Anyone own a music store?

[rolandson]

Know a guy...
Turned out to be a creep, but...

He complained constantly about the fire marshal,
the landlord,
the local cops checking used merch against their 'hot sheet',
the customers,
business license,
taxes,
more cops and hot sheet stuff (guess buying from junkes at 10 cents on the dollar wasn't the business model it was cracked up to be)...

oh, and did I mention the customers?

I don't know if he was always a creep or if being a proprietor made him that way.

 

[StratUp]

Perhaps a franchise would be a better option. Like a music go round or something similar. With a franchise you have to buy in and give the parent company a cut but work with you to help you be profitable. Because if your not profitable they don’t make money off you.

I don't know anything specific about music franchises. But, most franchise deals require you to have a fairly large pile of assets, have a significant amount of money to invest, and be willing to accept a salary with limitations on possible earnings. It can work, but it's not usually a lower cost approach for the ones I've looked at and may or may not be worth dedicating your life to.

 

[marksound]

You know how to make a small fortune in MI retail? First, you need a large fortune ...

 

[Rickety]

Know a guy...
Turned out to be a creep, but...

He complained constantly about the fire marshal,
the landlord,
the local cops checking used merch against their 'hot sheet',
the customers,
business license,
taxes,
more cops and hot sheet stuff (guess buying from junkes at 10 cents on the dollar wasn't the business model it was cracked up to be)...

oh, and did I mention the customers?

I don't know if he was always a creep or if being a proprietor made him that way.

I actually have an 'in' with the local police, my girlfriend of over 6 years is a police officer here in town, so I may have an inside view on the hot sheet and know what to look for, but I get what you're saying.

At the end of the day, this is a dream of mine that I hope to accomplish at some point, I don't have the know how just yet to do it but I'm learning a little bit at a time.

 

[Jimbo99]

Barriers would be the inventory. I think one could get one started as a pre-owned guitar store like pawn shops do. Maybe as a consignment store front. Perhaps offering repair services, and really even guitar lessons are necessary to be a Mom & Pop.

 

[arct]

Fender and Gibson are going to be around a half a mil for the two of them. A year. Each and every year, no matter how much you've moved or not moved. Think about that. When GC came here and our two local guys had to really think about how they could compete, price was first and our two local guys were winning. But like making your big hit record, distribution is everything. Both stores folded at the same time, about a decade ago now, because GC had negotiated enormous buys per year/per store, and that just forced the little guys out because they don't have that kind of volume or floor space, and they don't have twelve thousand other stores to shift stuff around to.

That's why every little music shop you pass by, turn around, and stop into all excited is full of just crap. Can't get the real stuff. Like making big hit records, everything in the retail music end of this business is all whacked out of shape by big distribution.

Good luck with it.

rct

 

[arct]

I can't even imagine a Taylor/Martin buy every year. I do recall when they couldn't be in the same room. That was a hoot.

rct

 

[Thrup'ny Bit]

It's a nice dream. Given that mom & pop shops have been going out of business for at least 20 years despite all the experience they had, how do you think you could do better?

 

[StratUp]

...
That's why every little music shop you pass by, turn around, and stop into all excited is full of just crap. Can't get the real stuff. Like making big hit records, everything in the retail music end of this business is all whacked out of shape by big distribution.

Good luck with it.

rct

*ever little shop

Don't need "music" in there. In fact, could be "every little business". The Corporate money and the PE money is buying up anyone that makes it and driving out anyone that isn't like them. In every business. The only way for a small business to survive is on/in a personal service model. You can't compete in sales. That's just a loss-leader for the personal service you want to sell. The "personal" part is the only advantage you have over the big guys.

 

[pazman6]

I have a friend who is a musician and realtor. He bought on old church and turned it into a Live Music Venue, Music Store, and Record Store. He sells mostly by consignment/used for instruments but he does carry smaller items like cables, strings, some pedal lines, and I think he has new Komet Amps which are locally made. He hosts lots of different bands at the live venue - I went and saw Eric Johnson there right before Covid hit. I am not sure how much money, if any, he makes off the business but it is pretty cool. He was the drummer in a metal band named Chaos Horde back in the 80's - now he plays mostly light rock and pop......... Looks like he has let 2 of his 3 websites go during Covid. I think he was involved in the deal for Amazon to buy a local mall to tear down and make a distribution warehouse, and I know he sells a lot of houses, so he probably runs the business more for enjoyment, to be involved in the local scene, and a way to buy vintage gear that comes through the door.

Here is his music store stuff on Reverb
https://reverb.com/shop/baton-rouge-music-exchange

Here is the Live Venue
https://www.midcityballroom.com/#midcityballroom

 

[simoncroft]

I don't want to discourage you, @Rickety, but I do want to help you not to lose a shed load of money. From what I've read, I would guess you have never started a business before, and have no experience in running one either. That's not a great start for what you are hoping to achieve. Believe me, if you succeed in raising capital for your venture, you can very soon find you've spent most of it, but revenue is nothing like you thought it was going to be.

What kills most start-ups – and more established small businesses that are profitable on paper – is running out of cash. That 'journey' can ruin your health, your wealth and everything around you, as you work 80+ hour weeks trying to keep afloat a business afloat that was only marginally profitable before the internet stole most of your business/the landlord put the rent up/the government slapped some tax on you that you didn't factor in/your biggest supplier is chasing for money you don't have/you have an unexpected period in hospital...

The first thing I would urge you to do is set up a spreadsheet showing Profit & Loss on one page and Cashflow on the next. If you don't know how to do that, please go away and learn, because these are vital skills for running any business.

If you already know how to set up that spreadsheet, I'll happily advise on how to fill those cells in.

You may find the numbers give you an answer you weren't expecting.

(I ran a large audio/video store in Central London in the 1980s, and was a company director up to 2013, when I retired. I also lost about £200,000 on a publishing company that limped on for years giving nothing but stress... so feel welcome to learn from my mistakes, rather than yours. )

 

[simoncroft]

Honestly... I don't think a community of 7500 is anywhere near enough people to support a business like this.

Let's analyse that, using really, really optimistic percentages.

Potential 'universe' = 7,500
Actual number of active musicians (10%) = 750
Actual number who want to buy anything in next year (10%) = 75
Number who chose to buy from local store (10%) = 7.5
Average profit on transaction = $100 x 7.5 = $750 Gross Profit a year

Rent = $10,000 a year
Loss = $9,250+

Once you've put in all the other overheads, the clear implication is the business would struggle with a 'universe' of 750,000 potential customers. Although Gross Profit $75,000 in our three-quarters-of-a-million model sounds OK, most of that would go in overheads. (Servicing the debt raising the initial Capital, cost of fitting out the store, stock, electricity, insurance, accountancy fees...) And after all that, as well as the rent, the business owner might actually like to get a living wage.

 

[Dadocaster]

Many lifetimes ago, I worked for a couple of local chain music stores. Both went out of business and that was before online.

AT THAT TIME the products that had a good margin were accessories stuff, little things, supplies. They had a lot of mark up. I don't know for sure, but I suspect many people are going to be buying that small stuff online due to price and the fact that it's costly for a local store to have enough variety. Amazon delivers fast. Income from the little stuff kept businesses afloat.

The posters commenting on the amount of money it takes to get the good lines are correct. Amazing amounts of money involved. I personally won't buy instruments online but it seems many others are happy to.

It might be possible to make some money that does not require a huge investment by renting spaces to teachers of private lessons. That also gets people in the shop.

Good luck. I have contemplated a music store in retirement, but if I did, it would be all used junk and be called Dado's Craptaculer Axes.

 

[henderman]

i knew a mom and pop' s music store store owners and they told me you need to give lessons, do repairs, rent rentals and have online sales b-cuz your showroom sales will be small and the cost of brick and mortar overhead will be large.

 

[vid1900]

You need to work at a shop, before you can run a shop.

There are 1000 musical instrument sales tricks you need to know, and they are not obvious.

 

[soulman969]

No but I grew up wishing someone in my family did.

In this era bootstrapping up a music store would seem to be quite a challenge. In a small town I think it would have to be almost secondary to another profit center with daily cash flow from which to pay the bills.

 

[Rickety]

Tons of awesome advice here, and loads to think about! Thank you, everyone, for your input and insight! After reading everything, especially that very informative breakdown from @simoncroft I think it would be wise to shelve this for right now and maybe only take it on once I have a few other projects that are showing some good profit. There's an LLC that I have spoken to (I know the owner and have an extremely close relationship with them) who I can operate under so that I can run multiple businesses and move my own profit take throughout the conglomerate of businesses that I plan to open.

This is in no way something that I will be able to open within the next year or two, I still have a lot of capital to raise and investors to acquire before I can start opening anything, but I do think that this is something, if I have some support from other successful business ventures, that I would be able to keep afloat as a passion project, but only when I'm able to fully call myself independently wealthy.

 

[Stormy Monday]

Do you have a real business plan? Have you worked out the pro forma financials for thenext five years?

 

[Rickety]

Do you have a real business plan? Have you worked out the pro forma financials for thenext five years?

Like I stated previously, I don't know much about running a business right now, but I'm learning little by little. I'm taking the advice that I've gained from here and factoring it into my future endeavors. This isn't something that I plan to open within the next year or two, until I know what I'm doing.

 

[Impulsive guppy]

The successful music stores around here are based on school band instruments. I think they contract with the schools to provide rental instruments and repair. Guitar is a sideline.