Contributions Of Small Business To The Economy

Small businesses form the core of the U.S. economy. Businesses with fewer than 500 employees generate 47 percent of total U.S. sales and over half the nation’s gross domestic product. Nine of every 10 U.S. businesses are small businesses. In addition, small businesses employ 53 percent of the nation’s private nonfarm workforce. Once business that started small but has been growing is Guitar Center. The retail chain has created unique links with its customers and placing themselves as The Best Business Practice in the Business World.

Guitar Center: Hitting All the Right Notes  

What musician could resist a music store where you can “come in and try anything and hang out as long as you want”? That’s the Guitar Center, a successful chain of about 130 music stores across the country and an additional 19 American Music Group (AMG) outlets. Not surprisingly, Guitar Center specializes in guitars, with models in every price range from $99 Fender Squier to a vintage 1958 Fender Stratocaster for nearly $40,000. But the store also offers drums, amplifiers, keyboards, and other instruments, as well as audio and recording equipment, parts, accessories, books, magazines, videos, and music software. It appeals to musicians and music lovers of all ages.

The country’s largest music equipment dealer, Guitar Center Inc. posts net income of nearly $37 million a year. It attracts not only crowd of customers – 1,400 people came to the recent grand opening of a new store – but also hundreds of potential employees. About 300 people showed up before a recent opening to apply for the store’s 15 available jobs, and management’s ability to handpick the most knowledgeable people to work in Guitar center is just one component of the chain’s success. Competitive savvy is another.

“They beat the competition on selection, they beat the competition on service, and they beat them on the price, the three legs of the stool that really drive store choice,” said an industry analyst. Guitar Center also advertises widely. Says one competitor about Guitar Center, “What your customer base does is go down there and check it out. Heck, I went down there and checked it out. They’ve got one of everything.”

The chain is expanding rapidly, building on strategy of growth in the 1970s, and added 14 new stores in one recent year, with about as many more still to come. In its high-ceilinged interiors are glass-walled rooms set aside for customers to try instruments, and some music lovers drop in regularly, often without buying anything. Product seminars and guest appearance by musical artists also draw customers to the store, where open space complements the massive displays of product offerings. Service is a priority, backed up by Guitar Center’s online store.

The performance of the American Music Group has not been quite as strong as Guitar Center’s. “The AMG business model is taking longer to develop than the company had anticipated,” said one analyst, and expansion plans for AMG were recently put on hold. Unlike Guitar Center, AMG must appeal to band instructors and their parents, and some competitors say the company’s business model – the “big-store” concept that made Wal-Mart a runaway success, using the store’s buying power to leverage a wider variety and lower prices-won’t work in that market, where long term relationships are important.