WOW!!! Look at those cocobolo boards! Who wouldn’t see that and think they could sell wood like that and make a fortune? Can’t be that hard, right? Or, is it harder than you think?
Let’s start with some lessons in what not to do. Never a dull moment, lots of excitement and plenty of great stories. But at the end of the day, a boring success story is preferred to an exciting story that ended badly for everyone.
Over the last 20 years I have spoken to at least a dozen companies that have tried to get into the tropical timber business. They all had big dreams and big budgets. They all went bankrupt and lost millions, most involved some level of fraud. The fraud usually came once the reality of their situation sunk in and they started to discover the things they did not know. They all rejected my advice and said I was too expensive to hire and that the business was not as difficult as I had warned them. (side note, on average, my fees were 1-2% of what they lost). What they all had in common was a lack of experience in the timber industry. They didn’t know what they didn’t know. And it usually took me less than 30 minutes to discover why their plans would not work. Most could have adapted and been successful if they changed course in the beginning. One company did eventual hire me a year later, after they lost $1 million. They lost another million by refusing to fire the person I told them to get rid of on my first day at their lumber yard. Their manager was one of the CIA’s largest drug dealers of all time and the absolute definition of a psychopath and a crook (they hired him at the start instead of me because “he was cheaper”). He stole every single payment and in the end even stole the tires off the logging trucks. But I had the company on the verge of a major success when the original investor was arrested. He is currently almost finished his 7 year sentence. It turns out all his money came from running a large Ponzi scheme. Many of the other lumber projects have similar exciting stories that always end badly for those who invested.
So, how do you avoid making these mistakes? First, understand what you know and what you don’t know. If you are not an expert in this field, don’t think you can be a success when those who have expertise, experience and financing don’t always make it. Don’t try to do too much, don’t try to do everything. Start small enough to learn and big enough to have an economy of scale to succeed. Talk to experts, learn and pay a little to avoid losing a lot.
If I was to give advice to someone who wanted to live in a tropical country and be involved in selling exotic woods I would tell them to establish a good dry kiln and planing mill near a major port in that country. The biggest bottleneck there is for tropical species is getting them properly kiln dried. The next big problem is proper grading. Planing the wood can present the wood better and make it easier to grade. Running a kiln requires learning and patience, but it is basic and can be done. Running a planer is as simple as it gets. You can make money just drying the wood, planning it and loading the containers. This will lead to finding out what species are in demand, who has them, and who wants them. This will draw buyers and sellers to you, and then you become the focal point and have leverage to do business with the people you want. If someone wanted to do this, I can easily find them kilns and planers (I had a woodworking machinery company for 15 years) and I have large buyers who would buy properly dried and graded lumber.
Don’t try to do too much. Have a plan, make sure your plan will work. Talk to people, get advice. Study and learn. Don’t think it will be easy and you will have no problems or struggles. Be willing to work hard, don’t be afraid to make small mistakes. But be able to see your mistakes and learn from them. Make sure you have enough money to succeed and pay for a couple of mistakes. And most of all, develop relationships with people who can help your business succeed. You can’t do it alone, so if you need others to help you, make sure they know more than you do about the business you are going into. If this is something you want to investigate, feel free to reach out to me and discuss it. I may just tell you why you should not, but that will just save you money rather than losing money. But if you have a passion for something like this, then spend the time and money to do it right and don’t make your dream a nightmare.
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