By 
My business partner and I decided to invest in a project that would provide cash flow, profitability, and ultimately an asset at the end. We decided to buy a 115 year old bourbon barn, dismantle it and sell the material that was dismantled. We had no prior experience in salvage, demolition, or the logging industry. The purpose of this article is to share our experiences. Hopefully the reader learns from our (bad) adventures. The article is organized into sections titled Business Model, Sales and Marketing, and Operations. In addition, a history of our barn is included.
Business model – 6 ideas
1. There is no trade association or certified agents in the reclaimed wood market. In general, the reclaimed wood industry is a fragmented market with dozens of local or regional brokers and manufacturers.
2. The purchase and sale of the wood product involves at least one, often two, intermediaries. As a seller, the brokers are not working for you. Usually the buyer pays them and then they take their fees or percentages and then pay the seller. There is a natural conflict of interest with only one broker involved.
3. Buyers of reclaimed wood do not always conduct a site inspection of the material prior to purchase. Digital photos and samples along with broker advice or inspection are part of the deal. Unfortunately, buyers may not know what they’ve received until they download or add value to the material at a later date.
4. The parties involved often feel positive about business deals: buyer, seller, and broker(s). In none of the seven different sales transactions with different buyers and brokers did we feel that the deal was executed as agreed (loading, final count, species, classification).
5. Part of the reason players get frustrated is that terms are often not put in writing. Without contracts, the deals kept changing (put it in writing). Sometimes players send it by email, but most of the time it’s by phone.
6. Fuel surges and a poor economy hurt our company’s profitability. Because reclaimed lumber is typically used for housing (flooring was the biggest demand), a downturn in the housing market hurt our plan. Additionally, as the commodity lumber product became pulpier, many potential customers were looking for new lumber instead of our aged lumber.
Sales and Marketing – 7 points
1. One of the mistakes we made on the project was not selling the material ahead of time. In hindsight, we should have marketed the material early to build relationships and find channels to sell our product. We waited until all the wood was on the ground and in a pile, which hurt our cash flow. Also, it takes time to meet new buyers and develop networks (if it’s the first time). Another mistake we made was not stacking, also known as sticker stacking, our lumber while we were dismantling it. We learned that a best practice is to acquire the “sticks”, such as tobacco sticks, before removing them. The sticks are placed between the rows of boards so that the wood breathes and prevents it from rotting. Stacking the wood also makes it easier to load the wood. Our recommendation is not to wait to get the sticks. Unfortunately, we had to buy them from a sawmill and overpay.
2. The more value you can add, the more income you earn and the more risk you take. Value-added activities could be sorting, cutting, drying, delivering, and finishing. We found that it really is worth the investment to count each stack and mark each package with type, board footers and location. If you don’t, then you are setting yourself up for downsizing issues, loss of income, disputes, etc. It is imperative, however basic it may seem, to define the terms of the sale.
3. Species seemed to be important to potential buyers, but it seemed that each broker and potential buyer was claiming that the wood was a different species than it was or what another expert was saying. In addition, the species rarely brought us a higher price. More important than the species, the dimensions were what brought a higher price. The longer and wider the material, the more demand we find for our product, always at a higher price.
4. The uses of our material varied. We sold to buyers and brokers who worked in flooring, cabinetry, home improvement, and furniture. If the wood has defects, such as wormholes or bolt holes, it still has value (often more value).
5. Diligently vet prospective buyers and brokers. It was generally unproductive to meet buyers on site unless they were serious, established, and dealing in material as a full-time occupation. It is important to align yourself with a broker that works for you. Runners may bring multiple parties to purchase their material. There may also be a broker for the buyer and a broker for the seller.
6. The intranet is a good place to start generating interest in your material. Wood Planet.com, Craigslist and Google searches for “Reclaimed Wood” generated good leads.
7. It helps to have a great story to tell about the barn you repossessed (see “Our Bourbon Barn”).
Operations – 9 tips
1. Count the board feet of your material after stacking to check for shrinkage and show the buyer that you are organized. It helps to put a label on each pile that identifies the amount, type, etc.
2. Train your crew on species types so they don’t mix oak with poplar or pine. A knife cut to show the grain, a simple map board, or a scale can indicate the different grades and species of wood.
3. Make sure there is room for flatbed semi trailers to be easily loaded and maneuvered.
4. Safety and Security – Make sure you are diligent in how you secure lumber and equipment. Unfortunately, we encountered multiple thefts of material and tools. Make sure the project has safety equipment, processes, and training.
5. Capital goods: We should have bought a long forklift. If you make the capital investment, you can sell it after the project is finished. It is an opportunity to reduce labor costs.
6. Get organized before you tear down the barn. We should have planned better where we would put the piles of wood.
7. Don’t make your crew work in poor conditions. W spent hundreds of hours working with our team in wet and muddy conditions where productivity was poor.
8. Make sure you have licenses, insurance, permits, and cash. It is important to have insurance for your crew and have the funds to pay the crew. Several of our crew to include one of the principles stepped on nails.
9. Take lots of photos of all phases of the project, even before the project. Have samples ready to ship.
Summary
My partner says he’d never tear down another barn. I do not agree. If I got a really good deal, I think the lessons we learned would make the next project that much more profitable and satisfying.
Our Bourbon Barn: A Rich Kentucky History of Its Owners and Descendants
Mr. Wertheimer of Little Rock had planned to enter the restaurant business. He invites the Ripey’s to a party and they got into the booze business together. Mr. Wertheimer became part owner of the Hoffman Distillery Company with the Ripey family (of Lawrenceburg, KY) in the 1940’s (shortly before World War II). Mr. Wertheimer’s grandson, Edward, was born in 1933 and said the distillery and warehouse were built 50-65 years before he was born and the barn dates from the 1880’s. Our barrel barn was the warehouse Oldest owned distillery. There were a total of three warehouses at the time. The other two were erected after his grandfather obtained co-ownership. Edward spent much of his youth amusing himself by the creek in Lawrenceburg. The property was later sold by Edward Wertheimer of Cincinnati to Julian Van Winkle III in 1981. It was renamed the Commonwealth Distillery Company, where the bourbon was labeled Old Rip Van Winkle. Julian (of Louisville) sold it to the owner (in 2000) from whom we purchased it in 2007. Unfortunately, much of this history has been lost (unrecorded), which is one of the purposes of the author of the article.
Before World War II, bourbon barrels floated down the creek, which feeds the Salt River, connecting the bourbon distillery to its original warehouse. The barrel handlers manually lifted the barrels from the stream and placed them in the warehouse. The barrels were full and waterproof. After trucks were commonplace in this region of Kentucky, barrels no longer floated down the river. Another interesting fact was that there is a shed across the road where a government caliber lived. The shed still exists. Each barrel was taxed and had to be stamped by the government employee.