Starting an audio business

Discussion in 'After Hours Lounge (Off Topic)' started by Mike<>S, Nov 4, 2004.

  1. Mike<>S

    Mike<>S Extra

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    I am pondering the idea of opening a home audio store. My preference would be to provide brands that are a step above the brands found in local audio/electronics stores (e.g. NAD, PSB, Denon, Marantz, Rotel, Paradigm, Arcam, etc.)

    I wanted to know if someone could give me some tips on the "how to's" of doing this. I am not looking for retailing info, but more things like:

    1) How to become a dealer for different brands?
    2) How much inventory is required?
    3) What is the start-up cost (looking for a ballpark figure.)
    4) What does insurance cost?
    5) What type of security is required and what does it cost?
    6) How does home installation & repair service fit into the equation? Are both required?
    7) How much margin is there and how much do you need to sell to pay the bills?

    I hear that opening an audio store is the quickest way (besides Vegas) to deplete your life savings, but I have seen some guys that “did it right” and seem to earn a descent living.

    I would appreciate any tips. I have thought about this in the past, but giving it a little more consideration these days.

    Thanks,
    Mike
     
  2. Shawn Solar

    Shawn Solar Supporting Actor

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    Well I'm starting off small. I do custom installs and am subcontracted for now. as I aquire a reputation and more tools I will eventually get my own work. When that happens I'll work a deal with a local audio store for stock until I can get my own distributers. I won't open a audio store in my area due to the over saturated market here. But a little further away should be nice once the monies there.

    Start small, pick a good location and try to gauge your area as far as price points. Diversify, offer one or more different services. I also install alarms, phones and card and gate access. As well as CCTV.

    Inventory is key. you may have minimum purchase orders so you may have to order more than you need. It varies with the distributer. Some have rules so chosing what you can and can not carry is not always up to you. Its mostly a compromise

    location. Competition is only good for consumers.
     
  3. Shane Martin

    Shane Martin Producer

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    Mike,
    Most of the audio folks nowadays have an install business and that is the bulk of the industry right now. I don't honestly believe one could open a B&M store and expect to survive w/o an install business.
     
  4. Shane Martin

    Shane Martin Producer

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    Ignore, double post.
     
  5. Richard K.F.

    Richard K.F. Auditioning

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    hi Mike; before you invest a nickel, there are two things you need, one is a business plan and secondly an accountant who can help you put the plan together and see if it works. In short you have to define what the business will be, project sales over the next 12 months at a minimum (you really have to have a handle on your market). You need to know you costs and cash flow expectations. Your accountant will probably be able to advise you on insurance, taxation and all that stuff. The business plan is a projection of all of the business events you need to anticipate over the next year and should include a projected profit and loss statement and cashflow projection. When you have that together you'll be in a position to assess your risks and to see if its a viable idea. First pass you'll probably see disaster, but maybe with more service activity and less inventory intensive business it'll work. How long can you finance the business, how much income do you need--- this is all stuff that needs to go into the plan. Its a lot of guess work, but you need to be as realistic as you can. I wish you success and hope you can make it work!
     
  6. Jason Kirkpatri

    Jason Kirkpatri Second Unit

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    Best advise so far is from Richard - get a business plan.

    This would include a marketing plan and a finance plan. Future cash flow budgets are required if you need external financing, assuming that you don't have the capital for start up. Regardless of your starting point, you need a good idea as to where you want to be (cash wise) one year from now.

    Most importantly, in my opinion, is the opportunity cost. You work sixteen hour days (saves paying out salary costs to employees if you work the most) for six of the seven days in the week, maybe even all seven days. You earn how much in your pocket, after personal taxes??? Your cash flow budget will tell you. Now how much could you make elsewhere, working sixteen hour days, six days a week? I would guess that you would make more working as a "regular joe" for the insane hours that would be required.

    Having said that, if your marketing plan does identify an unexploited market, then perhaps you can make a run at it. Being pestmistic, I would say that you do installs on the side as a hobby (and keeping it fun) and earn more elsewhere as somebody's employee for less stress, hours, etc.

    Just my two cents.
     
  7. StephenHa

    StephenHa Second Unit

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    also check with the state and city, some won't giva any licenses for audio dealers (I found out the hard way here have a bunch of reps, and no location)
     
  8. Mike<>S

    Mike<>S Extra

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    Thanks for the info. Currently, as a business owner, I understand the need for a business case, cash flow estimate, sales forecast, etc., but I was hoping to get some industry-specific information. I wanted some info on how to get into the audio game and what are some of the challenges with becoming a dealer. Thanks again.
     

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