How to Start a Lumber Yard

Start a lumber yard by following these 10 steps:

1. Plan your Lumber Yard
2. Form your Lumber Yard into a Legal Entity
3. Register your Lumber Yard for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Lumber Yard
6. Get the Necessary Permits & Licenses for your Lumber Yard
7. Get Lumber Yard Insurance
8. Define your Lumber Yard Brand
9. Create your Lumber Yard Website
10. Set up your Business Phone System

We have put together this simple guide to starting your lumber yard. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out othersmall business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit ourHow to Name a Businessguide or get help brainstorming a name with ourLumber Yard Name Generator

If you operate asole proprietorship, you might want to operate under a business name other than your own name. Visit ourDBAguide to learn more.

当registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a lumber yard?

This project requires a sizable upfront investment. You will need to purchase or lease a warehouse/store situated on at least an acre of land, although more space will permit you to stock a greater variety of lumber. Heavy-duty equipment needed will include forklifts, commercially sized saws, storage racks, pallet jacks and a complete retail store setup. There are also the initial orders to fill your shelves with lumber, hardware, and assorted supplies. If you offer delivery services, vans and trucks will also be part of the initial investment. Start-up will require capital from 500,000 to a million dollars.

What are the ongoing expenses for a lumber yard?

Your largest regular expenses will be payroll and maintaining inventory. Building maintenance, licensing, safety inspections, and marketing are other costs associated with doing business. You'll need to keep your vehicles maintained and safe. Business insurance should also be kept updated.

Who is the target market?

Busy general contractors will be the meat and potatoes of your business, buying large quantities of materials from the yard on a consistent basis. You may offer them a wholesale discount price for their continued business. Homeowners and property managers will provide the more consistent business that helps to attract more customers, but they will not be spending as much as the contractors.

How does a lumber yard make money?

The more lumber you sell, the more money your business will bring in. For a lumber yard, numbers and volume will drive the bottom line. If you stock a greater variety of products, you will build larger sales as contractors use you as a one-stop shop for all their building supply needs.

How much can you charge customers?

A single nail can be sold for just a few pennies, while selling enough lumber to build a house will cost thousands. Your retail manager will constantly compare prices among your competition to ensure you are not pricing yourself out of business.

How much profit can a lumber yard make?

You can expect to see a profit margin for much of your lumber stock in the 15 to 20% range. Hardware and accessories have a much higher margin and require less manpower to stock. A small lumber yard can see a net profit of $50,000 to $100,000 while a large yard in a busy area can see a million dollar annual profit.

How can you make your business more profitable?

Careful management of your inventory will help to raise your profit margin. If a product does not sell and spends time taking up space on the shelf, remove it from your regular inventory. Make sure you don't run out of popular products during the busy building seasons, and add new products on a regular basis to keep your customers interested and involved.

STEP 2: Form a legal entity

The most commonbusiness structuretypes are thesole proprietorship,partnership,118bet金博宝 , andcorporation.

Establishing a legal business entity such as anLLCorcorporationprotects you from being held personally liable if your lumber yard is sued.

You can金宝搏188是什么公司yourself and pay only the minimal stateLLC costsor hire one of the118金宝app for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more aboutstate sales taxand franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

当your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to aspiercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting abusiness credit cardhelps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our有限责任公司费用备忘单。

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a lumber yard. Learn more about licensing requirements in your state by visitingSBA’s reference to state licenses and permits.

Certificate of Occupancy

A lumber yard is generally run out of a large indoor or outdoor space. Businesses operating out of a physical location typically require aCertificate of Occupancy(CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a location:
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a lumber yard.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening,it is recommendedto include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

If you plan to purchase or build a location:

• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your lumber yard will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully.Business Insuranceprotects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face,begin withGeneral Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need isWorkers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

An individual with solid business knowledge and skills will do well managing a lumber yard business. Knowledge and experience of building materials, procedures, and operations will allow you to anticipate the needs of your target customer base.

What happens during a typical day at a lumber yard?

• Placing orders to keep all varieties/sizes and accessories for lumber stock on hand
• Filling orders placed by customers
• Assisting customers in selecting the right materials for their projects
• Taking orders over the phone for clients
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• Answering questions on practical applications of your different available materials
• Maintaining and training staff to work in the lumber yard
• Maintaining a safe working environment/ensure inspections are completed of lifting and cutting equipment per OSHA standards
• Balancing your books
• Completing all payroll responsibilities
• Learning about new products
• Maintaining active marketing campaign to attract new customers and clients

What are some skills and experiences that will help you build a successful lumber yard?

• Knowledge of popular building materials, sizes, accessories, and their application
• Solid understanding of business management
• Good personal skills
• Ability to establish positive relationships with contractors and DIYers
• Good ability to geographically dissect demographics to be able to respond to changes in the local market
• Knowledge of OSHA standards to provide safe work environment and training for your staff
• Basic knowledge of construction techniques--although not necessarily required

What is the growth potential for a lumber yard?

Communities that are actively expanding offer the greatest opportunity for a new lumber yard business. This is one industry where starting small is the short line to failure. Once your yard is well-established with contractors stating that they wished you were located closer to their sites is an indication that you would profit by expanding to multiple locations. If you are looking at a small store front in an urban setting, a hardware store might work better as lumber inventory requires massive amounts of cubic footage for storage and sales.