Family Business in a (Seemingly) Declining Music Industry Niche

[AmazingLarry]

Hey Guys,

I may have the opportunity soon to get involved with a family business, and I'm looking for some feedback as to whether this is smart or not. There may be some emotional aspects that are clouding my judgement, so I want to try and see around those.

The business manufactures custom drums, and they have a good reputation and have been around since the 60's. Their product is great... but the marketing is not so much, and I think this has really held the business back. The family members who run the company are approaching retirement age, and I would hate to see the company get sold or close down.

I believe I can help them out a lot with marketing and increase their sales. My pitch to them would be that I would work part time for a year on marketing, and if their sales increased by X amount, then I would come on full time and get paid relative to the monthly or yearly sales. And eventually I would run the business.

This seems like a good opportunity and it's relatively low risk, however I'm concerned about getting into a space that's had a consistent decline in sales over the past 10 years. Obviously the business could provide new products or services related to the industry, and I have some ideas for this, so there's room to innovate and break into different areas of the market or potentially new markets. The other concern is working with family... and I have seen people advise against this.

Am I seeing things clearly here? I would appreciate any advice!

 

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[Jon L]

One thing to think about: why does the marketing suck? Ideally, they'd admit that their marketing sucks, that they need help and are fully committed to trying new ideas. What's more likely is that they think their marketing is just fine, or there is someone there that's entrenched in their way of doing business. Convincing people like that to try new things is an uphill battle. Best to go into it eyes wide open. Make sure expectations are set up front. If you get push back, communicate clearly. If things can't change, quit.

 

[AmazingLarry]

One thing to think about: why does the marketing suck? Ideally, they'd admit that their marketing sucks, that they need help and are fully committed to trying new ideas. What's more likely is that they think their marketing is just fine, or there is someone there that's entrenched in their way of doing business. Convincing people like that to try new things is an uphill battle. Best to go into it eyes wide open. Make sure expectations are set up front. If you get push back, communicate clearly. If things can't change, quit.

Yeah, that totally makes sense. There would need to be a discussion before anything happened to make sure they were fully on board and willing to make changes and try new things. You're right in that they think the marketing is fine. Up until 2 years ago, the website looked like it was made in 2001 and hadn't been touched since (it probably hadn't). It was finally updated after much convincing from other family members and there are still blatant mistakes on the site.

 

[Jon L]

Yeah, that totally makes sense. There would need to be a discussion before anything happened to make sure they were fully on board and willing to make changes and try new things. You're right in that they think the marketing is fine. Up until 2 years ago, the website looked like it was made in 2001 and hadn't been touched since (it probably hadn't). It was finally updated after much convincing from other family members and there are still blatant mistakes on the site.

what if you started with a survey of people in the market "What do you think about this company?" I could see something like:

Pay each participant with an amazon gift card of $50 to look at a few websites of drum manufacturers and then ask them questions like "what kind of company does this seem like to you?" "Describe the owner of this company" "Describe the people who buy from this company" "What would be some of the concerns you would have about buying from this company" "What do you think they do well?" "What would having this equipment on stage mean for your band?" "Do you feel drawn to this manufacturer?" etc

(Come up with better questions than I did)

I'm betting that the results of this will be devastating, which is what you want.

"This is what people think of when they look at our website. We are losing most of our potential customers because of it" (or whatever)

A small family-owned manufacturer like yours can tell an amazing story. People buy into stories. They'll think of the person that made the drum when they play it. They'll think of the owner and the care and passion they put into making the perfect drum.

 

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[Kid]

If you are afraid that company will end up in wrong hands, which might happen, you can organize the alternative buy out.

Basically find investor that will pay the same but with you as a active partner.

You would have the advantage of saying to your family that company won't go completely to strangers' hands because you will oversee it and they won't lose on monetary side of.

 

[AmazingLarry]

what if you started with a survey of people in the market "What do you think about this company?" I could see something like:

Pay each participant with an amazon gift card of $50 to look at a few websites of drum manufacturers and then ask them questions like "what kind of company does this seem like to you?" "Describe the owner of this company" "Describe the people who buy from this company" "What would be some of the concerns you would have about buying from this company" "What do you think they do well?" "What would having this equipment on stage mean for your band?" "Do you feel drawn to this manufacturer?" etc

(Come up with better questions than I did)

I'm betting that the results of this will be devastating, which is what you want.

"This is what people think of when they look at our website. We are losing most of our potential customers because of it" (or whatever)

A small family-owned manufacturer like yours can tell an amazing story. People buy into stories. They'll think of the person that made the drum when they play it. They'll think of the owner and the care and passion they put into making the perfect drum.

Wow, this is a great idea! They will take potential customer's real opinions more seriously than anyone else's.

And yeah I totally agree with what you say about telling a story, and they do have a great story to tell. They're also known for having really great customer service and their product is very nice quality, so it's a shame that they are being held back by the marketing side.

Anyway, thanks for the suggestion!!

 

[AmazingLarry]

If you are afraid that company will end up in wrong hands, which might happen, you can organize the alternative buy out.

Basically find investor that will pay the same but with you as a active partner.

You would have the advantage of saying to your family that company won't go completely to strangers' hands because you will oversee it and they won't lose on monetary side of.

Hmm, this may be a good way to go if they just want to cash out on the business. I would have to be more confident that I could significantly increase the sales before putting a large amount of money towards it. Thanks for the suggestion!

 

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[Jon L]

Wow, this is a great idea! They will take potential customer's real opinions more seriously than anyone else's.

And yeah I totally agree with what you say about telling a story, and they do have a great story to tell. They're also known for having really great customer service and their product is very nice quality, so it's a shame that they are being held back by the marketing side.

Anyway, thanks for the suggestion!!

Take a look at the Martin Guitar website. You get a sense of the love and care they put into each instrument they make.

Martin Guitars | The Choice of Musicians Worldwide | C.F. Martin

Martin Guitar has created the finest guitars & strings in the world for over 180 years. They're the choice from professionals to beginner guitar players.

www.martinguitar.com

 

[Bigguns50]

I'm going off the cuff here, but maybe it will give you some ideas.

If you have a good relationship with the family, this would be beneficial to all parties. If you love their product and business, tell them so. Tell them how much you care about it and are worried about their declining sales and the future of the business. Don't bullshit.

Be honest and open with them. Then, you can construct an offer/deal, anyway you want. Example: I will work for free for 30/60/90 days...whatever, in exchange for doing all the marketing (company pays for all the adds, etc.), I will accept 50% of the gross income increase in sales above your current sales. If I can help you as I think I can, I also get 1st offer to buy your business.

They might even skip all that and just sell it to you, in which case, again, you can construct a deal any way you want.

I hope this gives you some ideas.

 

[Rabby]

I took over a family business that nobody ever thought would be taken over by someone else. I started by volunteering. "Hey, I found this thing that I think will help. Wanna try it?" There was no short-term gain for me, other than the fun of accomplishing something. It was just building a new aspect of the relationship.

You might might want to do it a different way, which is also fine. The initial free work is not for everyone.

But if you do consider it, you'll offer to help, starting with one thing (maybe marketing, maybe some cost-suck in the business), and don't expect anything in return. Ask if they'll pay the cost of the thing, if it has a cost (like advertisements). If it succeeds, you suddenly have a new kind of credibility with these family members. (This method works perfectly well with non-family too by the way... consultants use similar methods all the time when they say "provide value up front").

A lot of the time, your family members know you as the kid you were 10, 15, 20 years ago. You have to show them you're more than that. Once they see what you can do on a small scale, it's easier to pitch the bigger picture.

 

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[AmazingLarry]

I'm going off the cuff here, but maybe it will give you some ideas.

If you have a good relationship with the family, this would be beneficial to all parties. If you love their product and business, tell them so. Tell them how much you care about it and are worried about their declining sales and the future of the business. Don't bullshit.

Be honest and open with them. Then, you can construct an offer/deal, anyway you want. Example: I will work for free for 30/60/90 days...whatever, in exchange for doing all the marketing (company pays for all the adds, etc.), I will accept 50% of the gross income increase in sales above your current sales. If I can help you as I think I can, I also get 1st offer to buy your business.

They might even skip all that and just sell it to you, in which case, again, you can construct a deal any way you want.

I hope this gives you some ideas.

I took over a family business that nobody ever thought would be taken over by someone else. I started by volunteering. "Hey, I found this thing that I think will help. Wanna try it?" There was no short-term gain for me, other than the fun of accomplishing something. It was just building a new aspect of the relationship.

You might might want to do it a different way, which is also fine. The initial free work is not for everyone.

But if you do consider it, you'll offer to help, starting with one thing (maybe marketing, maybe some cost-suck in the business), and don't expect anything in return. Ask if they'll pay the cost of the thing, if it has a cost (like advertisements). If it succeeds, you suddenly have a new kind of credibility with these family members. (This method works perfectly well with non-family too by the way... consultants use similar methods all the time when they say "provide value up front").

A lot of the time, your family members know you as the kid you were 10, 15, 20 years ago. You have to show them you're more than that. Once they see what you can do on a small scale, it's easier to pitch the bigger picture.

Great advice, thanks guys!!