COVID-19 And Micro-Breweries | A 2 Part Series – Auction Masters
Part 2 – Why Selling Your Brewery Equipment Now May Be A Great Decision
The Short Term Situation
In our second article of this series we’re not going to talk about “unprecedented times”. We’re not going to talk about the uncertainties of the future. We’re not going to speculate about all the things that may or may not happen. We’re going to talk about numbers and strategy. We’re going to talk about action. If you are the owner and/or operator of a micro-brewery, then you’re likely dealing with one of two scenarios.
1) You’re successfully shifted your business model to meet the current situation created by this pandemic.
2) You’re exploring your options for moving forward. Should you keep your doors open and stick this thing out? Or, should you prepare for an exit and begin looking into your next business pursuit?
As we all know, there has been a natural wave of closures in the craft brewery industry due to covid-19, and will likely see an increase.
There are a lot of hardworking people at great risk right now. Business owners are feeling the intense pressure of being forced to adapt quickly in a world of changes they are seeing and experiencing. When it comes to the small brewery industry, how fast on-premise operators are able to shift to delivery is critical, not to mention – challenging.
Some craft breweries haven’t been able to make that adjustment in time and as a result, they’re removing people from the payroll and some have even been forced to close their doors. Some brewery owners haven’t been able to secure the government stimulus packages that are available for various reasons and that has caused the same outcome.
A Short-Term Opportunity
Regardless of why a brewery may be facing hardship, there is an underlying opportunity that could be valuable and likely short-lived. The opportunity? Selling your equipment now.
As it stands, there have been brewery closings, but there haven’t been as many small breweries going out of business as most of the public assumes. There are variations in this fact-based on how the state and local governments are engaging the pandemic. On average though, sales volumes for breweries across the country are still promising, but the trend has moved from on-premise purchases to off-premise.
Off-premise sales is a channel that is difficult to navigate for small breweries and it may not get any easier. Suppliers want fast restocks and that may not be willing to wait for gaps in keeping the beer shelves stocked. Small brewery businesses may not be designed to meet those sorts of demands. Most all business models weren’t built on a model that considered a pandemic in their dynamic models
The buying levels for holidays will still see peaks, but not quite as high. Staying with the current trend, we’ll likely see those volumes shift from on-premise to off-premise buying as well. But, people won’t be throwing big parties and having group cookouts. So there will almost assuredly be a dip in the overall volume. In past years, the beer industry has seen around 45% peaks during Memorial Day, July 4th, and other holidays. This year, most early predictions are expecting 10% and 15% peaks.
Factors like the inability to successfully make an off-premise model profitably work and overall lower sales volumes may leave a significant group of smaller breweries in a tough situation where selling their equipment may be the only option.
For those owners who find themselves in this scenario, there may be a small window of opportunity to take action and create a valuable exit strategy. As more craft breweries are forced to close their doors, the market will likely be flooded with used equipment. This will naturally cause equipment value to bottom out.
As an owner, you don’t want to be in this wave of equipment sales that will be yielding bottom value. If you determine that selling your equipment or your entire business is the best option, it will be beneficial to work with a trusted appraiser to determine your equipment’s current value and take action towards selling as soon as possible.
But how do you make that determination? Is it the right move to look at selling your business equipment or would it be better to work on a strategy that keeps you going? How will you know?
Modeling and Contingency Plans
This is where using real-time data to build models can be critical. If you’ve never relied on modeling to help your business strategies, then it may be a good idea to start today. If you have been using predictive models to help you grow your brewery, then right now you could benefit from building more dynamic models than you have in the past.
Forecasting and pure math models can be a tremendous help for you to understand the potential of your business pulling out of the upcoming recession. You may want to consider allocating some of your resources within your team to create a variety of models based on scenarios that are occurring or could occur.
Direct to consumer modeling could be critical for a business owner at the moment. In many perspectives, it has become the democratizing agent for market strategies. This sort of model can give you a very real look at what consumer behaviors and trends look like, helping you determine your best approach to shifting consumer demands. And whether or not you’ll be in a position to adjust with them. You’ll have a solid plan of attack to implement if restrictions are raised in your state. Likewise, you’ll have a strategy for the event of prolonged restrictions.
A Quick Seller’s Guide
After you’ve created your dynamic models and reviewed all of your potential outcomes, then you can begin your next steps of action. If your models point towards an exit strategy being the best outcome for your brewery, then it may be a good idea to move quickly before the market is flooded with used equipment.
First, you’ll want to contact a trusted appraiser. In the case of breweries, you’ll specifically want a Certified Business Equipment Appraiser to walk you through the process of determining the current market value of your tanks and production equipment. Once you’ve determined the value, connect with a seller who can deliver the greatest reach possible in the brewery niche and get you the most valuable return on your equipment. At Auction Masters, we’ve built models that allow us to effectively market businesses and the equipment as a package to attract the most valuable buying customers available. We have found great benefit in implementing this approach before a business owner moves to liquidation.
A Trusted Appraisal Process
Not all appraisers are created equally. If you decide to downsize or sell your brewery outright, you’ll want appraisers who are valued for their reputation. You want to trust their integrity and know they’ll give you the highest value service at a cost-effective price.
As a professionally certified, nationwide appraisal company, Auction Masters has more than 40 years experience with business liquidation and personal property appraisals in Minnesota and surrounding states.
Long-time industry experience has given us a deep knowledge of asset values and markets, allowing our team to successfully work in a wide variety of niche industries, the brewery industry being one of those that we thrive in.
We understand that right now more than ever in the history of your business, your time and money matter. That’s why we’ve created streamlined processes that ensure fast turnarounds and competitive prices. We aim to exceed our appraisers’ highest standards by diligently following the USPAP requirements.
The Auction Masters Sales Process
With the current pandemic making it unsafe to conduct in-person business, we’ve created a simple, two step process for getting you the most valuable results possible when selling your equipment in a nearly virtual manner.
Step 1 – Streaming Video Consultation
Our experienced team has seen so many auctions now that quoting a brewery has become commonplace. We can schedule a video call, take a walk around your facility, and gather all of the information needed to conduct a successful auction for your business.
Step 2 – Inspection and Auction Checkout Scheduling
For safety reasons, we will schedule inspection and pick-up times to minimize exposure to COVID-19. With appointments for checkouts, customers can load their products more easily and receive thorough assistance. We have a digital document signing system that allows you easy access to files, quick signage, and replacement copies if you ever need it
Give Auction Masters a call at the number listed below if you have any questions or would like to schedule an appraisal for your brewery. We’re here to serve you in any way possible. We work with integrity. We offer competitive rates. And we’ll deliver the quick turnaround you need to move into the next phase of your career as a business owner.