A struggling Louisville musical instruments retailer gets a thorough dissection in the New York Times.
And we’re warning you up front: The post by Jessica Bruder is a to-be-continued cliffhanger.
“Tough Options for Family Business in a Tailspin” in the Times’ “Case Study” section of the Small Business E-mail blog documents the struggles of the Sullivan Family, who started First Quality Music in 1970 as a banjo maker.
Since then, First Quality has evolved into a company selling stringed instruments via a retail showroom, and through its website.
But in 2007, First Quality music suffered a double-whammy – the death of founder Bill Sullivan and the onset of the Recession.
After the bank cut off the company’s line of credit, his sons – Jeff Sullivan and Eric Sullivan – cleared out their savings trying to keep the company afloat as they worked through an operating loss of $460,000. Then they started bringing in those infamous business consultants to tell them what they were doing wrong.
Highlights from the story:
In 2009, sales flat-lined at $3.5 million, and a painful truth started to emerge: In effect, the brothers were paying to go to work each day. The results said plainly what no one had wanted to admit: the company was “functionally bankrupt.” Sources of outside capital were exhausted, and First Quality would wrap up 2010, at best, with an $80,000 loss on $3.5 million in sales.
(The Sullivan brothers then hired a consultant to do a business survey.) This information left the Sullivans at a critical juncture. They could hire American Management Services to institute a full turnaround plan, but there was no guarantee the plan would work and it would cost $170,000 — money they did not have. “They are by no means cheap,” Jeff said. Or the brothers could go it alone, using the survey’s insights as a starting point to devise their own plan.
So, how does it all turn out? Tune in next week as Bruder reveals the outcome on the You’re the Boss blog at nytimes.com/boss and on the Small Business E-Mail blog.
Wish we could get away with cliffhangers in the day of instant information delivery.