The Community Wood Recycling business model:
in a nutshell
Aims and objectives
Our overall objective is to make a contribution to a more sustainable society and our aims are both environmental and social.
Specifically, community wood recycling enterprises are set up to:
- Reduce waste and save resources by collecting and reusing waste timber that might otherwise end up at landfill – or at best “downcycled” into wood chip.
- Create jobs, training and volunteering opportunities for people marginalized from the labour market.
As a social enterprise, we work hard to ensure that we are financially self-supporting; that all the income needed to run our enterprise is earned through trading rather than via grants. By being financially self-reliant we can help ensure that our future is kept firmly in our own hands.
The advantages of our business model
There are many great things about the community wood recycling business model – especially that it is:
- Low capital intensive – it doesn’t need a lot of money to set up.
- Low tech – it doesn’t need highly skilled people or lots of expensive, specialist equipment.
- Highly labour–intensive – so it has the ability to create lots of lower-skilled but highly worthwhile work.
And in addition:
- We provide comprehensive support – From understanding the concept right through to ongoing support and mentoring as your enterprise grows, we provide help every step of the way. We do have to charge for our support (it’s like a franchise) but we are committed to ensuring that our fees never become a barrier to those who want to get into community wood recycling.
So what does the business do?
The idea is simple. We provide a cost-effective but environmentally and socially superior way of dealing with wood waste.
We collect from any organisation that generates wood waste. Our biggest customer is the building industry because the construction process continually generates so much waste wood, much of which is reusable, but we also collect from a wide range of customers, including firms that have pallets and wood packaging waste; theatres that have redundant sets and schools that might be clearing out furniture, fixtures and fittings. The key is that if an organisation would otherwise use a skip to get rid of that waste – we can compete and offer them a better deal!
Doing this is very labour–intensive so it creates lots of jobs, training and volunteering opportunities for local people – many of whom might be described as “disadvantaged”.
What is our niche?
Our niche is competing with the smaller skips. So where a potential customer would use a 6 yard3 or 8 yard3 skip, as well as the environmental and social benefits of using our service they can generally save money too.
We don’t collect from organisations like skip companies or the Council (from their waste sites), because they generate huge quantities of wood waste – well beyond our capacity to deal with.
How is the income generated?
There are two main income streams.
- Collection charges. We charge to collect the waste timber, but try to charge less than it costs to put the same amount of timber into a skip, so the customer has the financial incentive to use the service.
- Sales of wood and products. A proportion of the collected wood will be good enough to be reused, so it can be sold back to the community for DIY/building projects. Some wood, especially the shorter lengths that are not so useful for DIY, can be made into a wide range of wood products also for sale. Additional income can be generated by “added-value” services, such as cutting, sanding, planing and finishing customers’ orders. Pallets can be repaired and sold and in the Winter, wood can be sold as firewood/kindling.
These two income streams should provide sufficient revenue to operate the enterprise without the need for ongoing grants.
How much does it cost to set up a community wood recycling enterprise?
The answer to this question is… it depends on how you do it.
At the top end, if you do everything “properly” you will probably need working capital of between £30,000 and £40,000 (see sample budget) to cover the cost of buying a vehicle, buying tools, paying the wages, rent/rates, insurance and all the other overheads until your turnover grows large enough to cover them all.
Because this is a social enterprise, it is possible to apply for grants to cover some or all of the costs of setting up, but applying for most grants is a relatively arduous and time-consuming process and can take a year or more before any money is received.
However, many of our enterprises have been set up for far less! Much of that £30,000 working capital is used to pay the entrepreneur a wage and cover rent and rates.
So some entrepreneurs have started with no or just a very small salary, begged and borrowed tools and equipment and managed to sweet talk their local Council into providing premises at a very low rent… and by doing this they have managed to get their wood recycling enterprises going within months.
It is certainly not about cutting corners or starting up in a less-than-professional-way. It’s just that the simplicity of the model, the speed at which you can start generating income and the fact that the NCWRP provides such a high level of support means community wood recycling enterprises can start up relatively quickly.
What kind of premises do I need?
Community wood recycling does not need high quality space. It can work in virtually any reasonably accessible, secure space that has power and water; even in an open yard. It is ideally suited to low grade redundant space – perhaps awaiting re-development.
Due to the social and environmental aims of community wood recycling, such property can often be rented on favourable terms. However, the business model should be robust enough to allow for suitable property to be obtained at a reasonable market rent; the sample budget allocates £12,000 a year for combined rent and rates – hopefully not unrealistic in most parts of the country.
Community wood recycling is space-extensive so requires at least 200 to 300m2 (2000 to 3000ft2), preferably with some secure outside space for unloading, parking and storing pallets etc.
Because retail sales are such an important income stream, the premises should be as accessible as possible, in a busy location, on a busy road, on a bus route, and in an area of high footfall. Of course the better the premises, the more it will cost. So compromises must be made. But sometimes it might be worth choosing a more expensive site that has the edge for retail.
What happens to the collected wood?
The collected wood is taken back to the premises and sorted out. The idea is to find the most environmentally-beneficial use for it. To help us to better understand the wood waste stream and find uses for it, we devised a (fairly arbitrary and overlapping) grading system, consisting of 3 “grades”.
(c.15% – 20% of the construction wood waste stream)
This is timber good enough to reuse for DIY, building, the garden, art and craft projects etc. and is sold back to the community. Grade 1 is loosely defined as wood that is around 1.5 metres or more in length, relatively sound, free from splits and free from contaminants. Sheet materials in good condition more than 1.5 metres square are also classed as grade 1, along with doors in good condition, pieces of hardwood, shorter lengths of floorboards, skirting boards and architrave and pallets that can be reused – and anything considered interesting and saleable.
Even though grade 1 only represents a small proportion of the waste stream, it generates a large proportion of an enterprise’s income.
(c.15-25% of construction wood waste stream)
This is also good wood but too short or small to be easily sold for DIY. It can however be used for making wood products, and community wood recyclers made a wide variety of wooden items – ranging from bird boxes and compost bins to bookcases, benches and higher quality furniture. Where there is insufficient demand for timber for this use, it can be classed as grade 3.
(c.60 -70% of construction wood waste stream)
Grade 3 consists of everything else, including off cuts, small pieces, unrepairable pallets and anything too damaged, rotten or contaminated to be used. Any clean, solid wood (as opposed to composites like chipboard or mdf) can be cut up and bagged as firewood and kindling, generating a very useful income stream during the Winter. All the grade 3 that can’t be used must be passed on to a chipping firm. This incurs a disposal cost, so community wood recyclers have the incentive to find uses for as much of the collected wood as possible.
What sort of equipment is used?
The main piece of equipment needed is a 3.5 tonne pick-up truck, fitted with a cage of about 12 cubic yards. This is a Transit-sized vehicle and can be driven on a normal car license.
We use this kind of vehicle because it is relatively cheap to buy and operate and can still take a good load. A skip lorry with its (up to)) 6 litre engine, weighing around 20 tonnes will still only take that 8yd3 skip, but our trucks can take 12 yd3 of wood waste – that’s 50% more. Because we use vehicles that are lighter, use less fuel and produce less pollution that skip lorries, we have less negative environmental impact too. So even our collection methodology is superior to the standard skip approach!
Although some community wood recycling enterprises have well-equipped wood working workshops, it is not necessary to buy a lot of machinery when you start up. The basic tools that will be the most useful for collections cost little. For making products, simple hand and hand power tools are sufficient for most items.