Introduction
In recent years, forestry and timber harvesting businesses have experienced a huge level of growth, as indicated by statistics from the Forestry Resource Coalition, which reported a growth rate of 8.2% in 2018. It becomes clear that these companies are key players in the global timber economy. Therefore, it is of utmost importance for these businesses to be aware of the different strategies to increase their sales and profitability.
By understanding these practices, forestry and timber harvesting companies will be able to increase their revenues and scale their operations more efficiently. In this article, we will discuss some of the most effective strategies for improving sales and profitability in the industry. From using technology to staying up to date on industry trends, there are many different tactics that can help business owners strive for success.
Evaluate current cost of operations and develop plans to reduce costs
One of the most essential aspects of increasing the sales and profitability of a forestry and timber harvesting business is to regularly assess and monitor the cost of current operations. To effectively increase sales and have an overall impact on bottom line, forest business owners should be mindful of their expenses. By closely tracking these costs, owners can identify areas where savings are possible and use this information to make informed decisions to reduce their expenses.
Analyze overhead and identify waste
When analyzing their costs, the first place to look is overhead. These are costs that are often taken for granted when it comes to analyzing profitability. A thorough assessment of fixed and variable overhead costs such as rent, utilities, property taxes, insurance, and equipment can help identify areas where costs can be reduced. For example, renegotiating a long-term lease agreement or refinancing existing equipment to extend repayment terms could result in significant savings.
Review vendors and negotiate prices
Another area to look at is supplier costs. A thorough review of vendors should be done to drive out costs by negotiating lower prices, reducing payment terms and securing better payment terms. Additionally, vendors can be rated for their quality of service and efficiency. Unreliable vendors or those who take longer than expected to deliver their goods and services can lead to inefficiencies and can lead to delays in a business’s operations. By carefully evaluating suppliers and negotiating better prices, businesses can ensure they are not overspending and can help keep operations at optimal levels.
Reduce energy consumption
Finally, businesses should assess their energy costs. By implementing energy efficiency measures, businesses can reduce their energy consumption and ultimately lower their energy costs. Some of the measures to consider include replacing old and inefficient equipment, using natural lighting and ventilation, and using renewable energy sources, such as solar panels. By making these updates, businesses can reduce their energy costs and can have a positive effect on their bottom line.
Calculation example
To illustrate how this strategy can increase sales and profitability, consider a logging company that harvests timber. By evaluating their current costs and identifying changes that can be made to reduce costs, the business can save ,000 in overhead, ,000 in supplier costs, and ,000 in energy costs. This saving will reduce the cost of production and result in a net saving of ,000. This saving will then flow directly to the bottom line of the business and increase their profitability.
By closely assessing their current costs and developing plans to reduce costs, forestry and timber harvesting companies can increase their sales and profitability. Taking the time to analyze overhead, supplier costs, and energy consumption can help identify areas to cut costs, which can contribute to a better bottom line.
Improve customer service to retain current customers and attract new customers
Customer service is an important part of any business, and even more so when it comes to a forestry and timber harvesting business. Excellent customer service helps retain current customers and encourages potential customers to choose your business. Here are some strategies for improving customer service in your logging and timber harvesting business that will improve sales and profits.
Make it easy for customers to interact with you
Providing multiple ways for customers to contact you and make inquiries is essential for a business. Make sure you have a readily available email, phone number, website, or physical location for people to visit. This allows customers to quickly contact and make inquiries. Respond to customer inquiries quickly, even if it’s to let the customer know you’re expecting information.
Provide quality service
Going the extra mile for customers is the key to success in a forestry and timber harvesting business. Make sure your staff is well trained and knowledgeable about your product or service. Take the time to ask customers questions to understand their needs and provide advice that meets their expectations. Advising customers of potential offers or options that they may not be aware of can also make a huge difference.
Demonstrate transparency and honesty
Be transparent about prices and timelines for providing your services or products. Being honest with customers goes a long way to fostering their trust. Customers appreciate companies that are up front and honest with their services and will be more likely to use a company they can trust.
Encourage customer reviews
Positive customer reviews are an invaluable asset to any business. Ask customers for reviews and offer incentives to take the time to leave them. Online reviews, in particular, are an essential tool for businesses, as potential customers seek feedback before making decisions, so having positive reviews will make a huge difference in attracting and retaining customers.
Estimated impact of improved customer service on sales and profit
Improving customer service with these strategies will likely have a positive impact on sales and profits. For example, if your business provides exceptional customer service, your average sales may increase by 5-10%, while your profits may increase by 10-20%. Taking the time to understand customer needs and provide excellent customer service will dramatically increase customer loyalty and satisfaction, leading to higher sales and higher profits.
Develop relationships with wood suppliers
Building relationships with timber suppliers is a key strategy for improving your forestry and commercial sales and business profitability. It’s a great way to ensure a consistent supply of raw materials and meet your production demands. Working with multiple suppliers can also help you contain costs, create an efficient logistics network, build relationships and reduce risk.
Tips and Tricks : When building relationships with wood suppliers, follow these tips and tricks to ensure you get the best results:
- Choose reliable suppliers – research and select suppliers who can reliably meet your production needs.
- Ideal price – It is important to negotiate with suppliers for optimal prices.
- Regular communication – Review your performance and feedback with your suppliers regularly.
- Go to a managed lumber supply company – this can help you track new lumber and plan production much more efficiently.
Developing relationships with reliable lumber suppliers will have a significant impact on your sales and profits. With a better offer, your company can manage the production process more efficiently while enjoying lower costs and higher quality. Plus, it gives you a competitive edge in the market.
Example calculation : Let’s take a look at this example calculation to see how building relationships with suppliers can affect sales and profits. If a company obtains a supply agreement with 300 units of softwood at per unit, the total cost of the purchase would be ,500. If the supplier could negotiate for the same 300 units at a reduced rate of per unit, the total cost would be only ,000. This cost saving of ,500 can significantly improve the company’s profitability.
Look for innovative logging and harvesting technology
As a forestry and timber harvesting business, staying competitive requires research into innovative logging and harvesting technologies. Timber harvesting operations, technical equipment and software must all keep up with the latest technologies and solutions to stay competitive. As a business, the more efficient and profitable your operations are, the more it will improve your bottom line.
Tips and Tricks for Researching Innovative Logging and Harvesting Technology
1. Stay up to date with what’s happening in the industry. Subscribe to industry newsletters, attend webinars or online workshops, and read articles related to forest and timber harvesting.
2. Join online forums and discussion groups for networking to keep up with the latest innovations and technologies. You can get great inside scoop from experienced industry professionals.
3. Research new and innovative harvesting and logging technologies available, then evaluate which ones would give your business the best return on investment.
4. Contact current vendors and vendors to see what new technologies may be available since you last acquired their product or service.
5. Attend trade shows or events that showcase the latest harvesting and logging technologies.
6. Contact professional associations and organizations in your industry as they often feature new and upcoming technologies in their newsletters and other publications.
Researching and using innovative logging and harvesting technology has the potential to dramatically increase the profitability of your logging and timber harvesting business. Not only can new and improved technologies lead to better and faster harvesting processes, but they can also lead to cost and labor reductions. For example, smart investment in automated crane systems can reduce manual labor costs. Additionally, these systems can also speed up the harvesting process, which can increase sales and profits.
Using an example, let’s say a forestry and timber harvesting company invested in automated crane systems at a cost of ,000. This new technology could then lead to a 10% reduction in labor cost (saving ,000 per year) and a 20% reduction in harvesting time (resulting in 1,000 additional units of timber per year sold). With the reduced cost of labor and the additional units of wood sold, the business could see an annual return on investment of over 50% (assuming an average selling price of per unit). This shows that investing in innovative logging and harvesting technology can lead to a significant increase in sales and profits for a forestry and timber harvesting business.
Form partnerships with other logging and timber harvesting companies
Partnering with other logging and timber harvesting companies offers a great opportunity to increase sales, profitability and the size of your customer base. By forming strategic partnerships with other companies, you can leverage each other’s strengths and skills to create more compelling offers for your customers. Here are some tips to help you get the most out of your partnerships with other forestry and timber harvesting companies.
- Identify and reach the right partners: Carefully choose who to partner with because it matters to business. Research other companies in the industry and decide which one you would like to work with, if they seem like a good fit.
- Define your goals and partnerships: Once you’ve identified potential partners, discuss each other’s goals and expectations to ensure that both companies are on the same page and can benefit from each other.
- Integrate solutions: Create cost-effective and integrated solutions between your organizations. Installing a common digital platform between the two organizations that meets all your business needs would be beneficial for increasing sales and profits.
- Create a win-win proposition: Make sure that both companies will benefit from the partnership. Organize a series of meetings with each partner to finalize and solidify the agreement.
- Identify gaps and develop strategies: Assess the strengths and weaknesses of your partnership and develop strategies to maximize the chances of success.
By developing partnerships with other forestry and timber harvesting companies, you can confidently increase sales and profitability. Let’s say you and your partner can increase sales by ,000 and reduce costs by ,000. This would increase your profitability by ,000.
Conclusion
It is clear that there are effective strategies to help forestry and timber harvesting companies increase their sales and profitability. From using innovative logging and harvesting technology to training and managing staff effectively and forming partnerships with logging and timber harvesting companies, these practices are key to helping companies succeed. While these tips may take time and effort to implement, the potential rewards are well worth it.
As the industry continues to grow, it becomes increasingly important for companies to stay ahead of the curve when it comes to sales and profitability. With the proper implementation of the strategies discussed in this article, logging and timber harvesting businesses can be well on their way to succeeding and taking their business to the next level in 2020 and beyond.