GOLIATH - Music Inc. Magazine

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people at Jordan Kitt’s have
been quite civil and cordial.”
TLC & PIANO RETAIL
But the best timing in the
world would’ve meant
nothing if not for sound business
practices. Year after year,
Slan’s stores have earned a
healthy profit, many times
while the rest of the piano
industry has languished. Here,
every piano retailer could take
a page from his playbook.
To start with, Slan is
obsessed with TLC. Before he
even considered the D.C.
opportunity, he held phone
interviews with local piano
technicians to gauge their levels
of expertise. Scoring famed
piano technician Rick Butler
helped seal the deal.
Slan considers meticulous
preparation critical to selling
Steinways and bemoans how
many piano retailers “do the
absolute least amount of service
and the absolute least expensive
job that you can to make a
piano acceptable to put on the
floor.” He said he has found
that the best technicians are
usually independent. “And even
though they are more expensive
than lesser-quality technicians,
because we use them only when
they are needed, we save the
company money.”
It sounds ridiculously simple,
but as Slan pointed out,
Steinway retailers “only get
one chance with a discerning
concert pianist. They’re going
to sit down, and if the piano
doesn’t sound and play just
right, you’ve lost them.”
“When we compared our
total operating expenses in [a
piano retail sharing group], my
expenses as a percentage of
sales were always the lowest of
the entire group — by maybe 5
or 6 percentage points — but
my service expense was always
the highest. What I’m doing is
54 I MUSIC INC. I JUNE 2010
Slan keeps a
high level of
equity in his
company to
cushion it in
tough times
putting my money where it
will have the biggest impact on
my customers.”
“David treats every customer
as if [he or she is] purchasing
a Steinway Concert
Grand,” Losby said. “He never
forgets from whom his success
has come.”
HIGH EQUITY, LOW DEBT
Slan’s fiscal conservatism
also helped spare him from
the brunt of the piano market’s
downturn. While he’ll splurge
on service and payroll, he’ll
often pore over each column
on a profit and loss statement
to find ways to reduce expenses
without sacrificing quality.
“The difference is we do that
in bad times and good times.”
He doesn’t floor plan. He
pays cash for inventory, helping
him get what he called “a very
low rate and very favorable
terms” when he has needed to
borrow money. This also lets
him take advantage of discounts
from suppliers. And he said he
keeps a higher level of equity in
his company than most piano
stores. In doing so, he sacrifices
a higher return on his investment
but cushions his company
from market fluctuations.
“There are some [retailers]
who feel very comfortable with
a lot of leverage in their company,”
Slan said. “The problem
is, whenever you have an economic
downturn like we had
and things get a little shaky,
your floor plan companies,
banks and suppliers all get
nervous. With me, nobody got
nervous.
“When economic conditions
are good, we do very
well, and when business conditions
are more difficult, our
company is still profitable.”
To other dealers, he recommended
that they pay as close
attention to their balance sheets
as they do their sales figures.
“Just selling another piano may
not always be the most profitable
thing to do,” he said. “To
run your company effectively,
you need to understand and
manage your balance sheet. For
example, what should my debtto-equity
ratio be? How much
inventory should I have to create
the desired inventory turn?
How much equity do I need to
support my inventory and
financing needs and allow me
to borrow money under favorable
terms?”
Slan learned which ratios
worked best for a dealership of
his size by studying other
companies in retail sharing
groups. And he credited Bill
McCormick, the late president
of Jordan Kitt’s, as a key mentor
in teaching him the financial
side of the piano business.
MARKETING TO THE INFLUENTIAL
One interesting fact about
the D.C. and St. Louis
Steinway dealerships: They do
very little traditional advertising.
Prior to the D.C. store’s
grand opening, Slan took out
four ads in The Washington
Post and later bought a set of
ads for the Thanksgiving weekend.
That’s it.
In place of traditional publicity
vehicles, he and his staff
network endlessly. Courting
centers of community influ-