For Sale: Music Store, Mentor Included

“I arrived in the United States with exactly 125 Australian dollars in my pocket. I have been blessed, and payback is incumbent on me. I invite other forward-thinking business owners to consider this approach and change the landscape for young people who want to be the next movers and shakers.”

                                                                       – Neil Bhaskar

 

Neil Bhaskar’s entrepreneurial instincts led him to pursue a wealth of interests from software development to law to — surprise — rock and roll. It is the latter interest, music, that is his biggest passion. After selling his primary business, NovaSoft, an information technology firm, in 2001 for an undisclosed sum, Bhaskar thought he would retire, but the life of Riley was not for him. “I decided to join my family in their musical pursuits,” says Bhaskar, “and began to take guitar lessons at the House of Music, a retail store near my home in Pennington.” However, he is an entrepreneur at heart and always on the lookout for business opportunities.

“When I approached the owner and founder of the House of Music, Lou Cordas, about selling he told me ‘Sure, if the offer is a million dollars!’ It took a while but I did buy the company.”

Bhaskar’s interest in the business of music had been ignited. At first, he left the management of the school to various others, but later he became more hands on. His hobby had now become a labor of love, and he was driven to look for more opportunities in music. He approached Farrington’s Music, a full line retail music store with several locations in central New Jersey, and other teaching and instrument rental companies. He even considered a company near Toronto that had more than 3,000 students but that proved too unwieldy.

All of Bhaskar’s children worked at the House of Music growing up, helping at the counter or doing inventory, learning how business runs from the ground up. “I wanted to teach them how to navigate a profit and loss statement, how to read a balance sheet. My whole family is very musical,” Bhaskar says, “and a music school was tailor-made to keep their interest.”

In fact, music introduced him to his wife, Janette. Bhaskar was born and raised in India, where his father was an engineer and his mother was a social worker. He earned a bachelor’s in engineering from the Indian Institute of Technology and a master’s in management from the Indian Institute of Management. After emigrating to New Zealand, he saw a girl at a train station holding an album of Indian music and struck up a conversation. They later got married. Fittingly, the couple’s first piece of furniture would be a grand piano. They came to the States in 1990, and he worked for a consulting firm in Tampa before settling in New Jersey.

The couple’s four children are all accomplished singers and musicians, and music is still a large part of each of their lives. Youngest son William is pursuing a recording career. Brother Alexander won the Battle of the Bands twice at Hopewell Valley High. Charlotte, the oldest daughter, is a founder of a choir at McGill University. Daughter Catherine still pursues music when not helping her father run his various businesses.

Bhaskar considered the House of Music to be a fixture in the Pennington community and viewed his ownership more as a custodian of the business. Having lived in Pennington for years, he sought a way to give back to the town. “The situation was an ‘aha plus’ moment. My children had received excellent musical training all through school, and Hopewell Valley High School has one of the best programs around. I met with the principal to see what I could do to help. I had heard that the teachers were complaining that good external music schools were hard to find in the region. I proposed gifting the House of Music to the school but that idea would run afoul of the rules regarding non-profit organizations having profit-making endeavors.”

Bhaskar’s interest in the House of Music clearly was more than just monetary. “I didn’t want to sell the business to just anybody who saw it only as means to make money. I wanted to look for people who had a love of music too.” Prior to putting the company up for sale, Bhaskar relocated the business from its original location in a standalone house on Pennington Road to the Shoppes at Pennington on Route 31 and spent more than $36,000 in lease hold improvements. “We wanted to move into a shopping complex where there was easy parking and the synergy of other businesses. The prior location was old and needed work.”

When ready to sell, Bhaskar had the idea of running an ad in U.S. 1 newspaper that not only offered the established business, complete with teachers, inventory, and support staff, but also offered help with the purchase and the chance to be mentored as well. The newspaper ad brought in multiple responses. Bhaskar narrowed the field to three.

Deborah Allman, a nurse by profession, saw the ad and realized that this might be the perfect opportunity for her daughter, Priscilla, who had achieved her high school diploma at age 16 and received her BA in music with a concentration in violin from the College of New Jersey in 2013. Allman and her husband, a mechanical engineer, had homeschooled both Priscilla and her brother Joshua, utilizing the methods and techniques developed by the Institutes for the Achievement of the Human Potential. The premise of the Institutes is that the mother is the best teacher.

The curriculum that Allman devised for her children included a great deal of music, something both excelled in. Priscilla was taught violin using the Suzuki method and pursued her love of the instrument through college. Such was her proficiency that she was chosen to represent the United States at the celebration of the 50th anniversary of the Suzuki method in Japan. At the time when her mother saw the ad in U.S. 1, Priscilla was teaching music part-time in Hightstown.

“My mom told me that I should meet Mr. Bhaskar, and I misunderstood why. I had thought it was going to be a violin audition, so I arrived at the appointed time dressed up and ready to play,” Priscilla says. “I couldn’t believe the opportunity being presented.”

Bhaskar was impressed with the entire Allman family. “My desire was to create an environment where someone as devoted to music as I could be supported in their venture. My goal was to teach the owner or owners how to be successful in business and to preserve a going concern. I saw this drive in the Allman family.”

The market value of the business was not the primary driving factor in drafting the contract of sale. “I wanted the terms of the sale to ensure that the school would remain active and the business would not just be flipped.” Because the principle behind the deal was the preservation of a thriving business and the chance for a budding business owner to get started, the terms of the contract are not purely dollars and cents. After a nominal down payment, the contract sets up a loan for the balance. For the first three years, the loan is interest only. Principal repayment is profit-based with benchmarks that concentrate on establishing an entrepreneurial mindset and focus on key performance indicators.

“I actively participate as a mentor, teaching the family how to navigate the world of banking, law, inventory control, accounting, payables and receivables, and all the myriad tasks that make a business thrive,” says Bhaskar.

“I have a firm hand on the tiller, and it is my interest to have this venture succeed. But I’m in no rush to exit. My goal is to have them thrive as business owners. It is my opinion that in the world of small business, your challenges are the community’s challenges and vice versa. Together everyone wins.”

The deal was signed on September 11, 2015, and the learning curve was steep to say the least. It still is. The Allmans must prepare monthly reports and provide detailed quarterly reviews of their balance sheets. They are required to become proficient in accounting software. The complexities of handling taxes for the employees and independent contractors alone is daunting.

House of Music is staffed by nine teachers and has more than 450 musical instruments for rental to the local community, Priscilla says, “We offer practice rooms for individual or ensemble instruction in percussion, strings, vocal, piano, winds, brass, and guitar. We also sell music books and accessories.”

The entire Allman family is engaged in making this venture work. Priscilla, her mother, and her father are the principals in the deal. But brother Joshua participates materially in the day-to-day running of the firm. He is currently a student at the College of New Jersey, majoring in finance and music. His instrument of choice is the cello. Dad leaves the business nitty-gritty to his wife and daughter. The family lives in Chesterfield.

At only 25, Priscilla has a thriving business and a stalwart mentor to guide her. But her talents and interests do not stop there. “In addition to running the House of Music, I am a candidate for a post baccalaureate degree in pre-med. I want to go to medical school and focus on the use of music in neurological conditions such as Alzheimer’s. This is a natural outgrowth of the training I received as a child. Music is a powerful force in so many ways,” she says.

“We have made many discoveries about how a business runs. There are so many little details that go into it, especially when you have to wear all of the hats,” Priscilla says. “I have also learned that you should be a really good customer in turn because the owners of the business you patronize are working hard to make things good for you. Working with customers and teachers and managing everyone’s happiness is the most important job that we have but it is also the hardest thing to consistently achieve. The thing that surprised us as harder than expected was coming into the business in the middle of the rental season. We had to switch inventory over, try to meet all the teachers and students, and still try to continue service without too much interruption.”

And how has this innovative approach to transferring a business to a new owner succeeded? “I am very happy with our progress so far. It’s only been a year and a half, but they are showing healthy profits this quarter,” Bhaskar says.

He sees this venture as a new paradigm for the creation and preservation of small businesses. Established entrepreneurs, he feels, owe it to communities to provide the environment for the success of new businesses. They are the primary sources of jobs and form the backbone of the economy. Sharing knowledge and experience is key to ensuring that businesses stay open. The drive is there among talented risk-takers to create businesses but, he believes that, without practical guidance, sustained success is uncertain.

“This new structure for transferring businesses depends upon the business owner’s desire to preserve a going concern and nurture the next wave of entrepreneurs. That goal must outweigh his or her desire for monetary gain,” Bhaskar says.

Bhaskar is definitely practicing what he preaches. The loan for this sale will be transferred to a new foundation that he is forming to incubate talent among emerging young risk-takers. He stresses the need for youth to be economically independent regardless of background. The foundation will also be funded by 10 percent of several other of his business interests, creating a fund of several million dollars.

Bhaskar’s thesis is that poverty or other disadvantages should not be insurmountable impediments to someone who dreams of creating a business. “The grants will be made equally to males and females. I hope to fund 12 new entrepreneurs each year,” Bhaskar says. “I arrived in the United States with exactly 125 Australian dollars in my pocket. I have been blessed, and payback is incumbent on me. I invite other forward-thinking business owners to consider this approach and change the landscape for young people who want to be the next movers and shakers.”

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