Life and times of Audionutz, pt. 8!

...OK, I am now in the new place ready to ROWMCO, and recall I was given a "cushion" from the landlord, so time to make some cheddar!

Almost immediately, business seemed to ignite, partly due to the showroom we designed being bad-ass with both my Civic and Bobby's S10 on display. From the road thru all those windows it was quite a sight! But I think it was mostly the location...being on a high-traffic road with decent ingress/egress was playing a major part. We built the showroom to be elegant and relaxed, focussing mainly on the vehicles rather than stacking boxes floor to ceiling like a pawn shop. We built a small radio/amp/sub display using an Astron 100A power supply I got from a friend, we rearranged the counters and made glass display cases for some other products, and hung slat-wall along the main wall to hang product on as well. Of course, I had a ton of trophies on display above the slatwall, but not too many. It was really nice, and defintely worth the money.

Would a big soundroom or large multiple-product working display been better than two cars? Well, not really. We were THE high-end place in town, and everyone else has soundboards selling stuff off them. It is our job to educate the customers about high-end, and in doing so, they will learn that speakers sound totally different in a car than in a room, so a soundroom would kinda defeat our purpose. I wanted to have two SQ systems ready to "jump in a audition" and let them sell the product. In retrospect, I think maybe a soundboard would have possibly sold a little more stuff, but when you factor in the cost of the inventory you'd have to invest in it, unless you have like $10K to just "Set aside", I'd rather have product on shelves to SELL immediately than sitting on a board in the showroom being another "salesperson", so-to-speak. Catch my drift?

So anyways, over a few months I learned that Mr. Upholstery wasnt all he was cracked up to be. Sure there were some cross-over customers for both of us, but I began to see how a bad work ethic on his part made my part look bad too, and I didnt like it. Add the fact that he was less than responsible with money and I had to chase him around for his share of the bills and rent and you get a bullshit situation that should have never happened in the first place! He was out before the first year was up, and we were way happier....but that really has little to do with this story....back to the topic!

New, big showrooms and pretty displays need products! So, of course we still had Crystal, DLS, Arc Audio, Oz Audio, etc...then we got Image Dynamics, Treo, Tru Technology, both Morels, Sinfoni, Cerwin Vega, Audio Control, and Batcap. Still had Stinger/AAMP, and IXOS/American Terminal supply. Select Products too. All of these brands were no on board, all of which were superior to 90% of the rest of the crap being sold in town. Sure I couldnt keep alot in inventory simply because of the prices of this stuff, but dammit I could order it as-needed and it worked out well

It is easy to become a victim of a high-pressure rep, and I found this out the hard way with one guy who came to visit..he had Morel USA, Sinfoni, Milbert, and something else I forgot. Anyways, he hounded the shit out of us until we took Sinfoni, and wanted us to do Milbert but I simply could not buy-in to them. Morel was the main thing I wanted from him, and he talked me into dropping additional cash on Sinfoni amps which I eventually had to sell on Ebay just to make a sale...they were TOO damn pricey and no one in Ocala wants that high of high-end. I did however manage to sell two sets of ClassA 60.1s to a friend (what up, Frankie!), but that was the extent of my Sinfoni sales. Well, this guy was a real jackass, all he did was talk crap about Morel Israel, Talk crap about Arc Audio, talk crap about Tru, talk crap about DLS, etc. Then one day he decides he's gonna tell me I dont know shit about running a business and my employees suck and the lines I carry are shit and on and on. He was escorted out and never dealt with again. Later he was fired from all three companies. Sometimes, you just gotta tell people to phuck off and thats that. I dealt direct with Morel from then on, and Sinfoni just fell by the wayside.

OK, enough brands and whatnot. Let's talk employees and payroll! I eventually hired a salesman who would be responsible for company PR, dealing with customers, selling product, cleaning the showroom, and keeping an eye on everything. One thing I found out over the two years he was with us....you do NOT hire salespeople who don't know anything about car audio! Sure there were several times I tried to educate him and quiz him and whatnot to help, but he basically relied on his people skills and bullshit ability to win over the customers...it worked most of the time. But the times it didnt work were BAD. Especially if you have a temper problem to begin with, but thats not a topic of this discussion. Lets just say some people are cut-out to deal with people and some arent. He is better off not doing customer service or retail. He's a great guy and a good friend, but something changed during his tenure with Audionutz and he just got burnt out.

OK, back to the topic...my salesman was paid all different ways during his time. First off, I did the whole "lets see how it works out for a few weeks" thing and we did $200 a week. Well, then after a couple weeks it was apparent that me and the installer(s) were able to do more b/c we didnt have to help all the customers, so the income increased overall. I then made his base $200/wk and 5% of the gross sales for the week (too much btw!!!). that was OK, but if we were selling stuff below MAP (minimum advertised pricing), then this was cutting directly into the profit and would prove to be detrimental later. I figured out that sometimes he would make more profit than the shop, and that just wasnt cutting it. We then changed to no more comission and increased his salary. I think eventually we were up to 350/wk with every other saturday off...not too bad for someone with no real car audio knowledge.

As for the installers, I have had about 6 different ones, the main ones were Dewayne (who I stole from another doomed shop in town) and Gimmick( who is down by law). Dewayne began nizzle life at 500/wk, Gimmick has always been part-time and he has stayed at 200/wk. Over the 2 years, D-bo eventually got raised up to 675/wk (ouch!), but he is worth every penny. He has vast audio knowledge, hard working, great customer service, great salesman, great alarm guy, etc. Is he too pricey for the nizzle? Yes he is, but I made the payroll happen b/c he was always the one I could count on to handle stuff full-time.

There was a time when I hired another full-time installer on D-bo's recommendation to help boost sales/speed install times. We were slammin busy and had recently departed with the salesman we spoke of before. This guy seemed great at first, but quickly became a slug and, since he was commuting from 1 hour away every day, was always late, always left early, and easily lost focus on his work. I dont know what happened, but he proved us all fools for hiring him and after two months he was gone. $575/wk and I felt we did better faster work without him. He should do installing as a hobby.

So, I am gonna modify the payrates of my main three employees for the sake of this discussion to INCLUDE the amount of income taxes
Salesman 395/week
installer 780/week
GImmick 200/week (thanks gimmick )

thats 1375/week in payroll folks! HOLY SHIT!
thats 5912.50 a month!

Now lets figure some other expenses in shall we> per month
Rent $2200
Electric @$430
Credit car machine and processing @$100
PHone, fax, and DSL $180
ADT $45
business insurance $130
Home depot card $400
miscellaneous stuff $200

total 9597.50 PER MONTH! And I havent even included business debts incurred over the past 5 years such as lines of credit, credit cards, and loans which total approx 2500/month in payments!!!!

So, add these totals together and we get 12097.50 per month to keep Audionutz open.

Lets take a moment to reflect on this. These totals allow for no travel, no show expenses, no supplies, no tools, no incidental expenses, nothing. Now consider this>>>>>>>>>

As a retail store, you rely on actual profit to pay expenses, not gross sales. Recall that we were constantly having to sell at below MAP to get business. Now think about this number.....$504.06. THIS is the magic number that Audionutz needs to see in NET PROFIT PER DAY that the store is open for business...

just to break even!!!!!!!!!!!!!!

Let me tell ya folks, several things to consider here....
1) business in FL fluctuates drastically, especially hurricane season. When weather is bad, NO ONE buys car stereo.
2) 9 other shops in Ocala all fighting over the same drivers
3) our beloved internet, full of jackasses selling pirated/Bstock/unauthorized audio equipment at or near dealer pricing which steals business from the actual businesses!
4) There are ALWAYS several days a month that NOTHING (read also "not a damn thing") is sold out of the store.
5) NET PROFIT means what is left after the cost of the products are paid for, PLUS the cost of the sales taxes are paid to the state, PLUS the cost of processing the credit card(if there is one).

Heres a fun example...lets say we sell an amp that costs us 449 to someone for 699 plus tax. MAP on the amp was 899, but we had to barter b/c he saw it online for cheaper, et etc...anyways, he paid with a c.c. 48.93 is sales tax, so price charged is 747.93. VISA is going to charge you about $22 finance/process fee, leaving an actual selling price for the amp of 677. minus dealer cost and the shipping cost to you from the mfgr, you end up with 210 net profit. I know other areas are different, but in Ocala, someone buying a $700 amp is a big deal and definitely does NOT happen daily. It is mostly coaxes, or radio installs, or whatever. During hurricane seasons, there were times when we had NO BUSINESS for a full week! Guess what? Take 6 days away from 24 business days in that month and you get 18 days to generate $12097.50 for the month JUST TO KEEP THE DOORS OPEN with ZERO money coming into your pocket.

Seems grim, doesnt it?

More to come