Official Luthiers Forum!

Been a lot of talk about the other side of this thing lately, the business side. And that's a good thing! I personally am always looking to get a few tips in this area. I am a better "mechanic" than "manager" and find most of us will fall into being mostly one or the other.

So I thought a thread of useful tips in this area may be warranted.

If this is going to be a business for you you gotta make it that in all respects. Treat it like a hobby and that's what it'll be.

Be legit! Get proper licenses etc.. I run as a Sole Prop and it was easy to set up. If you do the same make sure to get an EIN when you apply, no matter what they tell you on the other end! Get it right away as it is very difficult to get an EIN once you are running. This gets your SS off all paperwork and makes it much easier to open dealer accounts.

Get your local permits and do the dreaded sales tax thing if your state requires it. Want to join the game you got to pay the ante.

Open those dealer accounts! Buy as much of your parts and supplies at wholesale as you can. You'll be surprised at how many custom and boutique suppliers will deal direct with you and give a small profit margin.

Keep regular shop hours.... The appointment only thing typically doesn't work at a level that will sustain you. Most players are very... how to put it.... Laid back? and barley get to gigs on time let alone keep other appointments. Guitars are secondary to most of your clients anyway.... This avoids all the hard feelings about wasted time and missed appointments.

Be diverse! Your area will help determine what shop models will work for you but generally the more you can offer the better you can do to a point. Not ever community can support the large store format and I suspect most of us here would rather keep employees and overhead to a minimum. But adding small things like picks, strings, capos for quick convenience sale is never a bad idea. Gives your clients less reason to visit the other guy.... I also enforce a instruments must be in a bag or case rule when dropped off. I sell a few bags this way! Easy money and keeps my insurance people happy.

Get insurance! especially if a Sole Prop! you do not have the protection of the corporate umbrella here. You can of course go the LLC route but even then I would still advise insurance. Stuff happens!

Interested to see what some others may offer for advice here....

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Brian

You never know what you are capable of until you actually try.

https://www.howardguitarsdelaware.com/

"Most players are very... how to put it.... Laid back? and barley get to gigs on time let alone keep other appointments."

It's the "barley" that causes that!

Get an accountant! She taught me better business methods (and record keeping), and once I wanted to hire people she was indispensable. I applied for my Federal EIN (Employer Identification Number) and my paperwork didn't double, didn't triple, didn't quadruple - it increased TENFOLD. When the county decided I should build a ladies bathroom for my employees (I had one guy) in a RENTED shop, she saved my ass by setting the county inspector back on her haunches quoting regulations. And all she ever charged me was the same $30 per month for over a decade whether I brought her 10 pages or 100. Get an accountant!

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"Act your age, not your shoe size" - Prince

Understanding the difference between technician and manager has been huge for me. I got into this business backwards, I could play the guitar, and understood the basics of set ups and what went into the typical repairs that cross your average repair person's bench, but I'm much more comfortable and at home managing a business than doing this particular work. There is also a third skill set that should be recognized when it comes to running a business. The entrepreneur. Doing the work, and managing the day to day well, doesn't immediately ensure things will grow. If what a person is looking for is a sustainable personal income, a job, then you can get away with doing good work, and organizing yourself, and that's a valid and worthy goal. But if you want your business to grow into something bigger than just you, that requires another skill set altogether.

Two other things that have been hugely helpful...

The first is systems. Define and document them. Anything you have to do occasionally, so regularly but rarely you have to learn it every time is worth writing down. For instance, I file my sales tax quarterly, and I have to remit both federally and provincially (I'm in Canada), a month apart, and both are done differently. By keeping notes of the methods involved saves me a lot of time, it honestly turns an hour of frustration, into about 10-15 minutes of productive time. The other place documented systems can come in handy is when a person begins hiring employees. If I have done the work of articulating what goes into different jobs, when I decide its time to hire an employee to do those jobs I have a good idea of how long they should take, and exactly how they should be done. This both gives me a measuring stick for how the employee is doing, and gives the potential employee security in the fact that they clearly know what's expected of them.

The second thing is being intentional. In business (as in life) a lot of things happen and its easy to allow both opportunity and crisis to push us around and force us into situations that we maybe would rather not be in. The more intentional we can be about who we are as business people, what it is we do, and how we do those things, the more in control we are (in the best way.) We can never mitigate every possible unpleasant situation, but inasmuch as its possible I would way rather deal with the fallout of a decision I made on purpose, than dealing with the reality that I suddenly find myself in the middle of something I never intended.

I would recommend looking into a LLC instead of a Sole Proprietorship. It is easy to setup and it will give you some protection of your personal assets and may help with the tax collector, depending of current laws. When I was building houses I didn't do it but I should have. Worth checking into.

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Joe Beaver
Maker of Sawdust

I looked at an LLC. My brother runs his business as one. He has way more paperwork and tax liabilities than I do. Either way you should have insurance and if I exceed the million $ of my policy limits, well I was done no matter what.

I am also very much of the opinion that corporations are a large part of the problem with things today and in keeping with my personal philosophy of leading by example I refuse to become one.

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Brian

You never know what you are capable of until you actually try.

https://www.howardguitarsdelaware.com/

Thanks brian . I too would like to see more topics on the biz subject particularly on managing ones cash flow. Cash flow is the heart and soul of every biz including luthiery. Mismanage it and you are out. I too looked at the other options, and decided for now to KISS keep it simple stupid, and run it as a sole proprietorship, less chance of butting heads with the IRS , which we wound up doing. Not understanding the tax laws in ca and the usa., cost us dearly in the pocketbook as in the early 90/s we were new to the usa, In hindsight w e should have hired a bookeeper or accountant, and a lawyer to protect us from potential troublemakers. Of which we had one , who was a very unhappy and troublesome customer.

I'm a lawyer, but I am not the lawyer for anybody on the OLF. Nothing I say should be taken as legal advice, and none of you are my clients.

Having said that, I do think that everyone who wants to operate a business on their own should talk to a lawyer about the goods and bads of setting up a limited liability company. You are all grown-ups, and you can make your own decisions, but without a little bit of legal advice from a lawyer licensed in your state, you might not know everything you need to know to make an informed choice in this regard.

Just sayin'.

The problems we associate with "Corporations" are because of the experiences people have with large public corporations where The Management has no responsibility or accountability to "The owners". As a stock holder in a public corporation - I am technically "An Owner" - yet I have no assumed legal right or even any privilege of entering, touring, or inspecting their business locations or auditing their books.... There is no accountability there....

That's not the case when you are an owner of a small privately owned corporation....

Anyhoo....

My advice is:
Be cognizant of your strengths and your weaknesses.
Focus on doing your strengths.
Hire out as much of your weakness to somebody who has that strength.

For example - if the whole quarterly estimated taxes and payroll stuff drives you to despair and distraction - hire it out. It's not that expensive and it takes your tax lady a tiny fraction of the time it takes you.

Or...

If you are a fantastic manager/scheduler/planner/"Front man" - hire a tech who hates all that stuff. There are a LOT of fantastically good tech people who hate the "Run a Business" side of business but they love being in the back wrenching on stuff....