What does a tree service’s wood disposal arrangement tell me about its margins?

Every tree job produces material that has to go somewhere. For some tree services it is a major expense, for others it is a small source of income. Ask the seller to walk through the full chain: how loads are hauled, how far, where they are dropped and what is charged or earned.

Look at the paperwork. Are there written agreements with the sites, or is it an informal favour? A neighbour who takes chips for free this year may not next year. Ask your lawyer about anything that could change who may accept the material. Check what the arrangement does to job costing. If crews spend half a day driving loads, that affects how many jobs they can do and what the work really costs. Compare the way the seller prices jobs with what disposal actually takes. Ask about secondary sales such as firewood, mulch or logs. See whether they are recorded separately and whether they depend on the owner’s personal contacts.

Finally, ask your accountant to read the statements with disposal in mind, so you understand how it influences profit before and after your changes.

Key takeaways

• Trace the whole disposal chain, including hauling time, destination and cost or income.
• Find out whether outlets are written agreements or informal favours.
• Check whether the seller’s job pricing reflects what disposal really takes.
• Ask whether firewood, mulch or log sales are recorded separately and whether they depend on the owner’s personal contacts.