Expenses and Income
The following is an example of monthly expenses and income from operating a small mill processing 1500 pounds of fiber a month. These prices may vary depending on location, and the mill owners’ discretion. The cost reflects a three year operating history in Michigan and were updated in February 2015. As a rule of thumb, 1 pound of yarn requires 1 hour of labor.
|Typical Monthly Expenses||Amount|
|Insurance: Workman’s comp required in Michigan||$450|
|Insurance: Machines, buildings, and customers’ fiber while in your possession||$400|
|Soap and processing oil||$500|
|Propane: Heating wash water and building heat||$900|
|Website (updated and maintained by owners)||$10|
|Payroll: 5 employees working 220 days per year at $10 per hour plus $2 per hour taxes paid by employer. Mill owner is not one of the 5 employees||$10,267|
|Loan payment if needed: Suggested start up loan of $110,000 at 5% interest for 15 years||$900|
|Total monthly average operating cost||$14,697|
|Typical Monthly Income||Amount|
|500 pounds raw fiber processed as roving at $7.20 per pound incoming weight||$3,750|
|1000 pounds of fiber processed into yarn will yield about 600 pounds of yarn on an average, at $25 average per pound finished weight||$18,000|
|Total average monthly income||$21,750|
Average income minus average expenses = $7053 monthly profit
Please keep in mind this does not take state or federal taxes into account.
This can only be used as a estimated income potential, on a good month when your mill is at top operating performance. There is nothing added in the bottom line for property tax or building maintenance.
In my opinion a small mill is meant to be a supplement to farm income and not a family’s main source of income. The work is dirty, dusty and hard, but rewarding. Most importantly you will help preserve a rural way of life, by adding value to the small farms product.