(St. Cloud Times (MN) Via Acquire Media NewsEdge) July 26--ST. JOSEPH -- Direct mail, fishing lures and musical instruments might not seem to have much in common, but a local entrepreneur has developed businesses in each of those niches that have grown to employ about two dozen people.
And without the other two, the newest of those efforts never would have materialized. That would be Riff City Guitar & Music Company, which occupies part of a building at the end of Elm Street on the east end of St. Joseph. Joe Leach launched his latest enterprise in a brick-and-mortar storefront for an online retail operation that quickly has grown a customer base in Central Minnesota and across the country.
Less than two years ago, there was nothing here. Once Leach said, "Go!" it took fewer than 90 days to get up and running. The store has more than doubled in size since then, to 2,300 square feet -- with showrooms and most of the walls covered with about every guitar imaginable.
Leach, 45, looks at home on a large circular cushion in a soundproofed testing booth, talking about how he got here -- and where he might be going. He learned to play the guitar at 14, thanks to inspiration from one of his brothers, Rick.
Joe, who grew up in Melrose, worked in sales for Nahan Printing before he started Bliss Direct Media in 2000. As the recession forced some organizations to cut ad spending, Leach tried something totally different in 2009. Outlet Bait & Tackle, a Web business selling overstocked and discontinued fishing merchandise, got Leach into online marketing and Web development.
"I wasn't looking for it, but that business just exploded," said Leach, a 45-year-old married father of three who lives in Avon. "By our second year, we'd quadrupled in size and the business tripled the year after that ... but I have the attention span of an ant or a gnat. It's short and it doesn't take long before I get bored and want to move on to the next thing. So I was looking for something else."
And the music idea found him.
Leach had played bass guitar for years in a rock group, The Legendary Bottlenecks, and one of his bandmates, Al Stumpf, contacted him about playing at a party.
"I hadn't played for a while, and when I went out looking for strings and other add-ons, I realized the marketplace had room for another outlet with regard to pricing, selection and service," Leach said.
He wanted to start another online store, but found a retail location was required to carry many major brands. He strategically positioned Riff City in St. Joseph, on the west side of the metro area and distanced from downtown competition. That also provided nearby access to a 17,000-square-foot warehouse used by his other businesses and employees.
"This is just the tip of the iceberg, what you see here," Leach said.
The direct marketing business accounts for about half of the total revenue of the three businesses. Marie Felling is an executive administrator with Bliss and has worked there for 6 1/2 years. Her duties include high-level accounting and human resources for all three businesses, though she can jump in on many other tasks when need arises. In fact, she says they have a "no boss" policy that reduces the need for titles.
"I'm involved in all three and we've got an office here that's full of tackle, so -- depending on the day -- I might be out back helping fill orders," said Felling, who grew up in Sauk Centre as a neighbor to one of Leach's other brothers.
"I've been through a couple of Joe's big ideas now," Felling said. "After the economy dropped off and he started the tackle business, there was this initial shock like 'What has he got going?' It was kind of scary, because you're not sure if what he tries is going to work, but it has been a blessing. The tackle business has provided work for people who would've been laid off when the direct mail business got slow. Now, people go back and forth between the businesses and it's been great."
Tackling Web sales
Bill Luder, who worked for 25 years in the printing business -- including several years at Nahan with Leach -- manages the day-to-day business of Outlet Bait & Tackle, which has grown to be about 35 percent of overall revenue.
"When I started, we had two people," Luder said. "It's a job, but I don't feel like I work. In the printing business, you always had deadlines and it wasn't easy keeping people happy. Here, I think in the last 27,000 orders we probably had four or five complaints. I've learned a lot about shipping rules and software programs that have helped the music business."
Neither Felling nor Luder were sold on Leach's plan for Riff City. Felling asked, "Are you nuts?" Luder said he was more in the middle of the road. Eventually, the decision won over them both.
Felling says Leach is never far from his computer, day or night, and has worked extremely hard to grow his businesses. Luder said the success of Riff City even has him taking guitar lessons.
"I don't feel at liberty to say what they are, but Joe has told me of a lot of ideas he has for the future," Luder said. "His hobby is making money, and I have a feeling he's got some more big things that are going to happen."
From the day Stumpf met Leach more than 20 years ago, their personalities jelled. Leach was best man at Stumpf's wedding. Now 42, Stumpf maintains his skills as a drummer but also serves as store manager and luthier at Riff City.
"We met in the early 1990s and Joe was never the stuffy business guy, but believe me, he always had a business savvy," Stumpf said.
Perhaps that's one reason Leach landed on the guitar business. Riff City is on pace to almost triple its first-year revenue. Online sales initially represented half the business, but that's grown to 65 percent. That's largely because of the addition of some marquee brands, including Riff City's status as the first U.S. dealer of a line of guitars by Rob Chapman, a musician from England who is a YouTube sensation.
Leach said he's looking for relationships with the brands he offers, and that came through with Chapman, whom he met at a music expo. That day, Chapman posted a YouTube video of himself talking with Leach. Within 24 hours, it had 18,000 views.
Last month, Chapman came to St. Joseph to visit with fans and customers. And the flurry of attention via YouTube, Facebook and other social media expanded. By the time Riff City took its first shipment of 60 Chapman guitars, Facebook likes had tripled.
Riff City store revenue is growing, too, Leach said, just not as fast as the online business. He believes Riff City will be the most profitable of his three companies within three to five years. By 2015, he expects staff to grow by four or five people.
The approach, he says, is different from Bliss and Outlet Bait & Tackle.
"In the fishing tackle business, I might have one SKU (stock-keeping unit) from one brand, but I've got 10,000 of the same thing," Leach said. "The music store doesn't work that way. A new line of guitars might take a $15,000 investment, and the best-case scenario is you might move through those in six months. I can make 10 or 12 bait orders for what it costs me to buy one guitar. For that $800 guitar, I could also have 2,000 fishing lures. I might sell 50 of those the first day and 300 the first month. And after that, I can discount them if I've realized my investment or want to blow them out.
"That $800 guitar might hang on my wall for a year, and I can't discount it," he said. "So capital management has been a challenge, and the online marketing in the music business has been far harder than I thought."
Leach looks like a man who could pass for somewhere in his 30s. His darting blue eyes show a vigorous personality beneath a boyish haircut -- albeit graying at the temples.
"This is easy, balancing three businesses -- if you're nuts," he said. "You don't know how lucky I am to have been blessed with the people I've got working here. A lot of other business owners don't have that luxury.
"And, if the other two weren't successful," he added, glancing around at all the guitars, "I'd never have been able to afford to do this. My approach has been steady as she goes, knowing I'm going to invest some money here and not see it come back for a while. That's OK as long as I don't get in trouble by wanting to buy everything. I can be objective about fishing tackle because I never go fishing. Music is different."
For more about the businesses of Joe Leach, visit riffcityguitar.com, blissdirect.com or overstockbait.com.
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