BA Power Hour Provides Crisis Guidance
Mike Drumm, an alcohol beverage attorney with the firm Drumm Law gave a compelling overview of what craft breweries need to be doing now to survive the prolonged COVID-19 crisis. Below is a recap of Mike’s key points.
- Focus. Focus on what you can control and let go those things that you cannot
- Take care of yourself. Take care of your personal health and that of your family. Otherwise you won’t be able to take care of your business
- Cash is king. Hoard cash and preserve capital. Reach out to anyone you owe money to and see if you can defer payment.
- Go to survival mode. Reduce workforce to bare minimum. Now. As hard as it is, you have to make sure there is a business still standing at the end of the crisis for those employees to come back to.
- Talk to your distributors. If you have distributors, talk to them now. What is their payment plan? What is their plan going forward for sales, operations and ordering? Will there be a shift in ordering (kegs versus bottles/cans)?
- Review all contracts. Review all contracts that obligate you to pay money. Includes loans, building lease, distributor agreements, equipment lease, etc. Negotiate a new payment plan if you can. Cash will be king. Defer as many payments even if you can make them, hoard cash. It may save you later.
- Review insurance policies. Most business interruption policies do not cover this type of crisis. Make a claim anyways. If the governments mandates insurance companies to cover for COVID-19 you will have your claim ahead of others.
- Don’t sign new contracts. People will be willing to negotiate for awhile. If you have to sign a contract, make it short term and include provisions for exit.
- Think outside the box. Creativity and quick action can save a business in a crisis. If you do draft only, consider packaging. Can you use your empty brewery tap room for some other use? Are there other products that you can manufacturer to supplement sales? Keep thinking. And check with your insurance carrier to make sure your policy covers any new ideas or business models.