Lend me your ears: Thoughts on a side business.

Joey_V

So, my friends and I were thinking, I do a lot of audio purchasing. A lot of what you don't even see is gear that I supply my friends (I probably sold about $80,000 worth in the past year or so). Usually I deal with higher end gear and just move it around.

A lot of the stuff I don't post about, unless I keep it.

So, I was thinking (and 2 of my local buddies with some capital are very interested) of opening up my own little shop of high end gear. I would source them from audiogon or other means (forums, word of mouth). I would probably only stock high end gear and sell it locally, probably only stock stuff that can move and is not off the beaten path.

I would probably use my own room in the next house as the main demo area. I wonder if I should actually also have a store front. I would probably have 3 systems as I do now, but I would probably keep a larger inventory for some gear in the main room.


I was thinking perhaps I could have an inventory that looked like this:
Wilson Sasha 2
Sonus Faber Futura
BW 802D3
Dagostino gear
ARC gear
MAC gear

I would probably put a cap on instock items at $100K, and I would probably take special requests (say someone wants a pair of Strads or Rockports) and I would search for it once they commit to buy.

I would be able to flip them on audiogon if they don't sell locally, or I could just play with them in the meantime.

But it would cater to audiophiles who want something high end but do not want to chase after something online or deal with teh hassles of online shopping.

I am not exactly sure of the profit margin, but atleast I can deduct all my expenses and costs of being in this hobby... especially since I buy and move a lot anyway.

Could also be a failure.

littlewoodboats

Buying then trying to sell on the gon may not be your best option as everyone is looking for the same deal you were.

To buy from all over then sell locally to those afraid to mail order could work but do not see you moving any great volume of pieces. I could see you moving some gear.

kharp1

Don't take this the wrong way, but, many businesses make it big that I think are silly or inane. Not saying that's what I think about your idea, but, more of I'm not a great judge of business start ups. Which is why I'm mostly in ETF's. When I typed ETF it changed it to WTF, which may be a better term for it!

I had a similar idea several years ago before the whole "vintage" market exploded. I was picking up old pieces and rehabbing/repairing them and considered it as a side business for the reason you mentioned. I could write it off. I had a business in the 90's catering to the cigar industry and all I had to do was think back to that period to talk myself out of it.

As to your idea, I believe there could be a market for it if the right pieces are used. However, me, as a lover of all things audio, I would have a hard time paying a premium for someone else doing what I could do on my own with a few clicks of a button on the computer. However, there may very well be people, in certain markets, that are willing to pay a premium for someone else to secure something they want.

One of the great things about a business is you have about 5 years before Uncle Sam starts asking questions about why you're not turning a profit. That's 5 years of good write off. Take extended weekend trips to look at equipment and write it off, Always have a rotating inventory of good equipment and wrote it off...and so on.

Joey_V

littlewoodboats wrote: »

Buying then trying to sell on the gon may not be your best option as everyone is looking for the same deal you were.

To buy from all over then sell locally to those afraid to mail order could work but do not see you moving any great volume of pieces. I could see you moving some gear.

Yeah, the only thing is this is for high end pieces. Stuff that people might be leary about sending $30K for a set of speakers to some guy sight unseen.

For those of us cycling through gear a few hundred or a couple of thousand, it's not really an issue as we know where to get them. But maybe for people without the time or patience, it might work.

Case in point, I have 2 friends who tell me - I don't have the time, just find me good stuff and I'll pay you a finders fee.

So for them I just peruse audiogon and the other forums, and I purchase gear, tag a profit margin on it and they pick it up from me.

I'm talking like a SF Futura that retails for $36K at Magnolia, I can get it for $17K, I can sell to them for $20K.

Joey_V

kharp1 wrote: »

As to your idea, I believe there could be a market for it if the right pieces are used. However, me, as a lover of all things audio, I would have a hard time paying a premium for someone else doing what I could do on my own with a few clicks of a button on the computer. However, there may very well be people, in certain markets, that are willing to pay a premium for someone else to secure something they want.

Case in point:
Audio Research 5se - bought for 7K, sold for 7500.
Plinius Sa103 - bought for 3800, sold for 4500.
Cary Slp 05 - bought for 3700, sold for 4200.
Rel G1 x2, bought each for 2100, sold for 2500 each.
Mac 601 - bought one unit for $4000, sold for $4500.
Emm labs Dac2x - bought for $6500, sold for $7000.
Emm labs TSDC - bought for $6300, sold for $7000.

Bunch more.

These guys are people who don't have the time to be doing what we do, search, research, they have the money, they don't want to waste time or second guess.

But you're right, they're probably few and far between.

I'm not trying to get rich off of it, I just want to start buying gear at a discount for myself and do the fringe benefits.

marvda1

lets say the speakers with stands you just bought were bought to sell to someone else, now you are stuck with dealing with the problems on your dime.

Joey_V

marvda1 wrote: »

lets say the speakers with stands you just bought were bought to sell to someone else, now you are stuck with dealing with the problems on your dime.

That's a problem.

But also that's what the local buyers would also avoid... Headaches.

If I could buy my gear locally for 10% more but still 30% less than at the store, i would do it.

Joey_V

DSkip wrote: »

That isn't a business model. That's simply flipping gear. Do it for your friends and leave it at that.

Put it this way - do you want the liability when something dies two days in? A buyer will expect a minimum timeframe for gear to work. At that point, you assume all responsibility since you resold the item. The original seller is off the hook.

I was hoping you'd respond.

You're probably right, best to leave it a hobby

mrbigbluelight

Not worth the headache down the road which WILL come.

Joey_V

mrbigbluelight wrote: »

Not worth the headache down the road which WILL come.

Yeah, I forgot... Customer service can be a pita

Moose68Bash

Perhaps, you should consult PFB about this idea.

It sounds a bit like his business model.

Joey_V

Moose68Bash wrote: »

Perhaps, you should consult PFB about this idea.

It sounds a bit like his business model.

That's it... No more plans.

txcoastal1

I'll add to Skip's
I want a pair of TOTL speakers, Skip wanted a dealership. These TOTL speakers are $84K. The Texas dealership for this manufacturer is no where close to being saturated, actually very few. I tried tslking to the other dealers (4) and none could sell me the speakers. Meaning I would have to go out of state..WTF I said.

We pushed and couldn't make a deal.

Flipping is a risk/reward...highend hi risk

All of this is worked into manufacturer cost.

Just look at the PFB threads

Joey_V

DSkip wrote: »

I'll share my buying approach as it differs from yours.

1. Friend wants something and I find it for him. I'll buy it or link him to it to buy himself. I don't flip these items because a friend wanted it and should get the deal.

2. I find a good deal on a nice piece. I don't mind making money off something I find as long as I feel like I can pass another deal on to someone else. In this scenario, nobody I know is actively seeking the item so I feel my investment warrants a return.

3. I find a good deal on something for me. I don't resell and I enjoy my time with it. The CP-6311 are a prime example. Eventually they will move and when they do, I try to pass along a good deal.

If I know a friend is looking for a specific piece, I have no desire to make money off them. Even some things I've bought that fall under the second scenario I've passed on to friends at what I paid. Others I've told them straight up that they were investment pieces and I needed to make X to keep the misses happy (no lie there).

What I do know is that if/when someone buys the RTA-15tl from me, they'll be getting it at cost and probably be getting the most highly modified versions available. Those are the one pair I'm truly seeing out until the end to see what they are capable of. I've got $200 in them with several more bills going into them soon. They are my one bucket list speaker and I bought them purely for my own pleasure - something I hardly get to do anymore as a dealer.

Gotcha.

With mine, we have an understanding from the getgo that I get a cut. It's clearcut so no harm done. I front the money, sometimes 10-15,000$ at a time multiple times to which they are not rushed to pay immediately. I search for the items, I take delivery and I store it for a period of time. I get the best deals as the cut is related to how good of a deal I get as well, we call it a performance bonus.

In the end, everyone is happy.

I think I'll stick to my side job as a hobbyist.

Upstatemax

Glad you're keeping it a hobby. As soon as it becomes a business, it becomes a whole new animal...

tonyb

I'd agree with the other guys. Obviously your talking about your doctor friends, correct ? Lots of money but no time.

If....AND that's a big "IF", I wanted to do that for friends, then become a general contractor of audio for them.

In other words, align yourself with quality high end dealers and installers. You, go to their houses because they know you and you can visually see what you have to work with and what the customer wants. That way, customer service issues are handed back to those dealers and installers you dealt with. You charge a fee for that service. No inventory to hold or stock. You can have somebody create an audio app you can have friends download to their phones for your service that can explain what you do, show 3d pics of systems in homes or from dealers, before and after pics, etc. More so a customized personal service for the affluent.

Problem I see is....if these are your doctor friends and they don't have time to hunt this stuff down, what makes you think you will have the time ? Every business needs gobs of two things, and that's your time and money.

Other option, negotiate a finders fee with high end dealers and bring your affluent clients to them.

Joey_V

tonyb wrote: »

I'd agree with the other guys. Obviously your talking about your doctor friends, correct ? Lots of money but no time.

If....AND that's a big "IF", I wanted to do that for friends, then become a general contractor of audio for them.

In other words, align yourself with quality high end dealers and installers. You, go to their houses because they know you and you can visually see what you have to work with and what the customer wants. That way, customer service issues are handed back to those dealers and installers you dealt with. You charge a fee for that service. No inventory to hold or stock. You can have somebody create an audio app you can have friends download to their phones for your service that can explain what you do, show 3d pics of systems in homes or from dealers, before and after pics, etc. More so a customized personal service for the affluent.

Problem I see is....if these are your doctor friends and they don't have time to hunt this stuff down, what makes you think you will have the time ? Every business needs gobs of two things, and that's your time and money.

Other option, negotiate a finders fee with high end dealers and bring your affluent clients to them.

I deal with doctors but also big shot investment bankers who have more money than sin.

The opportunity costs are not worth it to them.

I wasn't thinking of taking more than my hobby time allows. I really just wanted to be able to tax deduct my own future gear.

tonyb

The income from the business has to warrant the deductions Joey. You have to have some coin coming in the door to write off against. Your not going to say....bring in 30k a year and be able to write off 100k in gear for yourself. I don't see how your going to generate the income needed for the write offs you seek by just allowing the same time you spend as a hobby.

Joey_V

tonyb wrote: »

The income from the business has to warrant the deductions Joey. You have to have some coin coming in the door to write off against. Your not going to say....bring in 30k a year and be able to write off 100k in gear for yourself. I don't see how your going to generate the income needed for the write offs you seek by just allowing the same time you spend as a hobby.

Yeah I see that. Unless I roll it in to my other independent contractor stuff as a "consultant"

tonyb

His assets ? He's Asian, he has no a$$. LOL

Joey_V

You're on my hit list @tonyb

mrloren

Upstatemax wrote: »

Glad you're keeping it a hobby. As soon as it becomes a business, it becomes a whole new animal...

Turning a hobby into a business is not a good idea. I did this with my PC repair hobby back in the 90's. turned out to be a mass headache in the end.

nooshinjohn

Joey_V wrote: »

I wasn't thinking of taking more than my hobby time allows. I really just wanted to be able to tax deduct my own future gear.

You are the reason so many people hate the rich. In CA, we pay taxes on everything from the first morning flush to the time we turn off the lights, and if they could find a way to tax snoring they would place a tax on that too. If I have to pay tax on every diaper I throw away and an extra tax for every other whim of this banana republic of a state, why should you be exempt on paying them for your exhorbitant lifestyle?

Suck it up buttercup, because you are no better than anybody else...

Joey_V

nooshinjohn wrote: »

Joey_V wrote: »

I wasn't thinking of taking more than my hobby time allows. I really just wanted to be able to tax deduct my own future gear.

You are the reason so many people hate the rich. In CA, we pay taxes on everything from the first morning flush to the time we turn off the lights, and if they could find a way to tax snoring they would place a tax on that too. If I have to pay tax on every diaper I throw away and an extra tax for every other whim of this banana republic of a state, why should you be exempt on paying them for your exhorbitant lifestyle?

Suck it up buttercup, because you are no better than anybody else...

Uh it's called setting up a business and paying taxes on the business and having to pay sales tax on goods sold through the business?

It's not exactly free buttercup.

No ones cheating anybody.

If you don't like it, tough on you.

nooshinjohn

Your words... "I really just wanted to be able to tax deduct my own future gear"...
Th way everybody with a brain reads this is if you buy 100k worth of McIntosh and Sonus Faber for baby Emma, because of your "business", you will take the 100k as a write down You will deduct it as a business expense or loss... the words "your own future gear" means you would be setting up a shell business to hide your true purpose in the "business", which is to evade taxes as much as possible.

Can you spell illegal and prison cell for baby Emma? That way she will know where daddy is while she listens to her stereo.

Joey_V

nooshinjohn wrote: »

Your words... "I really just wanted to be able to tax deduct my own future gear"...
Th way everybody with a brain reads this is if you buy 100k worth of McIntosh and Sonus Faber for baby Emma, because of your "business", you will take the 100k as a write down You will deduct it as a business expense or loss... the words "your own future gear" means you would be setting up a shell business to hide your true purpose in the "business", which is to evade taxes as much as possible.

Can you spell illegal and prison cell for baby Emma? That way she will know where daddy is while she listens to her stereo.

The business pays taxes and generates revenue, that's what Skip is alluding to. You cannot tax deduct more (edit, sorry) than you make. In order to tax deduct 100K, you have to make atleast 100K.

And so if I'm able to deduct the expenses through a business that generates revenue, that's a legal expense.

It's not some illegal scheme that does one thing to hide another.

You can't just tax deduct 100K from a business that does not generate any income, that's illegal.

So why don't you calm down and think before you post?

And the hate against the rich? That's something I'll never understand. It's a free market, capitalistic society - nothing holds you back.

I don't hate the rich, I admire them for their ability to be successful and it's great exercise to try to learn from them (as long as it is legal).

That's where you and I differ. You hate them because you see their success as a direct impedance on yours, whereas I see their success as a result of their own.

Btw, I am not rich, I am comfortable.

nooshinjohn

Keep telling yourself that. You seem to spend money faster than a drunk Charlie Sheen on a coke binge. You got it so good for you, but to me, whe you say things like I quoted above, it means you have a problem and are looking for ways to avoid paying the piper when he knocks at the door.

Slow down and enjoy what you have accomplished. If you rich friends want in, help them out, but don't become their crack dealer.

Joey_V

nooshinjohn wrote: »

Keep telling yourself that. You seem to spend money faster than a drunk Charlie Sheen on a coke binge. You got it so good for you, but to me, whe you say things like I quoted above, it means you have a problem and are looking for ways to avoid paying the piper when he knocks at the door.

Slow down and enjoy what you have accomplished. If you rich friends want in, help them out, but don't become their crack dealer.

I don't think you can tell me what to do any more than I can tell you what to do.

You are free to do whatever it is you want to do, so am I.

Spending more money that Charlie Sheen on a coke binge? Really? Haha... not even close. That's why it took me 2 years to not even fully complete 3 systems and I have to go to audiogon because I have money dripping out of me? Riiight.

I'm not going to apologize for my gear - I worked hard for it and I'm no trust fund baby. You don't like it because you feel the rich have undermined the system? Then move out of the country - because whatever is available to Tim Cook, to Bill Gates or any number of wealthy people is available to you and me. It's just that they actually know how to play the game whereas the rest of us are rats running around some maze.

nooshinjohn

Never said I hated the rich, or you for that matter. I am saying that setting up a business to hide your personal spending habits would seem illegal to me, and I know a few rich people that did just that. One has a yacht he hires out for private charter. The business takes in money, but just enough to show a bit of profit. Then he writes off depreciation, maintenance and operating costs. Loses money big time, which then gets deducted from his income from his real job. Quite the scam... and you and I get to pay for his boat.

Joey_V

nooshinjohn wrote: »

Never said I hated the rich, or you for that matter. I am saying that setting up a business to hide your personal spending habits would seem illegal to me, and I know a few rich people that did just that. One has a yacht he hires out for private charter. The business takes in money, but just enough to show a bit of profit. Then he writes off depreciation, maintenance and operating costs. Loses money big time, which then gets deducted from his income from his real job. Quite the scam...

You kinda just did... your tone was very personal Nooshinjohn.

The business that I am trying to set up cannot survive without generating income, without income, there is no way to deduct any incoming gear as that's a negative.

The only way I can tax deduct gear is if the business becomes successful and actually turns a profit.... soemthing that is probalby not an easy thing to do after this thread.

There is just not enough time or customer service in me, to provide what Skip provides. It's not easy to run something like this.

And if my "goal" is to make enough to tax deduct... it's going to be difficult.

Capisce?

Joey_V

la2vegas wrote: »

Ouch, this fell off the deep end fast.

Sorry for the interruption, proceed.

Ha. I accept any interruptions.