Sorry for the overly long post, but I thought I'd pass along information on recent events here at Salk Sound.
As you may recall, when the government started handing out Covid relief funds, we were literally inundated with orders. So many orders, in fact, it took us a year to fulfill some of them. We just couldn't ramp up production enough to address the situation and build times and, as a result, became very long. I am glad to report that we have worked through our backlog and build times have returned to normal.
But it wasn't just build times that suffered. We took all those additional orders based on pricing that existed at the time. Unfortunately, by the time we completed most of these projects, parts costs had gone up significantly. Over the years, we have always tried to set our margins as low as possible. But those increased costs ate up all the margin on these projects and more. It was not a good time from a financial point of view. But we felt our customers deserved to get the speakers they desired at the price they and we originallly agreed to.
Fortunately, most all of that is behind us now and things have returned to normal. Which leads me to the second related topic.
As has been discussed here a few times, people suggested we work on a succession plan. Unfortunately, no one in our family and no close relatives are interested in audio (which would certainly be a requirement). Over the past year or so, we have been approached by individuals who expressed interest in purchasing the company. Since you can't run a business like this remotely, those discussions didn't end up going anywhere.
Then, we were recently approached by two individuals who are quite interested in taking over the operations. They are Dan and Kerry from Creative Sound Solutions, a vendor of ours. Creative Sound Solutions was founded by Bob Reimer in Canada. When he decided to retire, Dan and Kerry (DIY speaker builders at the time) purchased the name and assets from Bob. Creative Sound Solutions, at the time, had no real stream of revenue but had developed some custom drivers (including the passive radiators we have used over the years). Initially Dan and Kerry had full time jobs and could not quit because CSS revenues were insufficient to support them. Over the next few years, they built the business and both now work full time at CSS.
As I indicated, I have dealt with CSS over the years and appreciate what Dan and Kerry have done. They are high quality individuals who are very enthusiastic about the audio industry. I have full confidence they would do an outstanding job taking Salk Sound to the next level. And they are young enough to carry on a business like this for many years to come.
This would be an ideal situation for me personally. I could continue to be involved but wouldn't have to deal with the day-to-day of running a business. This would allow me to spend more time on the things that I love about this business and less time dealing with shipping, accounting, parts ordering, scheduling, and other internal operations.
The only thing standing in the way of them taking over the business is pricing. Obviously, they cannot run a business as a "not-for-profit" or "hobby" company like we did. So in order for this to work out, our pricing needs to be increased so they can support themselves.
For that reason, we will be increasing prices effective March 10th. Some pricing will not change, but some models will see a significant increase (also due in part to increased parts costs). Current pricing will remain in effect in the interim.
The plan is to have Dan and Kerry work here for about a month after the new pricing is in effect. If we continue to sell at the new pricing levels, they will take over the business and I will become an employee. If not, they will not be able to justify purchasing the company.
This is the best opportunity possible for us to enjoy a successful transition. It is my hope that you will support their effort. I know I will.
- Jim
