Guitar Store Overhead
Guitar flipping from home saves you a ton of overhead. Consider the expense of even an off-the-beaten-path warehouse type commercial location –
- Deposit: $1200
- 1st & last month rent: $2400
- Utilities deposit: $850
- Sign: $1800
Initial Expense: $6250
- Monthly Rent: $1200
- Monthly electric, water, trash: $300
- Monthly phone & internet: $150
- Monthly alarm/security: $75
Total Monthly: $1725
(Your actual rates may vary, of course, so you should do some homework, but these figures should get you to the ballpark)
So if you had an average net profit of $70 per guitar, you would have to flip 25 guitars each month before you started making a single dollar!
That’s 25 extra guitars you have to run around and BUY each month – which is extra car expense, extra time searching for deals – just a whole lot of extra work. Or not. Having a store means that you’re more likely (though not 100%) to get sellers to come to you.
And a decent retail location will bring you some business you might not have gotten from your house. With visibility and traffic, it might bring enough extra business to give you those extra sales.
But there’s a trade-off. The figures above are estimated for an off-path warehouse type location. A good location would probably rent for at least twice this amount. If you’re in a tiny rural town, you might get a halfway decent retail location in a lower price range, but will your market be large enough to support you?
Forced to Hire?
I’ve had retail stores and I’ve run my guitar business from home, so I can speak from experience. You can manage your traffic from a home business since you should require that people have appointments or at least give you notice that they’re coming.
A retail store can go for hours with no customers, then suddenly you have a half dozen customers in your shop and the phone’s ringing off the wall!
You almost have to have at least one employee if you have a retail shop, especially if you have a good location. Your expenses just went up greatly!
- Social Security Tax
- Unemployment Tax
- Security Issues
- Health Insurance
- Property Insurance
And don’t even get me started about unexpected problems you get with employees – like not showing up on time or maybe not at all – and usually at a time you needed them most! Or thinking it’s ok to bring their kids to work when the babysitter didn’t show. There isn’t room here for the list of potential problems that having employees can bring.
If you scratch a customer’s Martin, you know you may have just purchased it – and at a high retail price! But what if your employee damages a customer’s guitar? You’re still on the line. The employee can just walk off and you’ll have to mail his check.
Let me emphasize one thing about employees over all other issues – and I don’t care if you’re hiring your best friend – have very tight security! Have tight bookkeeping rules and tight inventory controls. Otherwise, you have a good chance of losing your friend/employee and much more!
Retail Hours = Ball & Chain!
Freedom! You will definitely lose any sense of “freedom” you may have once had, if you run a retail shop. You’ll be almost forced to stay open six days a week. Many customers will never return if they see a closed sign during what is considered to be normal retail hours.
Don’t even think of an “Out to Lunch” sign. Those disappeared in the sixties when customers started demanding 9 to 6 (or later) retail access.
Teaming up with a guitar instructor, could make things like lunch breaks a bit easier. More on this in a bit.
MLK Day, Memorial Day, Veterans Day, etc. – these will be among your most profitable days because lots of people are off work and have time to come to you. But YOU will not be off work. You will be chained to you shop where customers expect to find you at all hours from open to close.
You will likely need a license from ASCAP or BMI to allow customers to try out guitars, since they will likely be “performing” copyrighted songs within earshot of other customers (i.e.: the public).
A commercial location (retail store) is a double-edge sword, bring more customers without advertising costs while adding a hefty “nut” to crack before you’re making profit.
Guitar Business From Home
But can you legally run your guitar business from home? There are zoning laws to consider, HOA policies, etc. But more importantly, you (probably) have neighbors.
Neighbors Are Key!
Consider that customers, whether buying or testing out their recently setup guitars, are going to want to plug in and try them out. Consider that – if the pandemic is still running rampant – you’re probably doing business out back on your lanai or patio.
Unless your neighbors are deaf, you need to be highly sensitive to the fact that they may not be fans of all the different styles of loud guitar music that may be blaring out (hopefully, not too loud!). A noise complaint to the local authorities or your HOA board of directors, might be enough to put you out of business.
Pay friendly visit to every neighbor within earshot. Let them know what you’re considering. Find out if they have an interest in guitars. Offer free lessons. Consider gifting them with an inexpensive guitar or one at cost.
Tell them what you’ll be doing and that you’ll limit any noise to between (suggesting) 10am and 6pm. Have customers turn the amp way down between 6 and 8pm or use headphones.
You may have to remove the volume knob on your demo amp and lock it to a preset level. Do whatever you have to do to avoid problems with your neighbors. Just one upset neighbor, anonymously complaining behind your back might be able to put an end to your home business.
Apartment/Condo Guitar Flipping
If you are an apartment or condo dweller, you will probably find it necessary to meet at a park or other public place for guitar demos. Battery-powered guitar amplifiers are affordable – well, not the good ones, but ya gotta do what ya gotta do!
I have a portable 120 volt AC power supply that’s quite small and light and can power a 35 watt Orange amp for more than enough hours to last me a normal day. Didn’t cost much more than a cheap amp, but allows me to test amps out in the field before buying them and, if I had to demo a guitar off-site, I could bring a good amp for the demo instead of a cheap little battery amp.
This gadget holds a charge “forever” and has never let me down.
Of course, you could always demo with headphones, in a pinch or if the weather’s bad. But having customers come to your apartment will likely disturb your neighbors and sooner or later lead to problems with management, so I’d advise only doing so on bad weather days.
It can actually be quite pleasant, meeting customers at a park picnic table, but you have even better options –
Flea Market Guitar Flipping
It depends on the flea market, but some can be pretty pricey and rival a retail store in overhead. On the other hand, you only have to be available to customers on weekends and are much freer with your personal time, so depending on the rates in your area, it’s worth investigating.
And remember – flea market rates are often negotiable! You could argue how your guitar business will bring more customers – customers who will buy food, drinks and brows other stalls.
Security could be an issue. Think about how you’ll secure your guitars; what happens when you go to the restroom? Will the noise bother other vendors? More than likely, the music will attract onlookers and actually bring more business to your neighbors as well as to you, but it needs to be discussed with management before there’s a problem.
Guitar Shop Rent-Splitting
Many of my customers ask me to refer a guitar tutor. Guitar flipping and guitar repair services are magnets for guitar teacher student prospects and vice versa.
So why not partner up with a guitar teacher? You’ll each expand the other’s business and you can split rent and expenses.
Here’s some other rent-splitting ideas –
- Recording studio
- Amp & stereo repair shop
- Piano/Guitar/Singing tutor, etc.
- Pawn shop
An added advantage is that you’ll be able to share customers and the established traffic and extra generated word-of-mouth referrals will be a boost to your business.
If you really want a commercial space and can’t find one of the above businesses to rent-split with, consider other small businesses that may be struggling – hobby shop, coin & stamp store, used book store, etc.
Just remember, you’ll have to work out a lot of details. Your rent partner may become annoyed by noise. It’s a lot like having a roommate. Money-saving, but can be irritating.
This comes with security issues, and potential problems with how situations will be handled. Personalities need to mesh adequately, etc. But the benefits to each should make the potential issues well worth working out.
Why not just sell online and ship the guitars you sell and never have to deal with buyers in person? Honestly, although I’ve sold one or two guitars most months from my website, I don’t have any experience in trying to sell guitars, via shipping, as a main method of distribution.
So, we’ll learn this together! I’m currently studying selling through Marketplace & Reverb and will update you on my experiences and best methods. Meanwhile, I’ve just today switched from my flat-fee shipping rates to live rates from a UPS shipping plugin. You can read about how to setup calculated shipping fees for guitars here.