An overview of a violin shop offered for sale. Includes the price, how the business was valued, the outlook of future sales, and the pros and cons of the purchase.
The Business: Does your current business life seem off-key? Why not try owning this shop that sells and repairs violins? It has a first-rate reputation and a worldwide customer base that ranges from local violin students who patronize the business's leased, 2,200-square-foot store, to accomplished professional musicians who often shop by phone or the Internet. Another asset is about $350,000 worth of inventory, which includes some 30 different models of violins, retailing between $350 and six figures, as well as parts to assemble violas and cellos. There's also a sophisticated computer tracking system that documents customer-purchasing patterns as well as the store's inventory; it keeps tabs on the whereabouts of sophisticated and rare equipment, too. In addition, the owners have built a network of high-end suppliers in the United States and abroad that allows the business to satisfy even the most arcane customer request. And if the prospect of assembling even a beginner's violin seems more daunting than a solo performance at Carnegie Hall, consider this: the two skilled owners of this five-year-old business learned repair and instrument assembly from masters in the trade and are willing to help instruct a new owner. After handling all operations, the pair now want to orchestrate other ventures.
Outlook: While violin virtuosity may not exactly rival baseball as the national pastime, there's plenty of room for this company to expand its niche. After all, Americans spend nearly $2 billion a year on musical instruments. One simple way to boost revenues would be to add other types of instruments to the shop's product line. (The retail business, which accounts for 80% of sales, provides higher margins than the repair work.) But if you decide to maintain its focus on strings, you could advertise more aggressively, expand the company's Internet presence, or pursue a growth strategy that the current owners have composed: tapping into the musicians' union to find local music teachers who might become commission-based sales representatives. If those growth efforts prove too time-consuming, you could consider hiring, for $25,000 a year, a recent graduate of one of Europe's violin-making schools to help you.
Price Rationale: As a rule of thumb, music stores typically sell for about one-third of annual adjusted earnings, plus the value of fixtures, equipment, and inventory. In this company's case, that works out to about $430,000: $80,000, plus $350,000 (a conservative estimate for FE&I). By pricing their store at $135,000 below fair-market value, these owners--who are eager for a quick sale--are giving their company away for a song.
Pros: A lifestyle business that's easily relocated, gross margins of more than 50%, and a growing network of loyal, cultured customers. That's music to anyone's ears.
Cons: How many members of the MTV generation do you know who are taking violin lessons? If you've really got growth on your mind, you may want to sell synthesizers instead. -- Jill Andresky Fraser
*Before interest, taxes, depreciation, and owners' compensation.
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Lou Santangelo of Sans & Co., at 717-533-4477.