VISIONARY - Music Inc. Magazine

InsideSUPPLY
> Blackstar Amplification
Receives top business honor
PAGE 29
> KMC Music
Opens Dealer Profit Center
PAGE 30
> Native Instruments
Reorganizes, becomes self-owned
PAGE 31
> Jarrell Guitars
Gets MIAC manufacturing award
PAGE 33
ST. LOUIS MUSIC I BY ZACH PHILLIPS
BOLD MOVES
Mark Ragin got more
than he bargained
for when he
bought St. Louis
Music (SLM) —
and that was a good thing.
“In the first 30 days, we
had 100 new customers,” said
Ragin, who purchased assets
of the distribution giant from
Loud Technologies in November
2008. “[Retailers] were already
dialing the 800 number, which
we acquired with the business.”
There was one small problem:
With Loud moving its remaining
assets back to its Woodinville,
Wash., headquarters, SLM’s
employees had already left. Ragin,
who owned U.S. Band &
Orchestra Supplies, had a lean
staff of only 12 — and specialized
in band products. (SLM had a
large offering of combo gear.) Not
to mention they were stuck in
U.S. Band’s building three miles
up the road. He had to make a
tough decision: grow slowly and
risk not being able to serve his
new clientele or grow quickly
and risk losing control of his new
business. Ragin chose the latter.
“[U.S. Band & Orchestra]
was a much smaller company,”
he said. “So, bringing on business
is not always a blessing because
it takes a lot of money.”
Mark Ragin
RECESSION-ERA BUYOUT
Funding growth meant scoring
a loan at the onset of the Great
Recession — late 2008 — right as
banks were crying foul. Luckily,
Ragin had a good relationship
with a bank he’d been working
with for seven years. The only
caveat? “You pretty much have
to put your life on the line,” he
said with a laugh.
The first order of business
was getting into SLM’s building,
which former SLM owner Gene
Kornblum had been renting to
Loud. After some negotiating, Ragin
took on the lease. Step two
was getting more bodies in-house.
Ragin immediately brought back
most of SLM’s inside sales personnel.
Within two months, he also
rehired SLM’s former operations
manager, who “knew the building
backwards and forwards,” as well
as the Knilling employees. This
was followed by bringing on two
vice presidents and rehiring some
of SLM’s former warehouse staff.
There were other kinks, too.
Ragin realized the new SLM was
severely understocked on several
top-selling items. “I would look
and see that I sold 1,000 of these
guitar string sets in a year, and
now I find that we’re selling that
in a week. I was only purchasing
100 sets at a time.” And with
new customers came a deluge of
paperwork in the form of credit
applications. “You don’t even
think about that.”
Within 90 days, the company
had 300 new customers. By the
end of the first year, Ragin esti-
mated it had 1,200.
“It’s been 80-hour workweeks,”
he said.
CONTROLLING GROWTH
Still, Ragin called his first year
leading SLM “phenomenal.”
He saw a 40-percent rise in business,
followed by a 21-percent
boost in 2010. In that time, he
took on Martin Guitar Strings
and D’Addario’s full line — previously,
he’d only sold D’Addario’s
Rico line — along with the distribution
of Alvarez Guitars. But
it wasn’t until August 2010 that
he felt the new SLM had truly arrived.
That was when he finalized
the purchase of SLM’s building.
“That was a real key thing
because the suppliers knew that
we were here to stay,” he said.
“That was our final big move.”
The remaining challenge? Balancing
continued growth. “We’re
very profitable, but when you’re
in growth mode, there’s no money
that necessarily goes into your
pocket,” Ragin said. “So if you’re
a real entrepreneur, you make a
decision: Do you invest in the
business or in yourself? We’re
investing in the business. The
day-to-day satisfaction comes
from seeing the 35 additional
former SLM employees we hired
now having a job again.” MI
JULY 2011 I MUSIC INC. I 25