Top Lessons Learned in Year 1 [Part 1]
Year one of South Rhodes Records will officially be in the books on March 2, 2019. To mark this milestone, I thought it prudent to reflect a little bit on some of the lessons learned so far and, hopefully, shed a little light on what it looks like to run a “bootstrapped” small business. These aren’t in any particular order and there’s a ton more I wanted to share. But, to keep things brief, I stuck to just ten lessons and have broken them up into two posts. Dig in below for the first five!
1. You HAVE to Take Some Ls.
The perfectionist in me really doesn’t like this one but, in pursuit of greater sanity, I had to learn early on that even some seemingly avoidable losses still needed to happen. Yes, even ones that I could have avoided or prevented. Whether it was a pop-up opportunity that I was 90% sure would yield no sales or taking a risk on stocking an album I was fairly sure wouldn’t do well, those moves still needed to be made. At least within this first year, I had to allow myself to stay in a position of learning, even in situations I thought would be a waste. I still went forward with some of them because I had to learn. And I couldn’t grow as a new business owner if I walked into (or out of) every situation assuming I knew with the end result would be. In some ways, that’s an even greater L because you rob yourself of an opportunity to learn and be surprised. Yes, there are a few hours of my life I want back as well as a few dollars. But, now that I know with certainty what I only assumed in part, I can press on with greater, data-based efficiency and agility. “L” equals lessons more than it equals loss.
2. Off Target.
Be prepared to be completely wrong about who your target market actually is. Early on, I had a very specific idea of who I thought South Rhodes Records would best be able to appeal and sell to. Throughout the first couple of quarters of operation, it became clear that I would need to adjust who my target market was based on who was actually buying (or not buying) the products I stocked. Admittedly, there’s some lament in this learning, but more on that later. With a primary focus on Jazz, Hip-Hop, and R&B, I banked on selling to a people with demographic data points similar to the ones I hold. WRONG! While a good number of my customers are on the older millennial side, other points like ethnicity, city of residence, and even income brackets were, let’s just say, a little more than off. Why is this important? Because these early assumptions of target market went into inventory purchase decisions (some good, some not so good). Now, they inform a bit more what I stock in the store as well as where I think it best to do pop-up shops.
3. Formulas Matter.
Making decisions about where to invest limited time and resources can slow down progress. Yes, it’s important to consider as many angles of an opportunity as possible. However, the adage of “study long, study wrong” still holds true as well. To keep from falling into a place of total indecision, I’ve developed a couple of very basic but effective formulas to help me determine whether or not a pop-up opportunity is worth it for me given my desired profit margin and revenue goals. Not only does this help me make these decisions faster, it also helps me be more objective and focused on my business goals.
4. The Dreaded “V” Word.
Acclimating people to the brand you want to create is difficult but stay the course. Sometimes you’ll have to turn down opportunities in order to protect your brand. And, at other times, you’ll have to completely cut someone off just to make sure your brand’s story and identity is being conveyed properly. Vinyl records are a weird thing to try to sell and even more weird are new vinyl records. I found that with many potential and first-time customers I had to help them scale was the “vintage” incline. And I get it. Kinda. Vinyl records are an old format and, in the post-CD/post-MP3 era, most people assume that any records in existence must be from the 1960s or 70s. On top of that, there are a lot of similar-ish businesses that douse their product selection in the vintage moniker. On my end, I was intentional about having South Rhodes Records be a store that sells both new and used vinyl, but with an emphasis on new music. With the exception of a few niche industries, the term “vinyl” is often associated with “cheap” in terms of price. I specialize in the just-left-of-center and sometimes rarer titles, also known as “not cheap.” And, while we're talking about the price-to-value ratio…
5. No, the Price IS Right.
If you have priced your products fairly then, for the most part, you don’t have to worry. You do have to do what it takes to target and court the right customers for those products. But going back and forth with people about the price of a given record, I’ve found, is a losing game. If you’ve effectively done the work of adequate brand education and located the right customers, the price literally won’t be an issue. As an example of this, during Pitchfork last summer, I had some potential customers balk at an LP costing $80. Moments later, I had another customer see that same LP and purchase it immediately. The price-to-value ratio was off for the first few folks but was right on target for the person that followed them. In sum, don’t be so thirsty to sell products that you devalue them just to make a sale. The margins for most new records are already fairly slim. So, if they’re priced fairly then the price isn’t the issue. You just need to do the work of finding the right customer for said product.