A business career that spans five decades didn't spare Bill Boyce from the recession. Now his biggest lesson learned should resonate with any entrepreneur: Stay steadfast about tough decisions.
Business. Piano Distributors, Palmettos
Industry. Musical instruments, retail
Key. Company sees a potential end to the recession in a 15% rise in quarterly sales.
By the Numbers. Click here.
Bill Boyce ended a blissful eight-year retirement filled with boat rides and barbecues to open a piano store in Sarasota in 2001.
It was an industry he was intimately familiar with, having run four successful piano and keyboard instrument stores in his native North Carolina from 1969 until 1993. But the past decade — Boyce's encore performance — has proven to be one long, hard tutorial in how to survive a wretched economy.
The result is a business, Palmetto-based Piano Distributors, which is growing in 2010, albeit at a slow pace.
After four straight years of declining sales, it's also another anecdotal sign that the recession could be waning, at least for some Gulf Coast small business owners.
For starters, Boyce recently closed on a $1.1 million purchase of a new showroom and store in Sarasota that will almost double the size of the company's previous building, which he had leased. He is also considering buying buildings in other locations where he currently leases space, including Brandon and Naples.
Moreover, Boyce says the last three months of 2009 and the first six months of 2010 have been the best nine-month period for sales at the company since 2006. Sales in the 2010 first quarter, for example, were up about 15% over the first quarter of 2009.
Of course, Boyce, 69, says a sales bounce doesn't mean the killer recession is truly dead. “I've never seen a recession like this,” says Boyce, who sold his first piano in 1959 in Raleigh, N.C. “It was really deep.”
Indeed, annual sales at Piano Distributors are down 45% since 2006, when the company peaked at $12 million. The drop was slow but steep: The company had $10 million in revenues in 2007, $7.3 million in 2008 and $6.6 million in 2009. Boyce declined to project 2010 revenues, but he doesn't think it will fall from 2009.
Boyce attributes much of the recent sales turnaround to the stock market's late spring climb. He says his business, like many contemporaries in the luxury goods and services industry, has long tracked the stock market because people aren't buying $10,000 or $20,000 pianos unless their portfolios are humming along.
“I don't care how much advertising and promotions you do,” says Boyce. “If the stock market is down, people aren't buying musical instruments.”
But the company's survival and nascent turnaround can also be attributed to a lesson Boyce learned from past economic downturns, one that can hold today for executives and entrepreneurs in any industry: Be swift and resolute when making difficult decisions, such as closing stores or laying off employees.
Any time spent hemming and hawing, says Boyce, could have dire consequences.
Piano Distributors actually made three difficult decisions during the heart of the recession. It put a dead stop on new product orders, going from $7 million in inventory to $4 million in one calendar year. It closed three of its newest stores, including one in Lakeland and one in Fort Myers. And the company laid off about 40 people from 2006 through last year, going from 70 to 30 employees in the process.
Not surprisingly, the cuts in employees were the decisions that cut at Boyce the most. Still, he says the savings to the company couldn't have come from anywhere else. “That's what we had to whack the hardest,” he says. “And that was the hardest thing to whack.”
It also cut deep when Boyce closed a trio of stores in early 2008, including two that had been open less than three years.
First off, it cost at least $75,000 in advertisements, marketing and new signs to open each store, says Boyce. And the stores, in Lakeland, Fort Myers and Altamonte Springs, were woeful underperformers.
Those locations were doing no more than $400,000 a year in sales per store, well below the $1 million mark Boyce considers the annual revenue break-even point for any store in the chain. Plus, by the summer of 2007, the stores were losing, on average, $23,000 a month. “We were losing money hand over fist, says Boyce.
Boyce didn't waste much time hoping for a turnaround. He made the decision to close by November 2007 and three months later the stores were gone.
Now the company is left with six retail locations in Florida, not including its headquarters, distribution warehouse and piano testing center in Palmetto. In addition to Sarasota, there are Piano Distributors in Brandon, Clearwater, Naples, Tampa and Orlando. Boyce also owns two stores in the St. Louis area; Boyce's son, Cliff Boyce, owns four stores in North Carolina under a separate entity.
Boyce and other company executives hope the new Sarasota store becomes a model for other locations in the chain. The 12,000-square-foot building, on a high-traffic area of U.S. 41 between two shopping malls, had previously been a furniture store. The company's previous location, a few miles north, totaled 7,000 square feet.
The building will also provide a better and bigger way for the company to capitalize on an integral sales driver in the piano business: Lessons and recitals. There will be enough space there for 10 studio rooms and a 125-seat recital center, more than double the current location. Those lessons, say company executives, are a time-tested way to lure new customers.
“We felt that Tamiami Trail was the right place to be,” says Piano Distributors Vice President John Slump. “It also put us in the vicinity of some really upscale furniture stores, including Robb & Stucky.”
The recession-hammered low price for the building, $1.1 million, was also a big factor in the purchase, Boyce says.
Still, the new building can't totally make up for the fact that these days fewer people are in the market for pianos that can cost up to $20,000. Plus, Boyce estimates that while nearly anyone can be in the market for a couch or a car at a given time, less than 5% of the population are piano-buyers.
So to drive more sales Boyce is bringing back Boyce Books — stacks of fake $100 bills with his picture in the middle. The fake bills are props for a sales contest in which Boyce will give away $12,000 in electronics, from Wii video game systems to a 47-inch TV.
The staff can earn the funny money by reaching monthly and weekly sales targets. They can then cash in at a party planned for Boyce's house in August.
Boyce ran a similar contest in 2008 that led to a summer boost in sales.
A piano lifer
No one dangled electronics as a sales incentive to Boyce when he first got into the piano business in 1959.
Instead, it was just a way for Boyce, then a 19-year-old college student, to make a few bucks at his uncle's piano store in Raleigh. He worked part-time, earning $40 a week plus 3% of whatever he sold.
By the early 1960s Boyce had graduated from North Carolina State and was making $10,000 a year at his uncle's store when a recruiter for IBM called him. The computer company offered a starting salary of $5,400 a year.
“I told them I was making [more] in the piano business,” says Boyce. “I couldn't take the pay cut.”
Despite what could have been at IBM, Boyce says he has no regrets from a life in piano retail.
He retired happily in 1993, when he and his wife moved from North Carolina to Sanibel Island. He was 52 years old.
But by 2001 he was back in the game: Some sales people at Yamaha, his largest source of products for 30 years in North Carolina, lured him back. Says Boyce: “They kept knocking on my door until the money seemed really good.”
The Sarasota store, his first in the second go-around, opened April 1, 2001 — with no tongue-in-cheek. The more ominous event: A grand opening party that cost $40,000 was held Sept. 10, 2001.
Sales for September, no surprise, tanked after the terrorist attacks of Sept. 11 decimated the economy. Boyce originally projected $200,000 in sales for the month and ended up with $15,000.
“I thought I made a big mistake, but things turned around,” says Boyce. “I take the attitude that if things go bad, I will just work twice as hard to make it better.”
With that kind of approach, it fits that Boyce is still going strong nine years later.
Still, with his 70th birthday coming in September, Boyce has begun to think about retiring for good. So far he doesn't have a formal succession plan, although he did recently hire two people for manager-track positions who could be groomed to run the company one day.
“I'm realizing I don't want to fall over dead and leave it to my estate to figure it out,” says Boyce. “I want to have something in place.”