Store Inventory

As I move towards selling guitars, I must decide what guitars I want to sell. I have ruled out the big three (Gibson, Fender, and Ibanez), since most stores around me already carry them. As well, I learned that Gibson was reducing the number of dealers they use, and requiring the remaining ones to sell more instruments.

Several brands are not represented well around me. These brands include: Washburn, Parker, Jackson, Dean, G&L, Paul Reed Smith, and many smaller brands. Today I contacted Parker Guitars to learn what their requirements are for becoming a licensed dealer. They are owned by the same company that makes Washburn guitars, so that will probably be the next brand I consider selling.

But I would also like to sell vintage instruments. Unfortunately, there is no one easy source for those, and my efforts in the past to find them at flea markets and garage sales have been completely unsuccessful. Vintage Guitar magazine is packed with firms selling vintage guitars (duh!) but they are all at fair market value, leaving no room for me to make a profit. So I am researching how they obtain their inventory (better garage sales?) so that I may start building an inventory (also known as a collection).

Scouting the Competition

As I promised myself, today I drove down to visit the guitar store I learned about this past weekend: Top 10 Music Studio. The store is a small storefront in a bad neighborhood with lots of dusty used, but not vintage, equipment. I talked with the one person working there, a man in his 50′s who acted like the owner, about the store and my not knowing he was there. I learned he had been there for 35 years, and that some people still say they don’t know he’s there. (So its not just me!)

We also briefly talked about other music stores that had disappeared in the past, including one in Havertown, PA which was open when I lived there (Arpeggio Music) and the store that was in Media, PA (the name of which I didn’t get clearly). He then was interrupted by phone calls and some real customers. After confirming that his inventory changed regularly, I promised to make a return visit and left him with his paying customers.

My next decision is how to approach him for more information on the store in Media, PA that closed. At what point in my conversations with him do I mention that I am in the process of identifying a profitable niche in his industry that I could serve, and possibly become a competitor. When is it ethical to mention that, or is it not necessary for me to mention that at all? And who among my associates should I ask for heir thoughts on this?

Starting a PA Business

I have never considered myself entrepreneurial. I consider myself smart, and very good at problem solving. I also am a good manager of people, and connect well with people at all levels in an organization, from the bottom rung to the owner or CEO. But I’ve never considered myself a self-starter or entrepreneurial.

So it is with some surprise that I find myself the proud owner of a Business Name and Sales Tax License Number. I am now officially Media Music. It was easy, thanks to the Commonwealth of Pennsylvania website and some quick answers from my friend.

As my first order of business, I need to decide on an internet website address. Media Music is already used (only by a squatter, but it is taken).

Music Trade magazine

My new subscription to The Music Trades magazine started with the September 2007 issue which arrived last Thursday. I felt a tinge of excitement and familiarity, like seeing a friend for the first time after a long absence.

And then the cover story hit me: Piano Market Survival Guide (emphasis mine). And then the editorial, talking about how infrequent are years with growth in sales volume, and the last one, and the forecast for the next, wasn’t good but that was normal. And I thought to myself “This hasn’t changed much since 2001 when the threat was Guitar Center and the stock market crash eliminating h8uge sources of disposable income”.

Not all the news in the magazine was glum. I haven’t read more than halfway, yet, but the article on whether music instruction can be profitable, or just a loss-leader service to establish new customer relationships. I particularly enjoyed reading the comments of George Hines, from my favorite local retailer, Georges Music. I found the comments from Pete Gamber of Alta Loma Music in Rancho Cucamonga interesting as well, and he had some of the best ideas for using music lessons to improve instrument sales.

But perhaps most importantly, knowing that George Hines is with George’s Music gives me new avenues for searching the internet for information on the stores, management, operating philosophies, and possible career options.

Passions

I am a believer in the philosophy of doing what you love and the money will follow. If you are passionate about something, you will enjoy doing it, and do it well. If you can turn a hobby into a career, it can only be for the good.

Along those lines, I am passionate about the following areas:

1. Music – I started playing the trumpet in grade school, and I took up the guitar in college. I made the mistake of not playing music at all after graduating college, and it was many years before I played my guitar. In the interim, I was a passionate collector of vinyl records and CDs, and came close to opening my own CD store in the late-1980s.
2. Stock market – In 1983 I worked at an office that had a communal subscription to the Wall Street Journal and several employees that actively speculated in the market. I was interested enough that I enrolled in Villanova University and obtained my MBA at night. When I finished it, I considered looking for a job in the money management industry. Instead, I stayed with my current employer, which had paid for much of my education, and advanced through the management ranks of that firm.
3. Sex – Yeah, not much career opportunities here. Still, worth putting on the list. And I did once look into a franchise opportunity selling adult sex toys. I’m not sure how I would tell my daughters what their Dad did for a living.
4. Physical fitness – I was always a heavy, out-of-shape nerd, long before nerds became geeks and, in some circles, cool. When I turned 40, I was badly out-of-shape and decided to do something about it. I’ve lost the fat, improved my strength and  eating habits. I’m in the best shape of my life. I enjoy reading about fitness and helping people achieve their goals. I’ve considered opening my own gym, perhaps a franchise, or becoming a personal trainer.

Selling music instruments/guitars on the internet

I first considered opening a music instrument store when I left my last job as Environmental Services Manager at Consulting Services, Inc. (CSI), a company that was later purchased by XL Capital. It was 1999, I had purchased an acoustic guitar, and the dot-com stock boom was going full steam ahead. I would sit on the front porch of my home in Havertown, PA, smoking cigars, reading stock analysis reports, and Music Trade magazine. There was a small guitar shop about 2 miles away from my house, but I was too new at playing guitar again to spend much time there. Shortly, he went out of business.

Two issues were dominant in the pages of Music Trade from those days: MARS (since bankrupt) and Guitar Center were spreading everywhere, and undercutting prices for all the existing retail channels; the internet was spreading quickly and instrument sales were slowly happening on line, despite the difficulty of buying an instrument without first playing it. There was a lot of space dedicated to discussions about buyers trying instruments at their local retail store, and then buying it at Guitar Center or on-line for less than retailer paid for the instrument at wholesale. I remember thinking how the internet would never be a good source of music instrument sales, since a musical instrument is such a personal choice.

Now? I’ve bought one electric and two acoustic guitars on e-bay, and I am delighted with all of them. Also, I recently sold a Gibson ES-345 guitar on e-bay for a friend, although not for as much as I was hoping. (See! Bargains still exist on e-bay.) Typing “guitar” into Google yields 135,000,000 hits. Narrow it down to “guitar sale” and the hits are a more manageable 6.350,000. Apparently many people have decided to sell instruments on line.

So if I want to sell instruments on line, what would I use to differentiate myself from those other 6million hits? If I work out of my house, my overhead is low. So I certainly can match most low prices. But there has to be more. I need a supply of instruments at a low price, but that I would be proud to be affiliated with (sorry, cheap Chinese starter-guitars). Through Music Trade I found a supplier of reconditioned used guitars, that only sells to people with legitimate tax IDs. So one possibility would be to obtain a business tax ID number, and order used guitars for resale. Another would be to offer my services to buy trade-in guitars from people buying new instruments at local guitar stores. For instance, when I was at Georges Music, they told me they don’t accept trade-ins, accept in very rare cases. Perhaps they could give my nm,e out as someone that gives money for good condition used instruments. Then I could resell them for a profit. Its not worth the effort to Georges, but it might be for me.

Large retailers

There are many large music instrument retailers. Many of these retailers first entered into a rapid growth mode in the late-1990′s. Among the multi-store companies with locations near me are:

• Guitar Center
• Sam Ash
• George’s Music

George’s Music is the smallest of these chains. As such, there may be greater room for growth withing the organization as they open new stores. Unfortunately, they already operate several stores in the Philadelphia region, and I don’t know if they want to open any more in this area. Stores opening in other parts of the state or country may not be suitable for me to pursue, but may allow other local managers to relocate, freeing up positions within this region.

Both Guitar Center and Sam Ash have multiple locations in the Philadelphia region. Guessing by the size of their stores, they won’t be opening new stores in this region. However, again based on the size of these stores, there may be ample opportunities to work within their existing locations.

Music instrument retailers – independents

Another path for getting into the music instrument retail business is working for an existing merchant. There are several independent stores located within 30 minutes of my house, including the following:

• West Chester Music
• Medley Music
• Swarthmore Music
• Springfield Music

Medley Music is the store that has the least opportunities for me. They are one of the 10 largest independent music retailers in the country. All of the sales personnel with whom I have interacted are more accomplished players than I am, or will likely be in the near future. The store is quite large, so it is also not likely to be sold for an amount of money that I am likely to finance.

West Chester Music is the furthest from my house. I have only been there once, but was very impressed with the friendliness and service offered. It seemed well run, therefore, has the least room for improvements under “new management”. As a small shop, working as a sales clerk or assistant manager seems unlikely, since they run a lean operation.

Swarthmore Music is the store I love to dislike. Laid out poorly, with a selection mostly kept behind the counter where it can’t even be ogled, let alone touched, the floor is cluttered with old display pieces and some amplifiers. I’ve not seen their books, but can only guess that they survive on offering instructional lessons and not instrument sales. They are located in Swarthmore, PA, which has a high-income, liberal demographic and the Swarthmore College, a respected liberal arts institution. I believe that this demographic should be able to support a music instrument store (and it does).

Springfield Music is a sister store to Swarthmore Music. Sometime in the past 3 years, Swarthmore Music bought Springfield Music, and consolidated operations under the single owner, Al. Al made several improvements to this store, and the floor plan is more conducive to selling instruments: the customers can come closer to the instruments than at Swarthmore Music. This store also has an instructional lessons business.

Music instrument stores

One of the first things I did when I left my last job was buy an acoustic guitar. It had been years since I had played guitar with any regularity; in fact, I hadn’t played at all in years. But it was one of the first things I brought back into my life once I had more time.

After buying a guitar, I researched the musical instrument retailing industry. I subscribed to two trade publications, and then let one lapse. For several years, I subscribed to The Music Trades until I reached several conclusions:

1. In 2000-2001, the music industry was under siege by the rapid growth of new store concepts like Guitar Center, MARS (since bankrupt), Sam Ash, and internet retailers.
2. A independent music store was unlikely to provide a large income, or much free time.

Since that time, I believe the industry has settled down a lot. In the past 7 years, independent music stores that remained in business have found a way to compete against the presence of big-box retailers and the internet. And I no longer feel that my income might be stifled by owning a retail store. And since my daughters are older, I no longer need so much at-home time.

To further explore the industry, I plan to talk with the Assistant Manager at my local George’s Music, where I have purchased a guitar, a drum machine, and routine supplies. We’ve established a relationship, and now I want to see what I can learn from him about life in the business. The store often advertises for help, both at the Sales Clerk and Management levels. I stopped by this morning, but he was off today. While I was disappointed he wasn’t there, I am also happy to see that they get some days off.