In my mid 40's reaching that mid-life crisis, which is not a myth. Many of my friends are leaving good jobs to start all kinds of wacky businesses. I am actually thinking of giving up a $120,000 yr job and starting a high-end audio retail biz - both online and hopefully later on a brick & mortar store. Have 20 years experience in sales and marketing, and/or design of software, electronics, multimedia, video and financial products including a few years in music retail and production.
Who can share their experience, or advice? Is the markup, distribution, etc of high end electronics similar to that of regular electronics? Any sources of info or pointers, tips, horror stories etc are appreciated.
As we know them, the world probably does not need another audio store. So the short answer to your question is: you probably are crazy.
But it seems to me that more and more and more and more people want some sort of multi room, home theatre, media servers wireless networks streaming digital music etc.
Simultaneously, there are no strong brands in the eyes of the mass market, other than perhaps Sony, Bose etc.
Amar Bose is worth a few hundred million bucks.
If I were you, and I were really thinking BIG, I would think about presenting all of this technology in a new, exciting context and/or building a brand for people who CAN AFFORD IT.
NOT for audiophiles who are too smart, too fickle, and less likely to pay high margins to someone who in their opinion probably knows less than they do.
So to set up shop trying to convince people to listen to music and buy geeked out high end equipment? Hmmmmm.....that one might not impress the business schools.
But certainly, there is a way to get rich and have fun selling consumer electronics but I would start by thinking "out of the box"
I would highly recommend starting it out of your home in your spare time. As others have mentioned this is the safest way to go. I have two local dealers here in Colorado who have very nice showrooms in their homes which allows them to spend money on inventory instead of rent, you can find both on the web, not sure if they will give you any advice but worth a try.
BTW, even the hardest 2 channel guys are moving to HT as custom installs are the highest profit of all and often the client is not fussy about components or budget.
Thank you all for your comments (and keep them coming if you have more to add).
I think high end is another business where the internet will continue to move ahead of brick and mortar - so starting online would be key - a retail store may or may not ever materialize. More manufactureres will continue to allow/embrace online sales. There are so many brands that have very limited distribution - I don't think I'll have trouble finding 10-20 good brands (good/mediocre...?)
I have no intention of quitting a good day job until a side busines sarts flourishing. But I have been very underhappy in the high pressure field of insurance and finance. But I do have this sinking feeling that its a little crazy to enter a field that seems to not be too financially healthy to begin with. Hi end audio is in general poorly marketed, poorly understood by consumers.
I understand I would have to subsidize the high end stuff with home theater installs, mid-fi stuff and even an ipod or two (and even continuing to sell insurance on the side) Anyboy need life insurance out there? (Like insurance salesman aren't a dime a dozen.)
I think the first step is to think about builind g a website and lining up some good brands that need distribution - my wife can fulfill mailorder/internet orders while I'm at work!! Just wait till I give her the good news...!!!!
Be aware that many (most) manufacturers have very strong no-internet sales policies. It defeats their dealership licensing agreements. That may restrict the pool of equipment you have the ability to sell. Also, internet sales are usually much lower margin than B&M.
Before you decide one way or another, prepare a thorough 5-year business plan to make sure you understand what it's going to take to do this. This will also help you identify what things you don't yet know. Finally, be VERY careful about assumptions in your plan. Be as conservative as you can be.
I recall facing this turning point in my life several years ago. I was contemplating a retail establishment. At the time I was approaching my 50's wanting desperaltely to be self fullfilled from an endeavor created by myself for myself and family. As I talked it over with my wife, family and friends some key points stood out. 1 A business start up usually takes 3-5 yrs to be profitable. 2 During those yrs. someone has to mind the store, if it's not you, you have to pay someone to do it. 3 You'll have countless expenses without income. 4 Unless your very well healed you could create a financial strain at home putting your marriage to the test. 5 Then there is the physcological strain from dealing with all of it.
Myself and my wife decided with retirement so close to invest in real estate. We have several rental houses in an area thats ready to explode with growth opportunities. You do not have to babysit this business. There is no financial stress as it is profitable now. We'e avoided the phycological complexities by making a better decision (for us). Now in our early fifties we are entertaining the thought of early retirement. So we esentially postponed our endeavors of what we thought would be instant gratification to creating an income that would support our golden years allowing us to fullfill those endeavors in different ways. Wishing you the best!
I have seen a number of High-End audio shops 'open-struggle-fail'. These were good people trying to serve the public with a great passion for the business. Keep your job and be thankful that you have the means to enjoy your hobby and know where your next meal is coming from!
As a previous owner of a failed "passion" business, I would advise against it. The passion gets dilluted and the financial reality hits hard. Then again, if I hadn't tried I might always have wondered what might have been. And if I had succeeded, I certainly would have no regrets.
To answer your question - yes you are, if you do what you are suggesting.
Listen to Elizabeth and Bryanhod, then use all the time you will save by not doing this to enjoy your music, your family, your friends, and whatever else you do to relax and have fun. The fantasy will not be worth your savings and your sanity.
If you have to try something new, think about something different you can do within your field of expertise that would be challenging and exciting for you. Good luck.
Keep day job, start business on Internet first. Learn tricks of trade, establish contacts with manufacturers, test the Internet with good marketing to see what will be the reaction to your new business. If the reaction is good, quit your job. After 2 years establishing income on the internet, take another look into opening a retail location. Better still, build a dedicated room and work from home to keep your overhead lower.
As someone that started a business when I was 36, although not a high end audio, this thread struck a cord. You have to have a few things to be able to make any startup work. First, you have to either be single or have a partner that completely believes in you. This is more important than anything else in my opinion. The amount of time you will spend on this will be more than your current job. Second, you need to have almost zero debt outside of your mortgage. If you have two car payments, credit cards, student loans and various other debts, you have almost no chance of making this work. A change of lifestyle will be in order. I went from going our to dinner three times a week to about three times a year. Third, you must like and be willing to work 14 hours a day, six or seven days a week for years and not become exausted. The amount of work to get things going is at times overwhelming so be prepared. And then fourth, you must have a passion for the work you are doing. There will be days that you just can't believe you left a great job for what you are doing, and there will be days you can't believe anyone would pay you for what you are doing. Good luck with your endevor.
I agree with Rec and Gregm. The overall customer base is relatively small, there is very little support infrastructure, and something not mentioned by either - a fair number of us (part of your customer base) are natural-born cheapskates. I, too, would highly recommend starting your efforts as a "paying hobby." As Gregm noted, the "value proposition" of high-end audio is "weak." The most successful dealers I have run into have something which makes them "sticky" as counterparts. They cater to their customers like personal servants, they specialize in one particular kind of item (only independent manufacturers, only analog, etc), or one particular kind of sales (low margin high turnover, low turnover but one-of-a-kind (or very rare) items), or they have a personality which drives them to be mavens. In each case, the "value" is in the person offering the goods, not the goods themselves.
As a personal aside... Every now and then I try to think of myself trying to make a business out of my hobbies. I have been able to imagine success in a few different hobbies. Audio ain't one. There is A LOT of competition out there.
That said, dreams are there for a reason... best of luck!
One thing I haven't seen mentioned is have you made any contacts with manufacturers yet? If there are exisiting dealers in your area for desirable lines you will likely not get those lines. You may be stuck with less desirable lines that are harder to move. Opening a brick and mortar store has a lot of up front costs that you stand a good chance of losing if you don't make it. Additionally, the business will become a time hole, you have to be there when the store is open then you have to take care of all the other things like installations, stroking the good customers, accounting, local politics, etc. I don't recall the number, but there is a very high percentage of small businesses that fail in the first year, and many of those are selling much more popular items. High end audio is such a small sliver of the overall electronics market that it will be an uphill battle. I would definitely go with the recommendation of sticking with your current job and doing this on the side. I think many of the small time folks run the business on the side and use it to feed their hobby. I think the bottom line is, how much can you stand to lose? That will determine how deep you should get into this!
I know 2 dealers that cater to 2 channel only. One of the dealers comes from a wealthy family so whether he makes money or not doesn't matter to him. The other dealer recently told me that if it wasn't for 1 great customer he has he would close up tomorrow. I say keep your job and dabble on the side that is my advice.
I am actually thinking of giving up a $120,000 yr job and starting a high-end audio retail biz - both online and hopefully later on a brick & mortar store
From a business point of view, and assuming you don;t have a revolutionary business-model in mind, I would definitely join Rec's suggestion to keep yr present job (at least for now). Highly fragmented market; Higher margin products are very slow-moving; The hi-end target clientele is small -- as opposed to consumer electronics. Worse, the advertising support is minimal -- as is the corporate equity manufacturers have compared to, say, Sony. It's difficult to create and retain a loyal client-base; Hi-end audio's value proposition is weak (the excitement of "good sound"). Do you have a value proposition (that hi-end clients will buy into)?
With your sales & marketing background, I am sure you've studied the issue extensively. However, I believe that trying this out as a "paying hobby" before you give up everything else would be more opportune!
As always, there's also lots of merit in pursuing a dream! Cheers
given the sales of used equipment on the internet, transhipping and the consumer's goal of getting a discount when purchasing components, you are taking a big risk in retail.
in addition, there are many manufacturers who are selling direct. they are your competitors along with other dealers.
My best advice is to keep your day job, at least at first. As a life long music lover I became a partner in an independent record store. Started out with three stores and ended up with barely one. Learned a lot, met a lot of great people, collected a lot of vinyl and cds and loss over 90% of my investment not counting no income from the store for years. Sometimes it's not a good idea to mix your hobby(passion) with your livelihood.
A very good freind of mine in that is a dealer always says. "the way to make a million dollars in the audio business is to start out with 2 million". But he is still in it and doing well. One thing he recentley did is buy a new house and is running the business out of his home. It seems to work out great. When it is slow he is at home and can do yard work, house work, etc. Also the lower overhead and he never forgets to bring an item to work with him. Let us know how you do. Good Luck!
I'm familiar with the 2-3 high end guys in town and bought from them but not sure I would want to approach them. I really need to start online and would love to find someone online who would not be threatened my presence, like the local guys might. I do understand they are going into home theater quite a bit and there is probably a lot of money in that which is OK by me. There are more Ferraris/Porshe/Maserati's dealerships in my neighborhood than decent high end audio shops - if that is worth anything... there is plenty of disposable income round these parts.
Good luck in this enterprise. Living in the St. Louis area and watching as very good audio shops went under, I am not sure what works today. Kevin Deal at Upscale Audio has successfully blended retail and internet, especially with his select lines and living/working in Southern California. Walter at Underwood HiFi has developed a strong following using Audiogon and the internet and providing exceptional service, availability and modifications of equipment. The advent of cheaper Chinese equipment and pure internet sales makes the retail side very challenging. However, I love walking into shops and sitting down and listening to equipment. Whether clients end up buying becomes the real issue. Best of luck and let us know. I am always in the hunt for great audio stores!
Access to selling on-line will help as the Net has opened up doors for us audiophools that never would have happened 10 years ago. Maybe you should start small committing time at night and weekends building up a reputation and clients before getting rid of the steady paycheck.
I say go for it - life is not a dress rehearsal...
the margins are not as good as other electronics, and dating not as good either. cashflow will suck the first two years, and the investment is incredible. one of my closest friends failed in his endeaver. a limited and fickled client base. the brands he had were blue chip.....cat, bat, naim, electrocomoaniet, audiolab,linn, revel, VS, hales, primaire, kimber, etc etc. invest in anything but a storefront. virtual stores can get by without inventory but they have their own problems......even hubs for high end such as mpls, seattle, new york city, etc are hurting.
Start one in Cleveland , Oh,. We have nobody. I live in the suburbs, had to go to Chicago to find a standup co. If done right & diversified you will make it. Location is always key.
I think your best bet would be to contact the owners of small high-end stores / businesses in your general part of the country. They'd have the best handle on the current high-end market. Many have had to shift a lot of their business into home theater, but some still make a living selling only high-end audio. If you'll make another post about where you live, our members could probably provide you with the names of some good contacts.
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