Musical Instrument Store Business Plan

MusicWest will sell new and used musical instruments and accessories. Our primary items will be new band and orchestral instruments, electric and acoustic guitars, amplifiers and electronic keyboards. In addition we will have a full service, on-site repair and customization department (band instruments, guitars and electronics).

We will offer a “state of the art” music lesson program featuring top degreed instructors, as part of our overall focus on educating our customer base. This program will include private and group lessons, as well as outreach to local schools. We will also develop music clubs geared to children and seniors, to further serve our local community.

Although offering school band and orchestral instruments, service and lessons will be our main competitive advantage, guitars will remain the primary revenue producer for musical instrument stores for the foreseeable future.

3.1 Product and Service Description

MusicWest will offer several name brand instruments such as:

• A large selection of band instruments by Selmer/Bach, Yamaha, and Leblanc with an emphasis on the intermediate level instruments.
• Electric and acoustic guitars including Albuquerque exclusive lines by Fernandez, Suzuki, Wechter and other nationally known brands, such as Takemine, Ovation and Martin.
• Amplifiers by Crate, Kustom, Traynor and Hiwatt to support our guitar sales.
• Keyboards by Yamaha, Suzuki and Korg.
• Sound reinforcement products will be exclusively Yorkville. We will be the only dealer in New Mexico, and will offer a rental program for local bands and schools.
• A very well stocked accessory department to support the above items. A recent Music Trades article found that 80% of the buying public considered this the most important reason they buy from a musical instrument dealer.

In addition to complete repair services for our products, we will emphasize upgrades and customization items to develop other income streams our competitors have not considered. When carrying a brand name item conflicts with giving the customer the best all-around value, we will always pursue the product that best suits our client’s interest.

3.2 Competitive Comparison

MusicWest is different from its competitors in several key areas:

1. Our three largest competitors do not carry band and orchestral instruments, one of our primary focuses. 
2. We offer services to support our products, and most of our competitors sell just the products themselves.
3. MusicWest will take full advantage of “name brand recognition,” an element that most dealers overlook and under-advertise.
4. MusicWest will capitalize on our competitors’ weakness in the accessory category by keeping ours well-stocked.

Musical instruments cannot be fully enjoyed without knowledge and experience. Unfortunately, we cannot sell these products at a higher price just because we offer repair and instructional services; the market does not support dealers who have tried this. We must offer varied services and product mixes and be competitively priced as well, in order to survive in this new economy. In addition to educating our customer base, we are committed to providing the best product value.

Accessories are the highest profit center for the store and we have to expose our competitors’ weakness in this area if we wish to expand market share from day one of operations. Competitors that do not stock the necessary accessories will send their customers to competing stores, from which customers may not return. We must keep our accessory department well-stocked to take advantage of our competitors’ flaws, and avoid this pitfall ourselves.

3.3 Fulfillment

When feasible, MusicWest will buy its inventory directly from the manufacturer in order to obtain the lowest price possible. We will make use of one or two jobbers that sell a large variety of small goods that would be impractical to obtain directly. We will frequently compare prices of these distributors to ensure we are getting the very best price possible per item. That said, MusicWest will always put the quality/value of the product we pass on to the consumer ahead of price. The majority of our competitors buy by the piece rather than by the box or case lot. We intend to buy our key, best-selling items in bulk, to obtain a pricing advantage over our direct competitors. Common discounts in the industry consist of free freight, repayment term incentives, additional free merchandise or incremental percentage discounts on quantity purchases.

Although we will buy key items in bulk when practical, we will also remind ourselves that sometimes a better deal for the sake of lower prices is not the best move for our bottom line.  We should not risk over-stocking new or unproven merchandise just to get a small advantage in price over competitors.

3.4 Technology

The Music Industry is currently riding a trend toward high-tech electronics in several product areas, most notably in guitar related effects and multi-track recording hard/software. Sales increases in these areas are due to the slashing of the price barrier in the home recording market, and the pace at which new products become obsolete. This high tech boom has increased the M.I. market substantially.

Digital keyboards are also seeing increased market share as technology becomes more accessible. These units offer families state-of-the-art sounds and capabilities without a huge learning curve. For instance, digital piano sales are currently the fastest growing segment of the total piano market in the U.S., and sales have increased 450% over the last ten years.

One downside of technological innovations is that prices in this industry are dropping sharply, lowering revenues per unit. It is therefore essential that the Musical Instrument retailer of today bundle products together as packages, to increase profits and build sales.

3.5 Future Products and Services

MusicWest will rotate its stock so that new products are always available. The store will balance what is popular today with what will be popular tomorrow. We will institute the following programs in order to ensure expansion of the store:

1. We hope to become the only store in New Mexico to institute the “Weekend Warrior” program, sponsored by the National Association of Music Merchants (N.A.M.M.). This program is responsible for bringing back into the fold many who had given up on music. The program has successfully raised income opportunities for the stores who have implemented it.
2. By the end of the first year of operations, we must place major emphasis on developing our own school band instrument rental program. This rental program will allow us to insulate ourselves from any large-scale competitors that might locate here, and generate consistent year round high profit income opportunities.
3. MusicWest will take advantage of the internet as a major tool for passing along information about our store and products to potential and current clients. We will maintain this site as a local site, geared toward information and service. We believe that placing a sales engine in our website would only lower our initial profit margin and limit sales opportunities, so we will avoid this for now.
4. We hope to start music clubs geared to children and seniors. These will be clubs that we can support with little cost, but which can generate additional sales not actively targeted by our competitors.
5. In the long term, there are many avenues we can explore, such as traditional piano sales, professional sound installations, and service contracts with the public and private school systems.