| My business partner and I decided to invest in a | | | | was usually unproductive to meet buyers on site |
| project that would provide cash flow, profitability, | | | | unless they are serious, established, and broker |
| and ultimately an asset at the end. We decided to | | | | material as a full time occupation. It is important to |
| purchase a 115 year old bourbon barn, dismantle it, | | | | get aligned with a broker that he works for your. |
| and sell the material that was dismantled. We had no | | | | Brokers may bring in multiple parties to buy your |
| previous experience in salvage, demolition, or the | | | | material. There also may be a broker for the buyer |
| wood industry. The purpose of this article is to share | | | | and a broker for the seller. |
| our experiences. Hopefully the reader will learn from | | | | 6. The intranet is a good place to start to generate |
| our (mis-) adventures. The article is organized into | | | | interest in your material. Wood Planet.com, Craigslist, |
| sections titled business model, sales and marketing, | | | | and Google searches on "Reclaimed Lumber" |
| and operations. Also, included is a history of our barn. | | | | generated good leads. |
| Business Model - 6 insights | | | | 7. It helps to have a great story to tell about the |
| 1. There is no trade association or certified agents in | | | | barn that you reclaimed (see "Our Bourbon Barn"). |
| the reclaimed lumber market. In general, the | | | | Operations - 9 tips |
| reclaimed wood industry is a fragmented market with | | | | 1. Count the board feet of your material it after it is |
| tens of local or regional brokers and manufacturers. | | | | stacked, so that you know if there is shrinkage and |
| 2. The buying and selling of the wood commodity | | | | show the buyer that you are organized. It helps to |
| involves at least one, often two brokers. As the | | | | put a placard on each stack identifying the quantity, |
| seller, brokers are not working for you. They are | | | | type, etc. |
| typically getting paid by the buyer and then taking | | | | 2. Train your crew on the types of species so they |
| their fees or percentages and then paying the seller. | | | | do not mix oak in with poplar or pine. A knife cut to |
| There is a natural conflict of interest with only one | | | | show grain, a simple map board, or a scale can |
| broker is involved. | | | | indicate the different grades and species of wood. |
| 3. Buyers of reclaimed lumber do not always do a | | | | 3. Make sure that there is space for flat bed semi |
| site inspection of the material prior to purchase. Digital | | | | trucks can be easily loaded and maneuvered. |
| photos and samples along with the broker's advice or | | | | 4. Safety and security: make sure that you are |
| inspection are part of the deal. Unfortunately, buyers | | | | diligent in the way that you secure the wood and |
| may not know what they have received until they | | | | equipment. Unfortunately, we encountered multiple |
| offload or add value to the material at a later date. | | | | thefts or material and tools. Make sure that the |
| 4. Parties involve often feel positive about the | | | | project has safety gear, processes, and training. |
| business deals: buyer, seller, and broker/s. Not one of | | | | 5. Capital equipment: we should have purchased a |
| the seven different sales transactions with different | | | | long fork lift. If you make the capital investment you |
| buyers and brokers did we feel that the deal was | | | | can sell it once the project is over. It is an |
| executed as agreed to (load out, final count, species, | | | | opportunity to reduce labor costs. |
| grading). | | | | 6. Organize before you take down the barn. We |
| 5. Part of the reason why players feel shafted is that | | | | should have planned better on where we would put |
| terms are not usually put in writing. No contracts, | | | | the stacks of wood. |
| deals kept changing (put it in writing). Sometimes | | | | 7. Don't work your crew in poor conditions. W spent |
| players will put it in an email but it is mostly over the | | | | hundreds of hours working our crew in muddy, wet |
| phone. | | | | conditions where the productivity was bad. |
| 6. Fuel increases and a poor economy hurt our | | | | 8. Make sure you have licenses, insurance, permits |
| venture's profitability. Because reclaimed lumber is | | | | and cash. Having insurance for you crew and having |
| typically used for housing (flooring was the biggest | | | | the funds to pay the crew is important. Several of |
| demand), a dip in the housing market hurt our plan. | | | | our crew members to include one of the principles |
| Also, as the wood commodity dipped for pulp, many | | | | stepped on nails. |
| potential customers were looking at new wood | | | | 9. Take plenty of photos of all phases of the |
| versus our aged wood. | | | | project, even before the project. Have samples |
| Sales and Marketing - 7 points | | | | ready to ship. |
| 1. One of the mistakes we made in the project was | | | | Summary |
| not selling the material early. In retrospect, we should | | | | My partner says that he would never tear down |
| have marketed the material early to form | | | | another barn. I disagree. If I got a really good deal I |
| relationships and find channels to sell our product into. | | | | think that the lessons we learned would make the |
| We waited until all of the lumber was down on the | | | | next project so much more profitable and satisfying. |
| ground and bundled, which hurt our cash flow. Also, it | | | | Our Bourbon Barn: A Rich Kentucky History from its |
| takes time to meet new buyers and develop | | | | Owners and Descendants |
| networks (if you are in it for the first time). Another | | | | Mr. Wertheimer, from Little Rock, had planned to get |
| mistake we made was not stacking, also known as | | | | into the Restaurant business. He met the Ripey's at a |
| sticker stacking, our wood as we were dismantling. | | | | party, and they got into the Liquor business together. |
| We learned that a best practice is to procure the | | | | Mr. Wertheimer became the co-owner of the |
| "sticks", such as tobacco sticks, prior to taking them | | | | Hoffman Distillery Company with the Ripey Family (of |
| down. The sticks are placed between the board | | | | Lawrenceburg, KY) in the 1940s (shortly before |
| rows in order to let the wood breathe and prevent | | | | WWII). Mr. Wertheimer's grandson, Edward, was |
| rot. Stacking the lumber also makes loading the | | | | born in 1933 said that the distillery and warehouse |
| lumber easier. Our recommendation is not to wait to | | | | was erected 50-65 years before he was born, dating |
| obtain the sticks. Unfortunately, we had to buy them | | | | the barn back to the 1880s. Our barrel barn was the |
| from a saw mill and overpaid. | | | | oldest warehouse on the distillery property. There |
| 2. The more value that you can add the more | | | | were a total three warehouses at one time. The |
| revenue you will get also the more risk you take on. | | | | other two were erected after his grandfather got |
| Value added activities could be sorting, cutting, drying, | | | | co-ownership. Edward spent much of his youth |
| delivering, and finishing. We found that it is truly | | | | having fun on the creek in Lawrenceburg. Later, |
| worth the investment to count each stack and mark | | | | Edward Wertheimer, of Cincinnati, sold the property |
| each bundle with type, board feet, and location. If | | | | to Julian Van Winkle III in 1981. It was renamed the |
| you don't then you are setting yourself up for shrink | | | | Commonwealth Distillery Company, where bourbon |
| issues, revenue loss, disputes, etc. It is imperative, as | | | | was labeled under Old Rip Van Winkle. Julian (of |
| basic as it seems, to define the terms of the sale. | | | | Louisville) sold to the owner (in 2000) we purchased |
| 3. Species would seem to be important to | | | | it from in 2007. Sadly, much of this history is lost (not |
| prospective buyers, but it seemed like each broker | | | | recorded), which is one the author's purposes of the |
| and potential buyer claimed the wood was a | | | | article. |
| different species that what it was or what another | | | | Prior to WWII, the bourbon barrels were floated |
| expert said. Also, the species rarely yielded a higher | | | | down the creek, which feeds the Salt River, which |
| price for us. More important than species, dimensions | | | | connects the bourbon distillery to its original |
| were what brought a higher price. The longer and | | | | warehouse. Barrel handlers manually lifted the barrels |
| wider the material, the more demand we found for | | | | from the creek and placed into the warehouse. The |
| our product at always at a higher price. | | | | barrels were full and waterproof. After trucks were |
| 4. The uses of our material varied. We sold to buyers | | | | common place in this region of Kentucky, the barrels |
| and brokers that worked in flooring, cabinetry, home | | | | were no longer floated down the river. Another |
| improvement and furniture. If the wood has defects, | | | | interesting fact was that there is a shed across the |
| such as worm holes or bolt holes, it still has value | | | | road where a government gauger lived. The shed still |
| (often more value). | | | | exists. Every barrel was taxed and had to be |
| 5. Screen prospective buyers and brokers diligently. It | | | | stamped by the government employee. |