At 2018 Summer NAMM, industry veterans Bob Popyk, Music Trades Magazine columnist, and Alan Friedman, a partner at Friedman, Kannenberg & Co., brought their combined wisdom, experience and passion for the music industry to offer music retailers tips to get through the slow times.
Popyk and Friedman encouraged retailers to turn the potential negatives into positives and stay inspired through tough months. Friedman noted that even though we’ve been experiencing upticks in the economy since the last recession, things will cycle down, and you’ll want to be prepared.
1. Set goals. You must have a marketing strategy and a plan. As Popyk said, if you don’t try, you’re not going to get. Friedman added that just as you wouldn’t build a house without a blueprint, you wouldn’t run a business without a budget. If you budget for profit, you will achieve it. Also, take the time to set goals and communicate them to your staff. (Bonus: Use free resources, such as the tools under “Resources” at fkco.com and NAMMU Online.)
2. Blow out the old stuff. Old inventory accumulates, yet this is where cash lies. Get your salespeople involved. Maybe spiff the items you want to get rid of the most. Make a concentrated effort to get rid of aging stock. Remember: The most important thing you can do is make sales and take care of your customers; the second most important thing you can do is manage your inventory. You’re taking your hard-earned cash and investing it in a non-liquid asset (inventory) in the hopes of turning it back into cash. The inventory turns in this industry (on average 1.4 times a year) are not good. That means you’re sitting on seven- to nine-month-old inventory, on average. Get rid of your old inventory, even if you have to take a loss. If you just reduce your 180 days inventory, you’ll see cash flow improve. If you have an item that has been sitting around for a year, it cost you 30-percent more than you paid for it.
3. Get your staff involved. Sit down with your staff in the morning and come up with a game plan. Who do you know? Who do they know? Popyk mentioned that when things got really tight, he and his team sent out a mailer of 500 pieces, and 100 envelopes were purposefully empty. The next time, they sent out an empty envelope purposefully with the store’s phone number under the return address and got a 70-percent response rate. People called to ask what was supposed to be in the envelope. Popyk also advised to where the people are. Get out of your store once in a while.
4. Save for that rainy day. As owners, you should be able to take money out. Also, be fiscally responsible. During good times, pay down debt. It’s a cycle that improves on itself.
5. Host a clinic or concert. Don’t judge your success on how many people you get into your store. That said, know that the more people you do get, the more you’ll sell because it’s a numbers game.
6. Manage debt to get out of debt. If you have a rental program, it’s hard to grow without having debt to finance it. As long as you manage the debt, it’s fine, assuming you’re profitable. If you aren’t profitable—or don’t know if you’re profitable—that’s a dangerous game, according to Friedman. You can be very profitable and still have no cash. You may be paying down debts, which is good.
7. Teach selling skills. As Popyk said, learn to sell, and you’ll never starve.He reminded retailers that selling is simple. You get people to like you. You ask a lot of questions and be persistent. Get your sales staff to do this and ask customers to buy.
8. These are difficult times. There’s a lot of competition out there. It’s not just the music business; it’s also everything else that’s engaging people’s time.Popyk remarked that he personally feels there’s more opportunity today than ever before in the music business. Get a game plan, get everyone involved, and you’ll do well.
Friedman commented that it’s easy to blame others during tough months. If you want to fix your problems, it has to start with you. At the end of the day, you have to do something. Opportunity is something you can create. It doesn’t just fall into your lap.