Yesterday after Christmas dinner I talked to a relative from out of state. He owns a local, brick-and-mortar music retail store.

Problems he faces:

• His bank came to him and said, “There’s no way you’re ever going to make any real money based on what you’re doing and we don’t want the business. Sorry, we’re getting rid of you.” The banker said contrary to what a lot of people would like, banks are not in the business of losing money.
• Competition from Big Box stores, deep discount online retailers and Amazon. There’s no way he can compete with their prices
• He pays sales tax, online retailers don’t
• Lines of credit are h-a-r-d to get, especially post-2008
• Online marketing can only gain him so much traction
• Unlike many Planet Perry folks, he can’t work all day in his underwear
• His original location is lousy and he’s got 3 1/2 years to go on his lease
• He’s in the process of buying out a partner, which costs a lot of money
• Unlike an online biz, scaling his business up demands a very large capital investment up front
• The prices of musical instruments have been deflating for years. Lower prices = less profit

A lot of guys like him started to figure they’re toast 10 years ago when the online wave hit. In spite of all that, here’s his report:

His sales are down slightly compared to last year but his profits are WAY up. His business is in the best shape its been since it was founded in 1927.

Last summer the local Public Schools Administration building burned down, along with 700 instruments. He quickly put together a “donate your used musical instrument to the schools, get a tax deduction and feel good” campaign. Sent out press releases.

Got coverage on 2 TV stations, the newspaper and 2 radio stations. People started coming into the store to donate instruments – and buying other stuff while they were there. You cannot buy that kind of publicity.

He realized that his accountant didn’t understand his business. (Which is VERY common. Odds are 3:1 that your own accountant also doesn’t understand YOUR business. That can be disastrous.)

He fired him and got a new one. Made huge improvements in how they manage rentals and inventory.

Firing the accountant helped him make changes which facilitated changing banks. They went from red to black in cash flow. He’d been making payments to vendors in arrears, which was resulting in higher prices.

With help from his bank and new accountant, started paying them immediately and earning 10% discounts. Fatter margins and happier vendors, who now also give him special treatment.

He’s using Facebook ads and Right Angle Marketing to identify quirks in his audience. His Facebook ads and status updates bring customers into the store.

He’s opened 2 more stores in affluent parts of town. Profits are up. He’s paying a lot more attention to margins and less attention to top line sales. As for his exiting partner, he says, “Hey at least the guy’s not interfering with anything.”

He’s hyper-aware of where he can’t compete with discounters (selling to price shoppers) and noting where they can’t possibly compete with him (people who demand knowledgeable sales people and service.) He’s doing what he does best and slashing everything else.

He’s done an 80/20 on the profitability of product lines, and trimmed whatever doesn’t earn dinero.

He’s writing for music industry magazines. People in the biz not only seek his advice but offer their best insights. He’s become a hub of information. The #1 beneficiary is HIM.

–> This week he’ll make the last payment on his house, which he bought 7 years ago. He owns it lock, stock and barrel now. Not bad for a couple in their late 40’s and early 50’s! <–

He summarizes:

“Marketing is like jazz. You always have to anticipate the unanticipated. You ask yourself, ‘OK, once this new thing stops working, what is going to work after that?” He’s learned how to see around the corner and stay ahead of the curve.

My friend, you might want to ignore the news and doom and gloom. Cuz MANY guys I talk to are like him. Post 2008, they’re running their business a lot smarter and DOING WELL. At least 1/3 of my Roundtable members scored a record month in the last four months. One just crossed the $10 million per year mark with insane profits.

What is YOUR plan for prospering in 2012? Do you know exactly what you’re gonna do?

I’ve started a Private Client Group which gives you exclusive access to me, a direct line to my personal assistant, and a full confidential 1-on-1 day of consulting with me for you and your staff.

I’m taking applications now. Great tax write-off for 2011, then watch your dollars multiply in 2012:

http://www.perrymarshall.com/pcg/

Perry Marshall

About the Author

Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.

He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.