Opening a Lumber Yard Business in Canada

Posted by on Aug 7, 2017 in Uncategorized | 0 comments

To open a lumber yard or sawmill business in Canada and moreover, to make it profitable, you need to calculate the startup costs, write a solid business plan, apply for financing, take a close look at competitors in your area, and attract potential customers.

Start-up Costs

The first step to opening a lumber yard business is to calculate the startup costs and create a solid business plan (www.creditavenue.ca). Startup costs include heavy-duty equipment and tools such as pallet jacks, storage racks (industrial shelving), commercial type of saws, and forklifts. Additional equipment for your business includes office supplies, home layout and design software, storage materials, safety gear, and hard hats. You also need to buy or lease a store or a warehouse for your business. And you need to stack materials and supplies, including hardware and lumber. Obviously, a lumber yard business needs equipment and tools such as moulders, sanders, grinders, and so on. If you plan to offer delivery, you also need to buy a truck or a van to do this. Startup costs depend on different factors and can be as high as $500,000 – $1,000,000. To run a successful business, it is also a good idea to hire experienced professionals to assist homebuyers, architects, and contractors. Finally, inquire about any licences and permits required to open and operate a lumber yard business in your territory or province.

Financing for Your Lumber Business

There are different ways to finance your lumber yard business, including crowdfunding, business grants, loans by banks and government-backed loans (the Canada Small Business Financing Program), (Canadian guide), etc. Invoice factoring or invoice finance is also an option if you need capital within a short period of time. Grants come in different forms, including local and government grants. If you have personal resources, this is a great way to finance your business. In most cases, however, businesses require external financing, whether a business mortgage, a commercial bank loan, financing offered by an angel investor, or a corporate bank loan. Commercial or business loans are offered by banks to start-ups and large and small companies to expand and grow their business. Credit unions in Canada also offer affordable financing with no prepayment penalties, fair and competitive rates, and different refinancing options. A commercial or business credit card is also an option to cover a portion of the start-up costs.

Business Plan

A business plan for a lumber yard business includes important information to convince your financial institution that you are a trustworthy borrower. The more details you include in the plan, the better your chances to qualify and benefit from flexible terms and low rates. A solid business plan includes details such as your strategy and projections, description of the services and products offered, personal and marketing plan, financing required, sales forecasts, corporate structure, etc. Include net profit, depreciation, taxes and interest, operating costs, and sales in your sales forecast section. Write a section on your startup costs as well, including opening supplies, security deposits, leasehold improvements, working capital, and initial lease payments. It is important to include a market analysis section with subsections such as industry analysis and economic outlook. You need a separate section to describe and itemize your organizational budget, including administrative and tax staff, bookkeeping, etc. Banks also require profit and loss statements as part of your business plan, including payroll taxes, utilities and rent, vehicle and travel costs, marketing expenses, and payroll. Finally, you may also include your balance sheet, cash flow, and business ratios. The more accurate and detailed your business plan, the larger the amount of financing (from a single source or multiple sources).

 

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