Guitar businesses – not retail

Although I have not posted in awhile, that doesn’t mean my mind hasn’t been active thinking about guitar-related businesses. Sadly, I have spent much time going down the road of opening a guitar store, and I see no way to make money at it. There is a great risk that the enterprise would fail, and fail in an expensive fashion. I think I am being realistic with this assessment, and not reaching this conclusion from either pessimism or fear.So I’ve been asking myself what other businesses might I become involved with that would still satisfy my desire to be involved in something musical, or better yet, guitar-centric. I’ve thought about web sites, and realize there are many websites that cater to the guitar player demographic. I personally have over 20 bookmarks that I visit on an infrequent basis, and a handful that I visit regularly. I have 10 RSS feeds in my google reader alone (fortunately they don’t all generate to many posts). There are instruction websites, band websites, and of course, sales websites. The last thing the world needs is another FREE GUITAR LESSONS website.I am currently thinking about a website targeted towards people like me (surprise!). More specifically, the website would be targeted towards men and women in their 30’s through 50’s that play guitar, or used to play guitar and would like to play guitar again. That’s the working concept, anyway. 

Guitar Store Closing

When I first started research on opening a guitar store, events unfolded quickly and easily. I took this as a sign that perhaps this project, unlike some other businesses I had researched in the past, was destined to happen. These past few weeks have seen the opposite: continuing omens of the futility of opening a bricks & mortar guitar store.

The most recent sign came yesterday. Months ago I obtained a sales tax number from Pennsylvania in a surprisingly easy transaction. At the time, I specified that I wasn’t anticipating any sales before November 2007. But I wanted to check with my tax accountant to learn if there was anything I needed to do before the end of 2007 for tax purposes. I didn’t want to wait until my normal appointment with the accountant in March to find out I made a mistake handling this. The conversation went something like this:

Me: I obtained a sales tax number.

Accountant: Why’d you do that?

M: I was thinking of opening a music store.

A: You don’t want to do that. (Followed by a short ramble on the perils of brick & Mortar music instrument retailing)

M: How do you know so much about this business?

A: I handle the accounting for Old Street Address Music .

M: Oh, they want to close their store and just do internet, so that’s why you are so negative.

A: (Pause). How do you know they want to close the store?

And so it went. I learned there are two partners: one 47-years old and one 61-years old. And they make most of their money on internet sales. They also handle internet sales for an outside domain name, where all they do is package and ship the instruments. I learned their inventory management is poor. That they sell mostly to musicians, and have almost no walk-in traffic.

I joked about me buying their store location, if they wanted to sell. But if these people, who have owned this store for 30 or more years, have decided to sell because the earnings don’t justify the expenses, then who am I to think I could do it much more profitably? Admittedly, there is room for improvement to inventory control. But to buy the store, and without the ability to use the store name when selling on the internet, isn’t appealing. And without the internet sales, the economics of this store don’t work well enough for the owners to keep it.

Guitar Business for Sale

The latest issue of my google alerts for vintage guitars included a listing by a business sales agent for a vintage guitar store. I was fast to respond, and indicated serious interest. But 24 hours later, and I haven’t heard anything back.

I am not aware of these listings being a scam, or a phishing expedition. But I have had poor luck with business sales agents returning my-mails on the two occasions I have responded to internet listings of businesses for sale.

Makes me wonder.

Vintage Guitar Market

One of the possible product lines I planned to sell in a music store was vintage instruments. The market for collectible guitars has done well in the past several years, and I have always had a fascination with most things included in Vintage Guitar Magazine.

As part of my market intelligence, I have set up a Google alert for “Vintage Guitar Business”. I receive daily e-mails with links to articles based on those keywords. Mostly, the alerts have been disappointing.  But once in awhile, something worthwhile comes to my inbox.

So while I am glad to have received this link, I am a bit disheartened.  More than disheartened, though, I am glad to know before opening up a store that relies on revenue from selling vintage guitars that the value of these instruments may have already peaked and headed back down. Perhaps my vision of lawyers strolling down town Media on their lunch break and picking up a vintage guitar as an impulse buy will need to be rethought. Certainly I am already rethinking the idea of having a store where a good part of the inventory increases in value every year it is not sold. And I am perhaps more understanding of why I was able to get such a good deal on an old 335 that I purchased on e-bay, well below its Blue Book value.

Unusual guitar retailers

There has been some written lately about the move by big-box retailers like Wal-Mart and Target to sell beginner guitars. I read with much interest articles that described how the low end entry level instruments were being sold at these locations, without any support or sales expertise. The general idea expressed by several retailers in The Music Trades magazine was that music instrument retailers should not race these stores to the bottom. As well, an unfortunate consequence of Wal-Mart and Target selling ultra-cheap guitars to beginners is that many beginners will become frustrataed trying to play an inferior instrument and will never become more proficient at the guitar. They will never realize that it may have been mostly the fault of their $79 guitar, and not their innate music abilities.

So imagine my delight when the latest PBTeen catalog came in today’s mail. Right on the cover are a boy playing guitar and a girl playing drums. At first I thought they were encouraging musical interest and healthy enjoyment of instruments by teens. My delight evaporated when on page 4 I saw that they were selling guitars in a choice of their two favorite patterns: Navy Camo or Blue Bubble. the case, amplifier, and a drum set are also available as separate items.

Business negativity

Flushed with excitement over how smooth everything was moving along with a possible guitar store, this week I ran smack into the “What? Are you kidding?” of my daily existence. Married to an anesthesiologist, this seek I was again reminded of what a large share of everything child- and house-related I perform. And my wife’s hours, which she modified once about two years ago, aren’t going to get any better. So this week I have spent less time contacting guitar dealers or real estate agents, which were the next steps on this possible new venture.

Instead, I bought a beautiful Parker Fly guitar off e-bay. I have been bidding on Parker Flys for several months and was never the high bidder. It was my inability to locate a new Parker locally that first drew me to the idea of opening a guitar store. So buying one is something of n accomplishment. And I simply love the guitar. It is high tech, and unusual, but mostly it fits me well. And I find myself exploring new things, and letting my creativity out to make up things, which I never did on any of my other guitars. So for now, I am a very happy player.

I am also bidding on a Gibson ES-335. Its 1960’s vintage, and I am hoping to win an auction with a high bid less than $10,000. The Blue Book of guitar prices I have pegs the value of this instrument around $12,000, and the auction listing says it’s worth $12,000 in the Vintage Guitar Price Guide, also. I’m not really planning to play this guitar, if I win it. Instead, I view it as an investment, a possible guitar for the wall in a guitar store (should I ever pursue that dream to fruition). And if no store materializes, I can still sell it on e-bay some time in the future, hopefully for more than I pay this week.

e-bay PowerSeller Program

e-bay has a program to recognize high-volume sellers. Its called PowerSeller. I have purchased items from PowerSellers in the past, often electronics. But as a result of my recent sales activities for my friend, I have become a Power Seller.

When I received the e-mail inviting me into the program, I first was concerned that it was a phishing scam. I e-mailed the customer service department at e-bay, and was told that I had indeed qualified to be a Power Seller. So now I am.

In order to maintain that elite designation, I need to sell an average of $1000 per month, averaged over the prior three months, and maintain a feedback rating over 98%. I’m already plotting how I am going to maintain the rating for as long as I can. I have taylor 420 guitar that I want to sell, but I won’t sell it until November. I want to have something next month to replace the items I sold several months ago that will become off my average.

But I still don’t think I’ll be getting rich selling on e-bay anytime soon.

Assessing Future Competitive Threats

I have spent much of my free time the past several weeks assessing the current competitive landscape for music instrument retailers in my area. I still plan to make a trip into Philadelphia and visit one major store I know is located there, and which sells guitars on the internet as well.

What I also feel a need to assess is the likely future retail environment. For example, as I was returning from a visit to Accent Music, I passed a large construction zone. The site has already become home to new Target, PetSmart and Home Depot stores, and there were several more large retail stores under construction. The plaza reminded me very much of a plaza in Plymouth Meeting, PA where the Guitar Center store is located. I briefly thought that it would make a nice place to have a guitar store, being close to the expanding population in Chester County. And then I wondered if Guitar Center may already have their eyes on that plaza. And if I knew where Guitar Center was planning to open a store, it might affect where I might locate my store, and what style the store would be.

And so my thoughts for this week are on attempting to evaluate the likelihood that a chain store might locate a new store close to Media.

Naming a New Store

I was quite excited to discover how easy it was obtaining my sales tax number from the state of Pennsylvania. All I needed was a business name to operate under. Faced with the obvious, I chose Media Music. There aren’t any music stores here in Media, and the choice seemed easy, if not especially creative.

Fast forward to this weekend, as I browsed a brochure advertising the Second Saturday art event held in Media. As I perused the stores, I noticed that some stores not directly on the main street, State Street, were participating. before I could even incorporate this into broadening the geographic territory for my potential store, I noticed one store titled “Media Music”, and my pulse quickened.

I was aware of a local recording studio, that also provides music instruction, called Media Recording Studios. And their website, includes the recording studio nature of their business. But it looks like they have the name Media Music mocked up.

Perhaps this is why I was asked by my home theater friend if I had searched the database of fictional and/or business names prior to selecting my name. Of course, I had not and had already selected this name. Now I need a new name, and figure out how to change my existing name. I’m thinking something about “Guitars & More”, perhaps John’s Guitars and More, Media Guitars & More, or some other lead in word to that phrase.

Reasons guitar stores fail

Today I met with a man who used to run music stores in Media, where I am thinking of doing the same. We spent over an hour walking through town and grabbing a quick sandwich. I learned a lot about the history of music stores in my town. It wasn’t at all what I was expecting.

Media has, in the past, hosted a dedicated drum shop, several music lesson studios, a guitar store that for awhile was the leading seller of Gibsons on the East Coast, a head shop that also sold guitars located across from the court house, and a at least one other guitar store. None of them exist any more. With the exception of the store run by this man, which he closed “for personal reasons”, none of them closed because they were put out of business by competition.

Instead, what I heard were stories of owners spending their days getting drunk or high. A shop that bought old broken instruments, repaired them, and sold them as new, until they were discovered. Poorly managed stores, and stores with no inventory. What I heard were stories of businesses being run poorly.

The gentlemen wished me luck. He had a few ideas for guitars I should carry (well made Korean guitars are incredible values these days). We talked about some of the things I should look for in a location, which was especially helpful.

Over all, the meeting was another positive, and surprisingly easy, step on the path to opening a store.