Overcoming Financial Challenges for Start-Up Logging Businesses

Equipment leasing for all kinds of start-ups has been instrumental in making businesses function. For the logging industry, this is no exception as logging companies need at least four pieces of heavy equipment compared to the two that are needed for construction and trucking businesses.

Combined with forestry being a process-oriented business, the most successful companies are the ones that can handle the multiple phases that the industry requires.

Logging businesses have it tough and so business owners need to be smart about everything from financing to acquiring the right kind of equipment. Here are some considerations to keep in mind to be on the right track for growth.

Remember That Age Isn’t A Number

Logging equipment is routinely used to handle the toughest terrains in the world. As such, business owners may be reluctant to buy old machines. This makes sense in other industries, but with forestry, there are no age restrictions.

Across the board, a piece of lumber is the same price regardless of if it’s cut down by a new piece of equipment or an old one. The only difference is that with a new piece of equipment, the business is paying more to convert the log into whatever it needs to be.

No Working Capital Won’t Work

A lot of start-ups often begin seeking financing when they’re able to afford the documentation fees and the first month’s payment. While that’s good, these businesses never consider the idea that things can go very wrong.

Before starting up a logging company, it’s advisable to have enough money to cover six months of expenses, including equipment payments, insurance, maintenance, repairs, fuel, and wages. Having reserves is even better.

The forestry industry is very competitive and the last thing a business owner wants to do is jump into a new venture, pay for equipment and not use it at all.

Temper Expectations Appropriately

On average, logging companies whose owners have good personal credit can qualify for $100,000 in equipment financing. For a logging company though, that amount is a far cry from what is wanted. Feeling disappointed that it’s impossible to get a new or upgraded piece of equipment is disheartening, but it’s more reason to temper expectations during this time.

There is nothing wrong with settling for an older piece of equipment or one that isn’t as efficient. So long as the equipment can generate business revenue, upgrading or getting a new piece of equipment can follow later.

The idea here is not to be too hasty or to bite off more than one can chew. Many start-ups fail because they grow too fast and can’t keep up.

Get started leasing or financing the equipment you need. Contact Yellowhead Equipment Finance today to get started. We’ll help you identify your eligibility, work with you to understand your options, and work with appropriate lenders to get the best solutions for your financing needs.