Can a Market Constraint Be Overcome by Installing a Splitter?

While speaking with a hydraulic wood splitter sales person, he shows me a chart that has a bunch of numbers on it. The first number is the price. The second number is the installation cost. The third number is the warranty. Finally there is the size of the machine. Out of these numbers the final number is the size that he is looking to buy.

This chart is misleading. While it does give a fair idea of how much it will cost and the size it is, it does not take into consideration one of the most important numbers in this equation. The amount of wood that will be cut during each split will be a matter of a few percentage points. If the split is going to take two feet then the cost of the machine will be six thousand dollars. However if it takes twenty feet then the cost is cut down to ten thousand dollars. This calculation isn’t as simple as trying to use seeutek heat press parts— I tried that when I decided to give up the wood splitter and start selling T-shirts instead. In the end, I used the T-shirts to market my business.  

Factors To Consider

In talking with the sales person I realized that a couple more things needed to be factored in. First, if the splitting is to take place in a state that does not allow a certificate of occupancy (CO) then the cost would go up significantly. Second, based on the sales pitch this would be a brand new location that would need electricity, water and a power source. The cost would be close to twenty thousand dollars. This makes perfect sense considering that the economy dictates that businesses have to move to larger areas or grow in size.

The next question that I asked the sales person was; “Does this machine have a variable speed drive?” My initial reaction was to look at my last question, “How does the hydraulic wood splitter operate?” He said; “It has a variable speed drive.” I then asked; “Why does it cost so much to operate?” To which he replied; “dictated by the size of the pieces and the amount of wood that is to be split.” The owner of the business could have told me that already but it is better to have all the facts before we sign a deal.

Now you may be thinking to yourself that the economy has hit an all-time low and it’s hard to imagine a business operating twenty-foot distances for wood, when it costs only ten thousand dollars to buy and use a machine that allows him to do this. The owner is considering buying a hydraulic wood splitter that sells for 50,000 dollars; he figures it will cost him eighty-five thousand dollars to divide up the twenty-five thousand cords that he needs to run his business from his truck. This calculation is just way too much for any normal businessman or woman.

Questions and Considerations

In reviewing this information, as the owner of a company with twenty-five employees, I had to ask; “What type of business operations do you conduct where splitting wood is imperative?” Does your company have a processing facility? Does your company have a huge wood processing plant? Does your company have a customer service center that deals with a large number of customers a day? If so, you are going to need a much bigger machine than the one the sales guy is selling which is only rated for thirty-two thousand cord capacities.

If your business has a production facility, as the owner of a greenhouse and nursery is considering whether to buy a hydraulic wood splitter that sells for fifty,000 dollars and if your production facility processed thirty-two thousand carts in a year, it will not be able to handle the task of splitting wood at all, let along processing them at an acceptable rate. Let me put it another way. Even if your machine is capable of meeting the fifty thousand dollar design capacity and twenty-five thousand cubic feet per minute output, it will not be able to process the job at all. In the case of a processing plant, it would not be efficient either. If your business processed wood twenty-five percent of the time and the machine only manufactured six percent of the wood, it would still be inefficient.

Conclusion

The truth is that a business is never going to operate at its maximum potential if it does not have the proper tools and equipment to do so. Likewise, a company cannot remain at its maximum potential if it does not have the proper inputs needed to improve its efficiency. If you are the owner of a greenhouse and nursery and are thinking whether to buy a hydraulic splitter, I would recommend that you do so now, before the price hike takes effect. The price increase may come as a shock, but it is necessary in order to achieve the efficiency improvements that are necessary to ensure the company’s long term viability and profitability.