VISIONARY - Music Inc. Magazine
VISIONARY - Music Inc. Magazine
VISIONARY - Music Inc. Magazine
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InsideSUPPLY<br />
> Blackstar Amplification<br />
Receives top business honor<br />
PAGE 29<br />
> KMC <strong>Music</strong><br />
Opens Dealer Profit Center<br />
PAGE 30<br />
> Native Instruments<br />
Reorganizes, becomes self-owned<br />
PAGE 31<br />
> Jarrell Guitars<br />
Gets MIAC manufacturing award<br />
PAGE 33<br />
ST. LOUIS MUSIC I BY ZACH PHILLIPS<br />
BOLD MOVES<br />
Mark Ragin got more<br />
than he bargained<br />
for when he<br />
bought St. Louis<br />
<strong>Music</strong> (SLM) —<br />
and that was a good thing.<br />
“In the first 30 days, we<br />
had 100 new customers,” said<br />
Ragin, who purchased assets<br />
of the distribution giant from<br />
Loud Technologies in November<br />
2008. “[Retailers] were already<br />
dialing the 800 number, which<br />
we acquired with the business.”<br />
There was one small problem:<br />
With Loud moving its remaining<br />
assets back to its Woodinville,<br />
Wash., headquarters, SLM’s<br />
employees had already left. Ragin,<br />
who owned U.S. Band &<br />
Orchestra Supplies, had a lean<br />
staff of only 12 — and specialized<br />
in band products. (SLM had a<br />
large offering of combo gear.) Not<br />
to mention they were stuck in<br />
U.S. Band’s building three miles<br />
up the road. He had to make a<br />
tough decision: grow slowly and<br />
risk not being able to serve his<br />
new clientele or grow quickly<br />
and risk losing control of his new<br />
business. Ragin chose the latter.<br />
“[U.S. Band & Orchestra]<br />
was a much smaller company,”<br />
he said. “So, bringing on business<br />
is not always a blessing because<br />
it takes a lot of money.”<br />
Mark Ragin<br />
RECESSION-ERA BUYOUT<br />
Funding growth meant scoring<br />
a loan at the onset of the Great<br />
Recession — late 2008 — right as<br />
banks were crying foul. Luckily,<br />
Ragin had a good relationship<br />
with a bank he’d been working<br />
with for seven years. The only<br />
caveat? “You pretty much have<br />
to put your life on the line,” he<br />
said with a laugh.<br />
The first order of business<br />
was getting into SLM’s building,<br />
which former SLM owner Gene<br />
Kornblum had been renting to<br />
Loud. After some negotiating, Ragin<br />
took on the lease. Step two<br />
was getting more bodies in-house.<br />
Ragin immediately brought back<br />
most of SLM’s inside sales personnel.<br />
Within two months, he also<br />
rehired SLM’s former operations<br />
manager, who “knew the building<br />
backwards and forwards,” as well<br />
as the Knilling employees. This<br />
was followed by bringing on two<br />
vice presidents and rehiring some<br />
of SLM’s former warehouse staff.<br />
There were other kinks, too.<br />
Ragin realized the new SLM was<br />
severely understocked on several<br />
top-selling items. “I would look<br />
and see that I sold 1,000 of these<br />
guitar string sets in a year, and<br />
now I find that we’re selling that<br />
in a week. I was only purchasing<br />
100 sets at a time.” And with<br />
new customers came a deluge of<br />
paperwork in the form of credit<br />
applications. “You don’t even<br />
think about that.”<br />
Within 90 days, the company<br />
had 300 new customers. By the<br />
end of the first year, Ragin esti-<br />
mated it had 1,200.<br />
“It’s been 80-hour workweeks,”<br />
he said.<br />
CONTROLLING GROWTH<br />
Still, Ragin called his first year<br />
leading SLM “phenomenal.”<br />
He saw a 40-percent rise in business,<br />
followed by a 21-percent<br />
boost in 2010. In that time, he<br />
took on Martin Guitar Strings<br />
and D’Addario’s full line — previously,<br />
he’d only sold D’Addario’s<br />
Rico line — along with the distribution<br />
of Alvarez Guitars. But<br />
it wasn’t until August 2010 that<br />
he felt the new SLM had truly arrived.<br />
That was when he finalized<br />
the purchase of SLM’s building.<br />
“That was a real key thing<br />
because the suppliers knew that<br />
we were here to stay,” he said.<br />
“That was our final big move.”<br />
The remaining challenge? Balancing<br />
continued growth. “We’re<br />
very profitable, but when you’re<br />
in growth mode, there’s no money<br />
that necessarily goes into your<br />
pocket,” Ragin said. “So if you’re<br />
a real entrepreneur, you make a<br />
decision: Do you invest in the<br />
business or in yourself? We’re<br />
investing in the business. The<br />
day-to-day satisfaction comes<br />
from seeing the 35 additional<br />
former SLM employees we hired<br />
now having a job again.” MI<br />
JULY 2011 I MUSIC INC. I 25