If a couple of neighbors or local farms let you haul timber off their property for free, you might be tempted to open a professional sawmill. But wait just a second. That’s great that they let you take the wood, but free timber is never a sustainable source.

Buying timber will be one of your largest ongoing costs. Identify alternate sources with pricing, so you know your options and timber costs going in.

Giving up your day job

It’s very common to start running your sawmill as a part-time opportunity.

For many, this is just a smart, conservative approach. It lets you build experience and manage expenses without overextending yourself.

One of the challenges of operating a mill is the large, ongoing cost of purchasing the timber.

If you feel like you’re ready to make sawmilling your primary means of support, be sure you have a solid, realistic business plan. And it is recommended that you have at least a year’s worth of operating capital on hand.

Crunching the numbers

Sure, you’re not thinking about opening a sawmill because you love math.

Even so, you want to have a detailed accounting of your costs and a conservative projection of your revenue, and then see how things line up. A lot of your decisions will be based on how each of your choices impacts your numbers.

What sort of lumber mill do you want to be?

Think of a new restaurant.

The cook doesn’t open his doors to cook up whatever he feels like each day. No, he details precisely what he wants to offer and to whom.

It’s the same for a sawmill business—especially for a small or medium-sized mill that can’t compete with the large industrial sawmill cutting commodity boards. But if you’re in a remote area with a robust, local construction industry, maybe you can succeed. Either way, the point is to first assess your local market. What it offers and what it needs, and then drill down on your niche.

What local wood species are available? Are there species that people can use to build homes or outbuildings? Perhaps local species that are in demand with artisans and furniture makers?

More specialized work requires more specialized sawmills, blades, and skills, which will increase your initial costs. If you’re the only mill that can handle large lumber, then it is worth it to invest in a small sawmill. Having a specialty doesn’t mean you can’t mill common lumber output, like studs and support beams. However, specialties make marketing easier and often allow for higher margin work.

When you offer a niche product or service, that’ll likely be the key to early success.

What scope of services will you offer?

From a revenue perspective, a sawmill has two primary variables: yield and added-value services.

Yield is the number of saleable boards you get from the lumber you mill. The most common pricing method is charging by the board foot, which puts the burden on you to mill the wood efficiently. However, how much you charge per board foot also depends on the grade of the wood, including how far down the processing line you’ve taken it.

For example, you can sell your cut wood green, or you can dry it first. Drying takes time and space, but if you use an accurate moisture meter that provides calibrated readings of the moisture content in each slab, you can sell the wood at a higher grade—which means higher prices—when it’s dried properly.

Should you be a portable sawmill or a stationary sawmill?

Many small sawmills get started by the weekend hobbyist who is experienced working with a portable sawmill. From there, it seems a natural step to take the portable band sawmill onto other people’s properties and complete a job for them.

But, of course, trade-offs exist between acting as a portable mill or working as a stationary operation.

Pros of operating a portable sawmill:

• No log transportation costs since you’re bringing the portable sawmill to the site.
• No need for large amounts of land to manage the wood.
• Lower initial cost for portable sawmills, which allows you to also buy specialty attachments to produce more specialty cuts.
• An ideal entry point into the business for someone who already owns a portable sawmill and wants to start doing seasonal work.

Pros of operating a stationary sawmill:

• Easier to add mobile sawmill services as an additional service, than for a portable outfit to decide to add a stationary sawmill.
• You have time and space to dry the wood for higher resale value.

Equipment you need for milling wood

There are various types of sawmills: From chainsaw mills to manual portable band sawmills, or circular saws to vertical milling machines.

The sawmill you’ll need depends on the scope of operations, the volume of wood you expect to cut daily, and the types of lumber and cutting you want to do.

Having decided the type of sawmill you want, you’ll also want to consider other equipment needs based on your scope of operations.

The bare minimum for just getting started

If you want the lowest overhead to start turning trees into money, this is the bare bones list of what you’ll need:

• Single portable sawmill
• A truck or tractor that can haul both the portable sawmill and your lumber around
• Trash bin for the wood waste
• Cant hook to move logs around
• Wood storage options
• Fuel reserves for your sawmill
• Protection wear, like steel-toed boots, gloves, eye-and-ear protection, and a hard hat
• Fire extinguisher and emergency first-aid kit
• Mill shed or kiln for storing/drying the wood.
  • Kilns come in a range of styles and prices, including low-cost solar kilns. You can even build your own solar kiln. Learn more about kiln drying here.
• Protection from the elements

For good airflow when drying wood, it is always recommended that you sticker stack your boards.

Let’s talk about “Protection from the elements” a bit.

The cheapest option to protect your wood from rain and snow is just draping some tarps over it, but the right way to do it is this: Sticker stack the wood.

Concrete blocks and “sticker stacks” keep the wood off the ground and get airflow between boards. You will also need some sheet metal roofing—here’s a full guide on storing wood.

And finally, get yourself a high-quality moisture meter to monitor and ensure moisture quality control. There are also stack probe sensors you can use to measure moisture deep into your wood stacks.

Value-add equipment:

Once you have the basics, you might look into these tools:

• Extra blades and spare parts to avoid prolonged downtime when something goes wrong with any of your sawmills
• Any specialty blades you need for edging and trimming

Equipment to add to be a midsize sawmill:

An accurate moisture meter that provides calibrated readings of the wood’s moisture content is an important tool to ensure that the wood is dried properly.

When you start ramping up operations, everything needs to grow a bit bigger to accommodate the larger volumes of wood that you’ll be managing at various stages in the milling process. So the first thing you’ll need is land to put it on.

Here’s what comes after that:

• Forklift and other support equipment, like loaders, roller tables, and log decks, to move, sort, and store wood
• Trailer beds and winches for the trucks moving the wood around
• Chippers and bins
• In-kiln moisture meter to monitor the wood’s moisture content as it drys
• Handheld moisture meters to quickly check the dryness of the wood and find “trouble spots”
• Specialty equipment that will help you expand what your company will offer, such as:
  • Edgebanders
  • Tenoners
  • Finishing and sanding equipment
  • Shavers and grinders

Putting it all together

Running a profitable sawmill takes planning and patience. But with the right tools and the right approach, you can join the ranks of those making money in the sawmilling business.

Best of luck as you venture out.

Ron Smith

As Sales Manager for Wagner Meters, Ron has more than 35 years of experience with instrumentation and measurement systems in different industries.  In previous positions, he has served as Regional Sales Manager, Product and Projects Manager, and Sales Manager for manufacturers involved in measurement instrumentation.