Guitar Lending Club

TTony

@spark240 - I was just thinking of it as a not-for-profit club, run more for the benefit of the members, rather than a profit-making business, but now you've got me thinking that it might be worth doing some numbers ...

The s/h market is also very depressed atm, so building up the stock from the current s/h market could be attractive.

There's little point in buying brand new instruments when it'll be "s/h" as soon as the second person gets their hands on it.

spark240

I guess the real question is...

Is there a market, I mean apart from the obvious , studios etc, how many members for example would actually sign up for something like this ?

The only reason to buy new would be to get the finance deals so a lot less upfront outlay, maybe get the high end stuff used.

I guess you could periodically sell off some stock to make way for new stuff.

Crikey...now Im thinking Amps and pedals ! 

musicman100

I'm lucky that i don't need anything like this. But for those of you wanting such a club, let's be honest is it ever going to really work. How's it going to work? Are you wanting members to share guitars.

ewal

Personally find this quite a strange idea. If anything like this could work, lowest common denominator in terms of guitars would kick in and bland would rule the day.

spark240

ewal said:

Personally find this quite a strange idea. If anything like this could work, lowest common denominator in terms of guitars would kick in and bland would rule the day.

I bet that's what's they thought with super cars, .....it's a massive business now?

Cabicular

I've seen more go out of business than I have succeed
I'd be interested to run the economics of this
It would require an initial upfront investment of 10s of thousands
How long to return that cash
Once it was cash positive then assuming you would keep adding to it who would decide what to buy next (and if to sell underused stock )
Running costs would consist of staff storage maintenance shipping and insurance.
You'd want to run a reasonable contingency cash in case of accidents
If I was the idle rich I might run something like this fairly altruistically. I've already got a reasonable sized collection that would need some addition but the economics would need to make sense
If you get 100 people paying £100 per year for example
That's not nearly enough

TTony

Some very quick figures

Assume; 

• 20 members in the club.
  
• Club matches "stock" levels to number of members, so each member can have a guitar at any one time
• Members pay an annual membership fee - lets say £25
• On top, they pay a guitar "rental" fee - lets say £25/mth each time they take a guitar from the club

So, with 20 members, we start out with 20 guitars.  Through a combination of the s/h market being on its arse and doing various deals with retailers or manufacturers, we buy stock at an average price of £750/guitar.

Initial Investment = 20 x £750 = £15,000

Income from annual subs (20 members x £25) = £500

Income from monthly rentals (20 members x £25 x 12 months) = £6000

But lets allow that not all guitars will be out on rental every month, so assume 50% utilisation and rental income falls to £3000

That gives us total annual gross income of £3500 on the initial investment of £15000, or a 23% RoI.

The major cost & risk of loss would be the couriering of the guitars to members, and then back to the club.  That cost would wipe out the profits in the above model.  Which is where the "club" needs to become a phyiscal meet-up so that guitars can be handed over in person rather than via UPS.

Agreed, physical meet-ups would restrict the membership to those able to travel/meet, and maybe it means that there's a few regional clubs that meet monthly, with national meet-ups annually.  But then we get into balancing numbers of members against stock levels & investment required.

Personally, I think the charges are pretty low.  £25 to be in the club, and then £25/mth to have use of a guitar for a month without the risk of deciding you don't like it and then taking a £ hit when selling it on.  But even with those low charges, and assuming only a 50% utilisation rate, the club is still make a 23% gross RoI.  Which is a way better return than you'll get from £15k in the bank.

SRich

andyoz said:

I'd say it would quickly end up as "Guitar Fight Club"...now there's an idea.

And we all know the rules about "Guitar Fight Club"...........don't we

underdog

SRich;968833" said:

andyoz said:

I'd say it would quickly end up as "Guitar Fight Club"...now there's an idea.










And we all know the rules about "Guitar Fight Club"...........don't we

Put a bigsby on it?

spark240

Cabicular said:

I've seen more go out of business than I have succeed
I'd be interested to run the economics of this
It would require an initial upfront investment of 10s of thousands
How long to return that cash
Once it was cash positive then assuming you would keep adding to it who would decide what to buy next (and if to sell underused stock )
Running costs would consist of staff storage maintenance shipping and insurance.
You'd want to run a reasonable contingency cash in case of accidents
If I was the idle rich I might run something like this fairly altruistically. I've already got a reasonable sized collection that would need some addition but the economics would need to make sense
If you get 100 people paying £100 per year for example
That's not nearly enough

I cant say I agree we need 10's of £1000's to kick start, surely finance is worth considering, e.g anything over £299 at PMT gets 9 months interest free.

I do agree that whilst this is a cool idea it is ambitious, and relatively unheard  of so it begs the question, is it actually viable.

Interested to see how it pans out though, I could find a few quid spare and always up for a challenge ! 

Cabicular

I think your initial 15k is way off
Even at second hand values I doubt people would be over excited to get there hands on a 750 guitar
I think you would at least need to double that
I've picked up a couple of white Falcons for under 1500 and a white penguin. A trussart for under 2k
My feeling is that these are the kinds of things people would join something like this for

High end Gretsch
High end Gibbos
Trussarts
Felines
Rickenbacker's
Etc
which makes the average price 1500- 2000
You've seen some of my collection Tony don't you think it's more the kind of thing?
Obviously there are some big holes there. I'm not a big offset fan so there are no Jags or JMs
But even adding them I think you would need to go desireable

Insurance for a collection like that would be reasonably sizeable as well

It's probably do-able but I would council caution with the figures (just speaking as someone who has started,run, built, bought and sold a few businesses)

Cabicular

I know nothing about your background Tony so sorry if I'm preaching to the choir

Gru

JookyChap;965924" said:

It sounds a great idea, but as I've only got one cool guitar (thanks to the chaps here) I'd be worried that I'd end-up being the one that turns up everytime and everybody tries to avoid, like going to a wife-swapping club when you are married to a gomper that you spend all your time trying to pimp off and convince the other members that it is faux relicification rather than hard worn miles on the clock. Though I suppose I could buy another guitar, that's a thought.

So, err, sounds good.

I now need to google the word 'gomper'. In nearly 40 years I had never heard that word used.

Garthy

Cabicular said:

I think your initial 15k is way off
Even at second hand values I doubt people would be over excited to get there hands on a 750 guitar
I think you would at least need to double that
I've picked up a couple of white Falcons for under 1500 and a white penguin. A trussart for under 2k
My feeling is that these are the kinds of things people would join something like this for

High end Gretsch
High end Gibbos
Trussarts
Felines
Rickenbacker's
Etc
which makes the average price 1500- 2000
You've seen some of my collection Tony don't you think it's more the kind of thing?
Obviously there are some big holes there. I'm not a big offset fan so there are no Jags or JMs
But even adding them I think you would need to go desireable

Insurance for a collection like that would be reasonably sizeable as well

It's probably do-able but I would council caution with the figures (just speaking as someone who has started,run, built, bought and sold a few businesses)

There is probably room for both USA Standard Strats & priceless Gretch's, after all EuroCar & Auto Vivendi co-exist, one punting out Aygos and the other Aventadores. Also there could be an opportunity for members to buy club stock as and when it suits both parties.

TTony

Cabicular said:

I know nothing about your background Tony so sorry if I'm preaching to the choir

No worries - I'm pretty useless at singing.

It'd depend on how the club was described and hence what its members expectations were.  I had a vague view in my mind about the sorts of guitars that I'd be interested in using in a reasonably risk-free / low-cost manner, and £750 - average - would probably cover it given that we'd be buying s/h and perhaps getting some manufacturers to seed the stock at cost (for the profile and potential business).

Maybe you're right, and the initial cost averages £1500 rather than £750.  But would I expect to pay higher membership fees & monthly charges to get my hands on more expensive guitars?  

Probably - if I was being reasonable - so the investment cost is higher, but the revenues are higher too.

But this is all pure speculation really.  I've not got a business plan taking shape.

Yet.

JookyChap

An alternative may be to offer the club as a truly authentic relicification service. People give us their pricey guitar for a period of months and we return it  genuinely distressed. We could charge for the privalege.