Opening a music instrument store

[DMD]

My nephew is seriously considering opening a music store - does anyone have any experience with this sort of thing? He is the typical young guy that has reached the point where he has risen as far as possible working for someone else and wants to work for himself. He has all the knowledge needed to manage a store, get inventory, deal with customers, etc.. But I have to believe there is a LOT more than just that to running a store - business plan, financing, business license, insurance, bookkeeping, etc.

 

It would be a small store until proven successful and likely just a sole proprietorship of him. I can tell him all about the internet world but that means nothing to a brick and mortar place. Anyone got any experiences or resources (besides the SBA)?

 

I'd love to help him out some if I could in some way.

[cliaz]

I would strongly suggest not opening a CD music store for the reasons above. Everything is digital now. Now if it's for guitars and stuff like that then i would suggest for you to tell him to contact the SBA (Small Business Association). They will help him draft up a business plan, get funding and give you the training (or point you in the right direction) to open up a small business. Most of the times they are free or really cheap. Great service.

 

 

...that will be one huddle fee for the year please...

[Savage Beatings]

I'll never set foot inside a music store ever again. I wouldn't buy a CD for myself, but even on the rare occassion that I would want to buy one for someone else, I would either order it from someplace like Amazon or else just pick one up while I'm getting other stuff at Target.

 

Of course I'm just one dude from Minnesota, but I think there are a lot of people like myself out there. I think the only way a music store could be successful today, is if it specialized in vintage mediums (vinyl, cassettes, 8-tracks, etc.). Even then, I'm not sure what kind of market there currently is for those things.

[detlef]

We have a small indy music store here in Durham that my wife and I go to from time to time. Mostly just to listen to what they have because they have a bunch of CD players set up to check out new tunes. To be honest, I'm usually guilty of checking things out there and then buying them from Itunes (that is if I don't totally cheese out and rip them from Limewire). Yesterday, overcome by guilt, I found a CD I liked and bought it there in some feeble attempt to make me feel less like a crook.

 

I have to think I'm not alone in this regard and would think that relying on the occasional guilt-purchase would be a rather shaky business model.

[Caveman_Nick]

We have a small indy music store here in Durham that my wife and I go to from time to time. Mostly just to listen to what they have because they have a bunch of CD players set up to check out new tunes. To be honest, I'm usually guilty of checking things out there and then buying them from Itunes (that is if I don't totally cheese out and rip them from Limewire). Yesterday, overcome by guilt, I found a CD I liked and bought it there in some feeble attempt to make me feel less like a crook.

 

I have to think I'm not alone in this regard and would think that relying on the occasional guilt-purchase would be a rather shaky business model.

 

 

 

You're certainly not alone. Tons of people use brick and mortar stores to browse and then look for the best deals online. Brick and mortar will never be able to compete with online sales as long as shipping can be had cheaply and as long as manufacturers don't have pricing requirements.

 

The unfortunate reality is that the longer this trend continues, the less people will be able to browse the stores...because they will eventually be gone.

 

If people want a service model, they should support their local retailer. If they want a price model, buy online. If they want both, tough.

[wiegie]

If people want a service model, they should support their local retailer.

I think (with the exception of high-end products) service models in general are going to be a dying breed. I don't need to pay for service (read: information) when I can get it more easily on the internet.

[Caveman_Nick]

I think (with the exception of high-end products) service models in general are going to be a dying breed. I don't need to pay for service (read: information) when I can get it more easily on the internet.

 

 

That really depends on what you are buying and what you mean by 'service'

 

Service is being able to go and look at or handle what you are purchasing first hand as much as it is getting information.

 

Service is getting answers from somebody who understands what you are discussing better than you do and can clear up misconceptions you have.

 

Service is having someplace to go when you have a problem with something you bought and you need to get it taken care of.

 

Service is having someone that can advise you when you bought something, but you need certain accessories to make it do what you really want, and not necessarily the expensive MFR recommended accessories.

 

There are all kinds of service. Information is just a part of it, and that information is only as good as the job you do interpreting it.

[DMD]

Doh!

 

I meant a store to sell musical instruments - mostly guitars. I agree, wanting to open a music CD store would pretty much have them rolling in the aisles down at the bank. It would be about guitars and accessories, maybe drums too. Plus he can give lessons there as well.

[Puddy]

Doh!

 

I meant a store to sell musical instruments - mostly guitars. I agree, wanting to open a music CD store would pretty much have them rolling in the aisles down at the bank. It would be about guitars and accessories, maybe drums too. Plus he can give lessons there as well.

 

 

My former brother-in-law owns one here in Michigan. He went into it rather blindly (probably didn't have most of the things you list in order). I'm sure he's learned from his mistakes. I'll send him an email asking for some advice and report back.

 

 

Oh and he is still in business 10-years later so I'm guessing he's relatively successful.

[evil_gop_liars]

I can't say enough good things about the SBDC.

It's a good place to start.

[Kid Cid]

Doh!

 

I meant a store to sell musical instruments - mostly guitars. I agree, wanting to open a music CD store would pretty much have them rolling in the aisles down at the bank. It would be about guitars and accessories, maybe drums too. Plus he can give lessons there as well.

 

He's gotta be real careful here and know his target audience real well. Are we talking mass market or a boutique type store? I'm sure he knows this, but it never hurts to repeat it.

 

Any business needs an FEIN (Federal Employee Identification Number) but he'll need to at least have made the determination as to how he wants to set it up before that (Independently owned, LLC, Incorporated, etc) and files the appropriate paperwork. The suggestion to talk to the SBA is well worth exploring.

[wiegie]

That really depends on what you are buying and what you mean by 'service'

 

Service is being able to go and look at or handle what you are purchasing first hand as much as it is getting information.

 

Service is getting answers from somebody who understands what you are discussing better than you do and can clear up misconceptions you have.

 

Service is having someplace to go when you have a problem with something you bought and you need to get it taken care of.

 

Service is having someone that can advise you when you bought something, but you need certain accessories to make it do what you really want, and not necessarily the expensive MFR recommended accessories.

 

There are all kinds of service. Information is just a part of it, and that information is only as good as the job you do interpreting it.

 

When I think of a non-service providing store, I think of something like Wal*Mart.

[Caveman_Nick]

When I think of a non-service providing store, I think of something like Wal*Mart.

 

 

I understand. In my first post I referenced "local retailers". Walmart does not qualify as local.

 

EDIT: And shopping at Walmart would also qualify as price shopping.

Edited February 19, 2007 by Caveman_Nick

[DMD]

When I think of a non-service providing store, I think of something like Wal*Mart.

 

 

While that is an obvious truth for many, musical instruments like guitars are much more conducive to being specialty stores because there is much more service and advice needed than buying a toaster, particularly if things like music lessons could be held there as well. The bread and butter of that industry is the person starting out, knowing nothing and needing help purchasing and then playing the instrument. You could never compete on price alone for merchandise. But this is one area that I could see needing more than just a high-volume product to succeed. Plus it would be just him, so it doesn't need to pump out several million in sales annually either.

[wiegie]

I understand. In my first post I referenced "local retailers". Walmart does not qualify as local.

 

EDIT: And shopping at Walmart would also qualify as price shopping.

 

That is exactly my point. Wal*Mart is almost completely about prices and almost nothing about service. And they are kicking ass.

[wiegie]

While that is an obvious truth for many, musical instruments like guitars are much more conducive to being specialty stores because there is much more service and advice needed than buying a toaster, particularly if things like music lessons could be held there as well. The bread and butter of that industry is the person starting out, knowing nothing and needing help purchasing and then playing the instrument. You could never compete on price alone for merchandise. But this is one area that I could see needing more than just a high-volume product to succeed. Plus it would be just him, so it doesn't need to pump out several million in sales annually either.

 

I definitely understand why a musical instrument store would be heavily service-oriented.

[Caveman_Nick]

While that is an obvious truth for many, musical instruments like guitars are much more conducive to being specialty stores because there is much more service and advice needed than buying a toaster, particularly if things like music lessons could be held there as well. The bread and butter of that industry is the person starting out, knowing nothing and needing help purchasing and then playing the instrument. You could never compete on price alone for merchandise. But this is one area that I could see needing more than just a high-volume product to succeed. Plus it would be just him, so it doesn't need to pump out several million in sales annually either.

 

 

 

And of course he will be able to make some money selling books, DVDs, strings, picks, tuners, straps, cases, humidifiers, stands, etc. It doesn't all have to come from selling guitars (and whatever other instruments he might sell)

[Caveman_Nick]

That is exactly my point. Wal*Mart is almost completely about prices and almost nothing about service. And they are kicking ass.

 

 

Yeah...but what you said and what I was responding to with regards to service was:

 

don't need to pay for service (read: information) when I can get it more easily on the internet.

 

 

I was merely pointing out that there are many facets of store service that we all use, but then we go for the price. And eventually, this will put small retailers out of business. That will lead to:

 

people want a service model, they should support their local retailer. If they want a price model, buy online. If they want both, tough.

 

 

Because the small retailer will not be there to provide the services.

 

And then it will cycle, because Walmart will jack their prices when they kill an area, and that wil create a market for someone to creep back in.

 

The best example I have of people wanting service but then looking online to buy things that cost less is in the golf industry. You need to go to the store to try the clubs, or find a demo day somewhere (but that's usually hosted by a store). Then, people go online to try to find a deal. I have seen several local golf stores go under, and I think this is largely to blame for it.

 

I shop locally most of the time for this reason. I have bought plenty of things online, but there are stores that I appreciate having around to peruse, and I try to give them business for that reason.

 

LL Bean is a very good example of a successful service retailer. They have great stuff, and the stuff is not cheap. They stand behind everything they sell, though, and that's why people shop there.

Edited February 19, 2007 by Caveman_Nick

[alexgaddis]

I think a key to a musical instrument store is becoming a licensed dealer for a name brand like Fender or Gibson...no idea how tough it would be to become one though...

[wiegie]

I meant that the people can get the information from the internet. And because they can get information easily on the internet, they won't be willing to pay a premium to shop at a service-oriented store.

 

As for Wal*Mart running local retailers out of business and then jacking up their prices, I would like to see some evidence of this happening. I know that all the time people claim that they do this, but I don't think it happens.

[Azazello1313]

for that kind of store....the main obstacle is going to be relationships with suppliers, knowledge about what he's selling, knowing people in the music community where he's at -- that stuff much moreso than typical "business plan" egghead theory kind of stuff. the successful small music store is one that integrates itself into the community of performers and educators, by knowing their stuff, giving them exactly what they need, etc. unfortunately, this is one kind of business where internet savvy probably isn't going to be terribly instrumental.

[H8tank]

He needs to have a way to support himself the first few years, the store, if successful will pay for itself the first few years, and little more, like income for him.

 

If he can survive the first few years, then he'll have a foothold in the market place and hopefully will be able to start turning a profit to reward himself for all his hard work.

 

If he goes into it thinking he'll make money, work parttime, hire kids to do his stuff, he's asking for failure.

[cdrudge]

Does he want to own his own independent store, or are there franchise opportunities available? For starting out his own business, going with a franchise may be easier as they could have existing resources available (promotional material, signage, marketing, etc).

 

Also, I think one of the first things that should be looked at (if it hasn't been done) is what is the local market? What is his competition and customer base? If it's a smaller town or is already serviced by several good music stores, entering the market and surviving may prove to be quite difficult.

 

Also I don't know if the music industry has such things, but check to see if manufacturers have any type of distribution restrictions. My hobby is woodworking and a friend and I were visiting a local store that was moving. We discussed different product lines and that some brands could not be sold as a competition store had exclusive rights in the area. If there are other local stores that have that type of an agreement, it may be difficult to attract customers with "lesser name brand" stuff.

[Caveman_Nick]

Does he want to own his own independent store, or are there franchise opportunities available? For starting out his own business, going with a franchise may be easier as they could have existing resources available (promotional material, signage, marketing, etc).

 

JMO, I think this is a terrible idea. the up front money and the continuous payment are a steep price to pay. There are tons of companies out there that can help with promotion and marketing.

 

 

Also, I think one of the first things that should be looked at (if it hasn't been done) is what is the local market? What is his competition and customer base? If it's a smaller town or is already serviced by several good music stores, entering the market and surviving may prove to be quite difficult.

 

Absolutely. Location, potential customers and competition are the 3 most important factors. Find an area that needs the store, and someplace in that area that has good visibility. Then talk to someone that knows retail advertising.

 

 

Also I don't know if the music industry has such things, but check to see if manufacturers have any type of distribution restrictions. My hobby is woodworking and a friend and I were visiting a local store that was moving. We discussed different product lines and that some brands could not be sold as a competition store had exclusive rights in the area. If there are other local stores that have that type of an agreement, it may be difficult to attract customers with "lesser name brand" stuff.

 

 

Absolutely. Very important research to do.

[AtomicCEO]

If he buys and sells used gear, he'll bring in a lot of customers. Instruments hold their value.

 

I used to patronize "Daddy's Junky Music" all the time. Small, but very cool. Guys in there knew their stuff.