What I Wish I Knew When I Opened My Store
At the 2015 NAMM Show, three music retail veterans shared their insights and wisdom on starting music retail businesses. Former Steinway Piano Gallery owner Greg Billings, the moderator, was joined by Ellen McDonald of Hartland Music and Menzie Pittman of Contemporary Music Center. As diverse music retailers in differently sized markets, they addressed common business pitfalls and what they’d do differently, looking back.
McDonald shared that she had a fear of looking stupid and not asking for help—a tendency of many new store owners. “I thought I knew how to do it all myself, all the time,” she said. Her advice: Conquer those fears by finding people you trust.
Pittman said he could have used a little more fear, acknowledging that fear works both ways and can help you make more thoughtful decisions.
Billings commented that the fear of making mistakes is one of music retailers’ biggest hurdles. “If you can be right 51 percent of the time, you’re going to retire rich,” he said. “Mistakes are a learning opportunity.”
McDonald added that a fear of not being liked worked to her advantage in the long run. “I’ve tried to please people for 34 years, and maybe that’s our success,” she said.
Billings touched on business basics, such as electricity, taxes and operations. He noted that retailers need to stay out in front of these bugaboos.
McDonald mentioned that she didn’t pay her store’s electricity bill one time, and the electricity was turned off on a hot summer day. She had to adjust quickly for her teachers and students and set up lessons outdoors. It ended up working out, but it was an unforgettable lesson to stay on top of her bills.
Pittman offered that he owns his store because the previous owner didn’t resolve his tax problems. Pittman counseled owners to take tax issues seriously and never let them get to the point where they’re pulling you under. Billings reiterated that, statistically, first-year businesses have a high failure rate, and sales tax and tax withholdings often finish them off.
Billings asked McDonald about going up against the big hitters in her market. She replied: “We’ve flown under the radar.” McDonald shared that she and her husband purchased the store from the previous owner when he retired. They were 19 and 20 years old at the time and got to know someone in every music store nearby. As they developed more friends and colleagues in their market and the industry, they started the Milwaukee Piano Dealers Association. McDonald’s simple advice: “Make friends, don’t burn bridges and be smart.”
Pittman said he views his approach to competing in a large metropolitan market as being stealthy. He explained that he doesn’t approach the business environment the same way as his competitors.
“Whatever we do, we do it for us—our website reflects that,” Pittman said. “I’ve got strong teachers who are great players, and we don’t sell [the business] the same. We just try to be what we are.”
Billings stated that we can spend too much time analyzing and thinking about what our competitors do. “Really, with the exception of your sales staff and marketing efforts, it’s a level playing field,” he said. “You can’t control what they’re doing—only what you do. No matter who your competitors are, find your niche.”
Pittman stated soberly that underfunding a business is a pit. He shared that not having proper capital is something he still struggles with every day. He described his early experience as flying by the seat of his pants, getting his first line of funding established and building it up over the years.
“If you have a vision, you can find money,” Pittman said. “Go ask people who believe in you to lend it to you.”
McDonald’s road was different. She and her husband funded the business by having alternate careers, not taking any money out of the business and buying their building.
“That was the best decision we ever made because it took us through the difficult years,” McDonald said. “I recommend you buy the real estate.”
Pittman agreed equity through real estate is a great concept because it gives you control, although he doesn’t own his own building. Like many retailers, he’s located in an expensive and cost-prohibitive real estate market. Still, he said that “if you have the capability to invest, then do it.”
As for general finances, Billings stated that he wouldn’t have focused as much on gross margin, despite it being a hot discussion topic among retailers, along with return on investment. He warned that inventory turn is more important. He described a costly buying mistake in his early days that took him months to fix.
“Never buy on terms,” Billings added. “Take the freight.”
On an upbeat note, McDonald suggested re-merchandising regularly by moving inventory around. This creates the perception that the inventory is new—even if it’s not—with students in her lesson program who come in each week. Adding to that, she advised, “If you don’t have a lesson program, figure it out. It saved us.”
McDonald and Pittman responded to a question from a business owner of less than five years, who was considering moving away from a focus on specialty instruments to new instruments. Pittman’s advised to make the decision based on your market, your competitors, your customers and your own stomach. Know what each unit will cost.
“Expansion and diversification can be trickier than you think,” he said. “But, you don’t have to pull the trigger to have the conversation.”
McDonald added, “Ask your customers!”
Billings then offered the last word: “Have the passion and knowledge to serve a need. Don’t go into business or expand just for the money.”