Lutherie - the business.

[simonm]

... I say this both because many luthiers seem to be working for very little income, and because most of the posts here never mention financial planning.

If you were planning to set up in business on a purely rational basis then you'd surely want to do some basic calculations, which might look like this
...

Then you ask the question, could I expect to sell that number of instruments for that price? .....

Back in the mid-80's I did exactly this. I looked at the numbers and reckoned that where I was living at the time (pre-internet) there was only a very slim chance of making a reasonable living inside of a decade and a very high chance of starving to death (ok not literally) within two or three years so I gave up on the idea.

There is also the issue of changing from hobby to job - it may well take the fun and the passion out of it. I've done that and will pass on the t-shirt.

Getting professional advice strikes me as being very sound advice. However, finding the right "professionals" may not be that easy. The number of good advisers world wide for small arts, or crafts businesses must be vanishingly close to zero. I have no idea how to go about looking for one. I also have no idea how I would be able to tell a good adviser from a mediocre or bad one.

[peter.coombe]

Efficiency is great.
Reputation is great.
Having wonderful suppliers you can trust, is great.
Having a flash website, is great.
Having the skills of a zen master, is great.

But it's useless without sales.

You can never have too many sales. You can have too little though.

That hits the nail on the head, and sales is my biggest problem at the moment, despite spending a lot of extra time and effort trying to drum up sales this year it hasn't worked. Not that long ago I had a backlog of work 3 years long, and enquiries every week. That slowed when then the Aussie $ went up. Then the GFC happened, Europe in a financial mess, Lacey act in the US, shipping and insurance coosts skyrocked, and 80% of my sales went down the toilet. The Lacey act seems to have been the last straw for US customers. The Australian market for mandolins is relatively small, so is difficult (and risky) to depend solely on the local market. Now Australians seem to have stopped spending as well, and one room in the house is half full of instruments. Nothing is working. Just checked the web site and was shocked to see that it is averaging around 80 visits and over 3000 hits per day. Why are they not tempted? The diversification tactic has been more like diworsification, and a small country town has very little repair work. Maybe I should build a boat and go fishing and relax. Any ideas? Actually the boat idea sounds like a good idea.

Anyway, thankfully we won't starve. The missus is an accountant.

Peter

[simso]

Now in lies the next issue with business pete.

Your an established commecrial builder who has been making a living from it (I hope), and sales are down turning.

Diversification is the only answer to survive now.

For those that dont know, not only do I repair and build guitars / ukes / mandos etc, I also have a machinery shop and offer machinery services to our local community, fabrication of custom steel or ally parts. I also build one of a kind tools, we also offer general paint services to local bike shops and industrys.

We diversified to survive, through diversification we have grown.

[P Bill]

Efficiency is great.
Reputation is great.
Having wonderful suppliers you can trust, is great.
Having a flash website, is great.
Having the skills of a zen master, is great.

But it's useless without sales.

You can never have too many sales. You can have too little though.

That hits the nail on the head, and sales is my biggest problem at the moment, despite spending a lot of extra time and effort trying to drum up sales this year it hasn't worked. Not that long ago I had a backlog of work 3 years long, and enquiries every week. That slowed when then the Aussie $ went up. Then the GFC happened, Europe in a financial mess, Lacey act in the US, shipping and insurance coosts skyrocked, and 80% of my sales went down the toilet. The Lacey act seems to have been the last straw for US customers. The Australian market for mandolins is relatively small, so is difficult (and risky) to depend solely on the local market. Now Australians seem to have stopped spending as well, and one room in the house is half full of instruments. Nothing is working. Just checked the web site and was shocked to see that it is averaging around 80 visits and over 3000 hits per day. Why are they not tempted? The diversification tactic has been more like diworsification, and a small country town has very little repair work. Maybe I should build a boat and go fishing and relax. Any ideas? Actually the boat idea sounds like a good idea.

Anyway, thankfully we won't starve. The missus is an accountant.

Peter

Pete, buy a tinnie and go fishing. I once worked building a gigantic ply and Oregon sport boat. In his off time the foreman
bonded a 30ft fiberglass hull and deck, fitted and rigged it. When I asked him why not a nice timber boat , he sez "..... do you want to go sailing or work on boats? "

[DarwinStrings]

"Hey mate, I need 100ml of shielding paint to finish of a guitar Im building for a client. Can either buy some off you at whatever price, or replace it with 500ml next week shipped direct to you. Can you help me out?"

"why would I want to help you?"

I am not sure which way around this is Perry, if it was you wanting to borrow the paint or someone wanting to borrow it off you, I had assumed the first.

If I had another builder within cooee of me ask I would have happily given them the paint free of charge(maybe I am not a good business man)

I've had them rock up and ask to use my tools for a bit of a backyard repair. Won't be no trouble....and no beer or $$$ either.

I certainly wouldn't come at that one Allen and if they were another builder or repairer I would wonder what was wrong with their tools.

Jim

[peter.coombe]

Pete, buy a tinnie and go fishing. I once worked building a gigantic ply and Oregon sport boat. In his off time the foreman
bonded a 30ft fiberglass hull and deck, fitted and rigged it. When I asked him why not a nice timber boat , he sez "..... do you want to go sailing or work on boats? "

Well both actually. I wanted to build a boat when I was a kid, and the desire has never completely vanished.

I probably exaggerasted a little bit. Last year was one of the best years I have ever had. This year, if things don't change, is looking like being one of the worst. That is not all that unusual in this business, it goes up and down and is impossible to predict what will happen from year to year. Music instruments are a discretionary item for most people and if they fear for their jobs then they keep their money. There is a lot of fear around at the moment, especially with an election coming up, hence sales are bad, but it will eventually pass, although it may take a while.

This is something else I do. Have sold a few over the years, but have never really marketed them properly. Women love them (they are small and cute), especially after they listen to how they sound.

[Ormsby Guitars]

"Hey mate, I need 100ml of shielding paint to finish of a guitar Im building for a client. Can either buy some off you at whatever price, or replace it with 500ml next week shipped direct to you. Can you help me out?"

"why would I want to help you?"

I am not sure which way around this is Perry, if it was you wanting to borrow the paint or someone wanting to borrow it off you, I had assumed the first.

If I had another builder within cooee of me ask I would have happily given them the paint free of charge(maybe I am not a good business man)

That's right. Help others, and the favour is returned when needed. (it was me asking for the paint, and funnily enough a few years later he asked for my help a few times. I helped him, and didnt mention our previous encounter)
I got all the way to the USA with a bass that still needed to be setup once. I did it in the hotel room. The one thing I failed to do, was drill the holes for the strap buttons. Went across the road to the Guitar Center, and asked the in house repair guy if I could loan his cordless drill and a drill bit to drill them right there in front of him. The answer was no, and that it had to be 'booked in'. Ok, whatever. Had to pay him $77 USD to drill two holes.

[inoz]

Hi Perry,
I'm typical of your topic I think.
I asked old Harry for advice and was told there wasn't much money to be made, I started anyway, now I'm making his prophecy come true

I do this, with Andrew Ellis. Not a single other guitar maker has ever asked to join us, but they certainly turn up on the day and 'suss it out'.

Does this mean I can't come and "suss it out" ?

[DarwinStrings]

$77, geez you must have had the wrong haircut for the dude. I guess for some it is money at all cost.

Jim

[Ormsby Guitars]

Hi Perry,
I'm typical of your topic I think.
I asked old Harry for advice and was told there wasn't much money to be made, I started anyway, now I'm making his prophecy come true

I do this, with Andrew Ellis. Not a single other guitar maker has ever asked to join us, but they certainly turn up on the day and 'suss it out'.

Does this mean I can't come and "suss it out" ?

We welcome all!

[Trevor Gore]

Had to pay him $77 USD to drill two holes.

Should have told him what you thought and gone next door and bought the drill and bits. Would have been cheaper!

This is something else I do. Have sold a few over the years, but have never really marketed them properly. Women love them (they are small and cute), especially after they listen to how they sound.

I've sold a few of these:

But I did finish them first! This is the only handy pic I have. Most (but not all) women hate them. Can't see the point in having speakers each of which weighs more than they do. The sound is something else, though.

For those that dont know, not only do I repair and build guitars / ukes / mandos etc, I also have a machinery shop and offer machinery services to our local community, fabrication of custom steel or ally parts. I also build one of a kind tools, we also offer general paint services to local bike shops and industrys.

So Steve, what proportion of the business is the instrument work?

[simso]

There nice looking speaker cavitys trev, Ive made a few in the past with adjustable sound ports, but nothing like that. Very interesting indeed

To answer your question "We" that is not just me, but the crew put about 220hrs a week into repairs and builds and an additional 25ish or so into other stuff

[Richard]

Great topic... really interesting to read over the past few days.

I for one come from the school of thought that there is a living to be made in this field and it doesn't have to be minimum wage nor repair-oriented. Parts + labour (factored at what I'd expect to pay a quality employee to do the same) + margin. The margin needs to cover marketing expenses, consignment costs, warranty, capex and ancillary labour/expenses (building jigs, sourcing parts, reading ANZLF at 10:50pm on a Sunday night etc.) or else it just doesn't add up.

I built full-time while I was studying full-time. I then kept going full-time for a year or so after that... GFC and a high dollar hit and international business really dried up. I built about 40 in my last year of full-time, but it wasn't a pleasant year knowing I had to sell x guitars that week/month to get by. Taking on a "real" job and then trying to keep the guitar business ticking and a reasonable quality of life meant finding ways to streamline wherever possible. I want each guitar to be better than the last and I want to reduce the time I spend doing tasks I don't enjoy, which meant approaching the overall process like a production line.

-Batch produce any part that's unchanged from guitar to guitar.
-Outsource. I can't justify my own CNC setup at the moment, but if I can spend a fraction of my hourly rate to get higher quality custom parts than I can produce myself then it's a given.
-Jigs for anything that's repeated or measured.
-Each task has a start point and an end point... complete the task and move on. I always have something to move on to.

For me I identified that ~80% of custom orders fell into a fairly narrow set of requests and so I started building those to try and keep in stock. Last year's build number was 29 from memory. It was an easy 29 too... never felt like I was burning the candle at both ends like I did a few years ago. The international sales have picked up again somewhat and things are humming nicely enough that I'm thinking of where to go next.

[J.F. Custom]

Wow! Interesting custom made 'cat litter' tray Trev

Are you testing their IQ on the way too? A maze with an electric 'tickle' should they choose a certain path...

Jeremy.

[kiwigeo]

I got all the way to the USA with a bass that still needed to be setup once. I did it in the hotel room. The one thing I failed to do, was drill the holes for the strap buttons. Went across the road to the Guitar Center, and asked the in house repair guy if I could loan his cordless drill and a drill bit to drill them right there in front of him. The answer was no, and that it had to be 'booked in'. Ok, whatever. Had to pay him $77 USD to drill two holes.

What a wanker....I would have rounded it up to $80

[Trevor Gore]

Wow! Interesting custom made 'cat litter' tray Trev

Are you testing their IQ on the way too? A maze with an electric 'tickle' should they choose a certain path...

It's actually a cat proof mouse trap; one of my more imaginative creations, which is fuelling my diversification push. Although it's a bit of an elephant in the room, the bottom line is that, going forward, it will become a synergistic part of my integrated product mix giving me a parallel profit stream capability and total inoculation (with other contingency planning) against the current (and any future) economic downturn and all other events lacking programmable specificity, eventually becoming the shoulders of the business.

[P Bill]

Wow! Interesting custom made 'cat litter' tray Trev

Are you testing their IQ on the way too? A maze with an electric 'tickle' should they choose a certain path...

It's actually a cat proof mouse trap; one of my more imaginative creations, which is fuelling my diversification push. Although it's a bit of an elephant in the room, the bottom line is that, going forward, it will become a synergistic part of my integrated product mix giving me a parallel profit stream capability and total inoculation (with other contingency planning) against the current (and any future) economic downturn and all other events lacking programmable specificity, eventually becoming the shoulders of the business.

Have you ever written for the Labor party Trev? I think they're looking for more contributors to the daily script now.

[colburge]

I got all the way to the USA with a bass that still needed to be setup once. I did it in the hotel room. The one thing I failed to do, was drill the holes for the strap buttons. Went across the road to the Guitar Center, and asked the in house repair guy if I could loan his cordless drill and a drill bit to drill them right there in front of him. The answer was no, and that it had to be 'booked in'. Ok, whatever. Had to pay him $77 USD to drill two holes.

What a wanker....I would have rounded it up to $80

Haha now that was funny

[needsmorecowbel]

You could have bought a drill for cheaper than $77 geeez

[simonm]

This is something else I do. Have sold a few over the years, but have never really marketed them properly. Women love them (they are small and cute), especially after they listen to how they sound.

Now this gives rise to an interesting experiment. Have a look at your website and see if you can make it more "women friendly". A couple of hours on the web, might give you a few ideas on what makes women pay more attention to a website. Make some kind of special offer aimed at women particularly for these speakers. Or even aimed a guys looking for presents for their lad friends ... you have a product and you know women like it.
Special offer doesn't mean cheaper, maybe even more expensive as in a "limited edition" to celebrate who knows what "international day of the XYZ" ...

[Ormsby Guitars]

This is something else I do. Have sold a few over the years, but have never really marketed them properly. Women love them (they are small and cute), especially after they listen to how they sound.

Now this gives rise to an interesting experiment. Have a look at your website and see if you can make it more "women friendly". A couple of hours on the web, might give you a few ideas on what makes women pay more attention to a website. Make some kind of special offer aimed at women particularly for these speakers. Or even aimed a guys looking for presents for their lad friends ... you have a product and you know women like it.
Special offer doesn't mean cheaper, maybe even more expensive as in a "limited edition" to celebrate who knows what "international day of the XYZ" ...

What percentage of your clients, or guitar players in general, are women?

[DarwinStrings]

Or even aimed a guys looking for presents for their lad friends .

Now there is another market you could tap into, can you set up a stall at Mardi Gras.

Jim

[nnickusa]

Beat me to it....by "that much"

[simonm]

Or even aimed a guys looking for presents for their lad friends ...

Ok Ok .... typo ... lady friends. Lad friends may have more money though.

Anyone every see a UK movie called "Kinkie Boots?" - very specialised market.

[DarwinStrings]

A typo! oh geez Simon I hope I haven't booked my stall at Mardi Gras and started this Kylie Minogue headstock inlay for nothing

Jim