How to Develop a Business Plan for a Wood Pelleting Operation

Sawdust can be transformed into wood pellets.

A wood pelleting business has the potential to be an innovative business on the cutting edge of new technology. New technology allows scrap wood and sawdust that would normally be discarded by the lumber industry, to be formed into pellets that can be burned as a cheap, efficient and renewable fuel source. In order to start a wood pelleting business, it is necessary to begin by writing a business plan. A business plan will outline the business for external investors and act as a guide for the internal management. Although writing a business plan is important, it is not difficult when following a few basic steps.

Things You'll Need

• Computer

Instructions

1. Write down the first section of your business plan in a word processing program. This section should include information about the management of the business and the marketing plan that will be used to promote your product. You should explain who will be managing the business and what the management structure will look like. When explaining your marketing strategy you should explain who your market is. For example, explain if you are selling wood pellets to consumers or other businesses.

2. Write down the second section of your business plan. The second section should consist of your projected earning for the business. Include a budget, an estimate of expected cash flows, and your anticipated sales figures. You should base your figures on your projected wood pellet production, the market demand for wood pellets, and the market price for wood pellets.

3. Insert supporting documents including relevant figures and graphs into a third section of the business plan. This section is intended to provide important details that may not be elaborated on elsewhere in the plan.

4. Write an executive summary. Although this is the last thing that you write, you should put it at the beginning of your business plan. The executive summary is a simple summary of the entire business plan that is intended to elicit the attention of a reader who is pressed for time and may not look beyond these first few pages. An executive summary can be very important for getting the attention of investors. The executive summary should give the reader an understanding of how your wood pelleting business plans to operate, but should not go into great detail -- keeping in mind that detailed information is in the remainder of the report.

Tips & Warnings

• When you are writing a business plan it is a good idea to have other people look at your plan to offer you feedback. People who are unfamiliar with your plans or the wood pelleting industry may be able to point out areas of your plan that are unclear.

• Be cautious with your financial projections. These should be based on data from existing companies and industry trends.

References

• EUBIA: The Pelleting of Wood
• Georgia State University: Writing a Business Plan