Starting a logging business can be an exciting venture, blending practical forestry knowledge with smart business planning. It's a multi-billion dollar industry fueled by consistent demand for wood products in construction, paper goods, and furniture manufacturing.
This guide will walk you through the practical steps of creating a business plan, securing funding, acquiring the right equipment, and getting the necessary permits to help you launch a successful logging business in the U.S.
Step 1: Create your business plan and validate the market
Your first move is to confirm local demand. Contact sawmills and pulp mills to learn their required wood types, lengths, and diameters. Also, check reports from your state's forestry association and the USDA Forest Service for broader market trends and timber prices.
Analyze your local competition
Identify other logging operations in your target area. Observe their scale, the equipment they use, and the types of jobs they take. This practical research gives you a better sense of market saturation and potential niches than a generic database would.
Estimate your startup costs
The initial investment requires careful planning. A frequent misstep is underestimating upkeep, so budget 10-15% of the equipment's value for annual maintenance. This helps you avoid unexpected downtime and large repair bills later on.
Typical equipment costs can range widely. A feller buncher might be $200,000-$500,000, while a skidder could run $150,000-$300,000. With insurance and working capital, total startup funds often fall between $500,000 and $1.2 million.
Here are 3 immediate steps to take:
- Contact three local sawmills to ask about their wood specifications and pricing.
- Draft a preliminary budget with high and low estimates for major equipment.
- Research your state's forestry association for local market reports.
Step 2: Set up your legal structure and get licensed
Most new logging outfits choose a Limited Liability Company (LLC). It protects your personal assets if the business faces a lawsuit. Profits pass through to your personal taxes, which simplifies paperwork compared to a corporation.
An S-Corp is another option that can sometimes lower your tax bill, but it comes with stricter rules. You might want to talk to an accountant who knows the logging industry before you decide.
Secure your permits and licenses
Your state's Department of Natural Resources (DNR) or Forestry Commission is your main point of contact. They issue the primary permits you need, like a Timber Harvesting Permit or a Forest Practices Permit. Expect to pay $100 to $500 per permit.
Processing can take 30 to 90 days, so apply early. A frequent mistake is starting work before the permit is in hand. This can lead to hefty fines, sometimes over $10,000, and a stop-work order that kills your schedule.
You will also need a federal Employer Identification Number (EIN) from the IRS to hire employees and open a business bank account. Also, familiarize yourself with OSHA's specific logging safety standards, as they are strictly enforced.
Here are 4 immediate steps to take:
- File for an LLC with your state's Secretary of State.
- Apply for a free Employer Identification Number (EIN) on the IRS website.
- Contact your state's DNR to get a checklist of required harvesting permits.
- Review the OSHA Logging eTool for safety compliance guidelines.
Step 3: Secure your insurance and manage risk
You will need several types of insurance. General Liability coverage of at least $1 million per occurrence and $2 million aggregate is standard. Workers' Compensation is another major policy, as logging is a high-risk profession. Premiums can be 20-40% of your payroll, depending on your state.
In addition, you need Commercial Auto insurance with a $1 million liability limit for your trucks. Your expensive machinery requires separate Equipment Insurance. A frequent oversight is assuming your auto policy covers a feller buncher on a trailer; it does not. This mistake can be financially devastating.
Find a specialized insurer
You should work with an insurance broker who knows the logging industry. General agents often miss key coverages. Consider providers like Forestry Mutual Insurance, Acadia Insurance, or the agribusiness division of Great American Insurance. They understand the specific risks and can secure better terms.
With all policies combined, your annual premiums could range from $50,000 to $150,000. This figure depends on your payroll size, equipment value, and safety record. A documented safety program can sometimes help lower your rates.
Here are 4 immediate steps to take:
- Contact an insurance broker who specializes in the forestry industry.
- Request quotes for General Liability, Workers' Compensation, and Equipment Insurance.
- Ask potential sawmills or landowners for their minimum insurance requirements.
- Draft a basic safety plan to share with potential insurers.
Step 4: Secure your location and equipment
You need a yard to store and maintain your machinery. Look for a 1-2 acre plot zoned for industrial or agricultural use. Contact your local planning department to confirm zoning requirements. A simple gravel lot with a secure fence is often enough to start.
Choose your core machinery
Your equipment is your biggest capital outlay. You can buy new, used, or lease. Leasing can lower your initial cash burn, but pay close attention to the hour limits in the contract. Exceeding them results in steep penalties, sometimes $50-$100 per hour.
Here are some typical price ranges for used equipment:
- Feller Buncher: $150,000 - $400,000
- Skidder: $100,000 - $250,000
- Log Loader: $80,000 - $200,000
- Logging Truck & Trailer: $70,000 - $150,000
When you look at used gear from dealers like John Deere or Caterpillar, or auctions like Ritchie Bros., a frequent mistake is to skip a third-party mechanical inspection. Spending $500-$1,000 on an expert review can prevent a $50,000 repair bill down the road.
Here are 4 immediate steps to take:
- Contact your local planning office about zoning for a 1-2 acre equipment yard.
- Request quotes for new and used equipment from two different dealers.
- Ask potential lessors for a sample contract to review hour limits and terms.
- Find a local heavy equipment mechanic to have on call for inspections.
Step 5: Set up your payment processing
Handle mill and client payments
Most of your revenue will come from sawmills, which typically pay via check or bank transfer on Net 30 or Net 60 terms. You need to plan your cash flow around these cycles. A frequent misstep is not having enough operating cash to cover expenses while you wait for these large payments.
For smaller jobs, like clearing land for a private owner or selling firewood, you will want a way to accept payment on the spot. This helps you secure deposits and close sales without delay.
Accept on-the-go payments
For logging businesses that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit and digital wallets directly through your smartphone. Just tap and it is done. Other providers often charge 2.5% to 3.5% plus fees.
At just 1.99% per transaction with no hidden costs or extra hardware needed, it's particularly useful when you collect a deposit from a landowner before work begins. Your money is available instantly.
- Get Started: Download JIM app for iOS
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers
Here are 3 immediate steps to take:
- Confirm the payment terms and methods used by your top three target sawmills.
- Set up a business bank account to receive checks and ACH transfers.
- Download the JIM app to prepare for on-site payments and deposits.
Step 6: Secure funding and manage your finances
Look for industry-friendly lenders
The Small Business Administration (SBA) is a good place to start. Their 7(a) loan program can provide $350,000 to $5 million for equipment and working capital. You will need a strong business plan and good credit to qualify, with interest rates typically around Prime + 2.75%.
You can also get equipment financing directly from dealers like John Deere Financial or Cat Financial. These loans are tied to the machinery, so they can be easier to secure. Also, talk to local banks and credit unions, but expect them to ask for a 10-20% down payment.
Plan your cash flow for the first six months
With mills paying on Net 30 or Net 60 terms, you need cash to operate. Many new owners get stuck here, running out of money for fuel and payroll while waiting for their first checks. This is a critical planning point that can make or break your first year.
You should have at least $75,000 to $150,000 in working capital. This buffer covers your operating expenses for the first three to six months. It ensures you can keep the machines running and your crew paid without interruption, which builds your reputation for reliability.
Here are 4 immediate steps to take:
- Contact the SBA to learn about the 7(a) loan application process.
- Ask two equipment dealers about their in-house financing terms.
- Calculate your estimated operating costs for the first six months.
- Speak with your local bank about their business loan requirements.
Step 7: Hire your crew and set up operations
Your business will run on the skill of your crew. A lean team for a new operation usually includes a feller buncher operator, a skidder operator, and one person to run the log loader and drive the truck. This keeps your initial payroll manageable.
When it comes to pay, experienced operators who can run a machine efficiently and safely often earn $25 to $35 per hour. A frequent misstep is trying to save money with inexperienced hires. This usually backfires with costly equipment damage or slow production.
In addition to field experience, look into your state's formal training requirements. Many states require loggers to complete a certification program, like a "Master Logger" course, which covers safety and environmental practices. Your truck driver will need a valid Commercial Driver’s License (CDL).
For daily operations, you do not need complex software. A whiteboard in the shop is perfect for tracking jobs and daily goals. As a performance benchmark, a productive three-person crew can often generate between $500,000 and $800,000 in annual revenue.
Here are 4 immediate steps to take:
- Draft job descriptions for an equipment operator and a CDL truck driver.
- Check with your state's forestry association about logger certification programs.
- Outline a basic safety orientation plan for new hires based on OSHA standards.
- Research two payroll services that work with construction or forestry businesses.
Step 8: Market your business and find customers
Your main customers will be sawmills and pulp mills. Your best marketing is a firm handshake. Introduce yourself to the timber buyers at every mill within a 100-mile radius. Learn their names and what they need. Reliability becomes your reputation.
A frequent mistake is to sell to only one mill. This is risky. If that mill's demand drops, your income stops. You should build relationships with at least three to four different mills to keep your options open and ensure steady work.
Secure jobs with private landowners
Private land-clearing jobs can be very profitable. Network with consulting foresters, rural real estate agents, and land developers. They often need reliable crews to clear lots for construction or to manage timber stands. Word-of-mouth from a happy landowner is your best advertisement.
You do not need a fancy marketing campaign. Get professional business cards and a simple one-page flyer made. A Facebook business page with high-quality photos and videos of your crew and equipment in action also works well to show your capabilities to potential clients.
Here are 4 immediate steps to take:
- Create a list of all mills within a 100-mile radius and schedule visits to meet their timber buyers.
- Connect with two local consulting foresters to introduce your services.
- Design and print 500 professional business cards with your contact information.
- Set up a simple Facebook business page and post five high-quality photos of your equipment.
Step 9: Set your pricing and manage your bids
Understand your pricing models
Most logging jobs use one of two pricing models. For mill contracts, you will likely use a "pay-as-cut" model. The mill pays you a set price per ton or per thousand board feet (MBF) delivered. For example, you might get $400 per MBF for oak sawlogs.
For private landowner jobs, a "lump sum" bid is more common. You estimate the total value of the timber and offer a single price for the right to harvest it. This requires an accurate timber cruise to avoid overpaying for the wood.
Calculate your costs and profit
Your bid must cover your operating costs and leave room for profit. Calculate your daily break-even cost, including fuel, insurance, payroll, and equipment payments. A target gross profit margin of 15-25% is a good benchmark for a healthy business.
Many new owners fall into the trap of underbidding just to win a contract. This often backfires once you account for all your costs. Your bid should be your estimated cost plus your desired profit margin. If a job costs you $20,000, a 20% margin means a bid of $25,000.
Here are 4 immediate steps to take:
- Calculate your daily operating cost to find your break-even point.
- Research recent public timber sale prices through your state's forestry agency.
- Create a bid template that itemizes costs for felling, skidding, and hauling.
- Set a target profit margin, such as 20%, to add to your cost estimates.
Step 10: Control quality and scale your operations
Maintain strict quality control
Your reputation with mills is built on consistency. A frequent problem is delivering logs that fail to meet specifications, which leads to rejected loads. Keep your load rejection rate below 2% by strictly following each mill's requirements for length, diameter, and knot size.
You might also consider a state certification, like a Master Logger or Sustainable Forestry Initiative (SFI) training. These programs teach best practices and can make your business more attractive to landowners and mills who prioritize sustainable harvesting.
Plan your growth
Growth should be deliberate. When your equipment utilization consistently exceeds 85%, it is a strong signal to start planning for a second crew or new machinery. Pushing your current assets too hard leads to expensive breakdowns and missed deadlines.
For managing operations, simple spreadsheets work well at first. As you grow to multiple crews, you can look at industry software like T-MARS or FORS to track loads, manage inventory, and handle settlements. This helps you maintain control as complexity increases.
Here are 4 immediate steps to take:
- Ask your top three mills for their written quality specifications.
- Track your load acceptance rate for one month to establish a baseline.
- Research your state's Master Logger or SFI training requirements.
- Calculate your current equipment utilization rate to assess capacity.
You have the roadmap to launch your logging business. Just remember, your reputation with the mills is your most valuable asset, built on reliability and quality. With this plan in hand, you are set to move forward.
And when it comes to getting paid, JIM offers a simple way to accept cards. Your smartphone becomes the reader for a flat 1.99% fee, no extra hardware. It's perfect for on-site deposits. Download JIM to get started.
