question about becoming a dealer...

[henry_mullis]

Hey,
I don't know if any of you guys own music stores, but I figure some of you probably do. I am very interested in starting a music store where I live, but I have never worked in retail before so I don't know what I need in order to set up wholesale accounts with companies. I figure I need a business license, but what else? Also, how do I setup accounts with companies? Thanks a lot.

Henry

 

[dachay2tnr]

I don't own a music store, but have a fairly extensive business background. The two biggest issues you will deal with in getting access to product lines are 1) restricted distribution and 2) cash terms.

Being a new business, most companies are not going to be willing to sell to you on credit. They will want cash, until you establish some track record of paying for your merchandise. This means you will have a lot of money tied up in your inventory. After a few transactions, they may give you a small line of credit. Make sure you pay your bills on time. Getting credit is a tremendous asset, because often you can order and receive the merchandise and have it sold before you have to pay the bill. So in essense, you pay the bill with the money your customer has paid you, and none of your cash is tied up.

Secondly, many top-line manufacturer's have limited distribution policies. In other words, they won't sell to you if they already have another distributor in your geography. This might force you into carrying lesser known brands, which of course is not the best thing for business. Most guitarists aren't interested in TikoTaco guitars.

To find out what's required to establish an account with a company, simply call them up. They'll let you know if their line is available to you and under what conditions they will sell you.

I've of course skipped over alot of details such a business licenses, reale certificates, etc., which really are more dependant on the state you will be operating in. You are probably going to want to get a lawyer and accountant once you get serious.

 

[TexRoadkill]

I worked music retail about 12 years ago and we were lucky to make 20% profit. The usual was 10-15%. After earning 40-50% in the software business I can't imagine trying to make money as a hardware seller. Unless you can establish a really needed niche market or there is no other retailer anywhere near you I would think pretty hard about the viability of a music store in the age of internet sales. You will be required to price match with web sites even though you have a lot higher overhead.

 

[henry_mullis]

I am actually planning on doing a lot of selling on Ebay. I buy and sell off ebay now and would like to take the next step and get wholesale accounts with companies...

 

[TexRoadkill]

In that case call up the distributors for the products you want to carry and see how many you need to buy up front. I have a feeling you will be limited to smaller brands and gray market goods because most reputable companies wouldn't want you undercutting their regional and national retailers.

Good luck.