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Sound Control + Turnkey go into administration...

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Re: Sound Control + Turnkey go into administration...

Postby Jez Corbett » Thu May 01, 2008 10:31 am

Wow, this is a shock.

I worked for Sound Control on Oxford Street for almost a year up until about two years ago. It was weird going back a few months ago to find most of my friends who had worked there had all left rather suddenly due to some rather odd changes. I was also a bit surprised when calling my local store recently to order something to find they couldn't transfer stock from other stores any more!

I'm glad to hear the people I got on with most there have already managed to find new jobs before this all happened. I just hope the two old bosses of mine who moved over to Turnkey get out of this ok.
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Re: Sound Control + Turnkey go into administration...

Postby Skyline » Thu May 01, 2008 10:45 am

In all fairness I think all of us inside the company know exactly where people should be pointing fingers. I wish there was a way of punishing people for corporate negligence leading to the collapse of a company.

We all knew where the company was haemmorraging money. We kept saying it but no one listened. There was no excuse for things getting this bad.

As a matter of interest, what was the problem do you think? I'm a Chartered Accountant and have a good understanding of these things, and curious as to how an organisation can collapse when the market was ok, e.g. guitar sales have been enjoying a boom the like of which no one has seen in decades.

Corporate collapse is often the result of many factors but often with one big one sticking out from the rest. Examples:

(i) Over-trading, i.e. expanding by acquisitions funded from large bank loans, and if sales take a slight downturn cash flow slows and can't service the loan repayments.
(ii) Owners taking too much out of the company in the form of salaries, cars, dividends.
(iii) Poor buying decisions with stock then having to be chopped out at inadequate margins.
(iv)Poor and/or late management information leading the owners to not understand that gross profits are not covering ballooning overheads.

Personally I never used Sound Control because whenever I read their mags/flyers the prices always seemed a tad high to me.

As for Dolphin, yes I've had the email which is fair enough, but I stopped using them as I bought from them on two occasions and on each occasion my credit card was defrauded shortly after and I had to have new ones. I'm not saying it was anything to do with them but I'm not taking the chance again.
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Re: Sound Control + Turnkey go into administration...

Postby Steve Hill » Thu May 01, 2008 11:32 am

Mike - that's the standard bumph which ought to be on the website (and every invoice, order, blah blah blah). The Turnkey site makes clear they are not accepting online orders.

I'm wondering why it's not repeated on Sound Control's site, which appears in all respects to be in "business as usual" mode at the moment (although I have not tried placing an order to test this theory!). The Deloitte press release says they are suspending internet sales.

The Carillon site is still down.
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Re: Sound Control + Turnkey go into administration...

Postby pazzle » Thu May 01, 2008 11:46 am

Firstly, my sympathies to those left out of a job...I've worked in music retail for ten years. This situation has been on the cards for years though. The 21st century business model of box-shifting massive quantities on tiny margins was never sustainable. The 'Tesco mentality', driven by a desire to capture the whole market, is destructive and in the long term, bad for consumers. It damages the business infrastructure established over many years of local music retailers, who offer close-to-home service and advice. I wonder how much advice I've given, how many demos that I have personally done, have resulted in a sale for Sound Control or Turnkey. (Try asking a website twenty questions to identify which product is right for you.)
We have long suspected that certain individuals at the top of these companies are willfully running their businesses into the ground, knowing that in many cases their liability will be 'limited'. The knock-on effect of this particular event will be significant, for consumers, retailers and suppliers.
Suppliers may not be able to recoup what they are owed, and this might be passed on to the rest of the industry. Customers who have recently purchased from Sound Control or Turnkey, or those who do so in the next three months, may find themselves having to deal directly with the manufacturer if they have problems with their goods.
If people use small independent retailers the money they spend stays in the local economy and circulates, benefiting everyone in the community. Buying from large corporate organisations benefits a very small number of fat cats.
Considering the current economic climate, I fear that other companies operating similar business models could soon suffer the same fate as Sound Control.
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Re: Sound Control + Turnkey go into administration...

Postby The Red Bladder » Thu May 01, 2008 11:49 am

A company is insolvent if liabilities (excluding equity capital) exceeds its assets.

Knowing what those liabilities and assets are from day-to-day and keeping them in healthy balance, is one of the core tasks of management.

There has been a trend in the UK for quite some time, for the more 'creative' of accountants to be able to take a generous view of what could constitute an asset and an ever narrower view of what is and is not a liability.

At the same time, management of UK and US companies have lost sight of the classical goals of the firm, seeking to expand their corporations, at the cost of making a profit. (Galbraith 'The New Industrial State').

The usual method for growth has been to raise new equity capital by issuing shares. In exchange, the new shareholders want to see either an increase in the value of their shares, or a return on their investment in the form of dividends. If the company has a track record of diluting the value of individual shares by the issuance of more and more stock and it also cannot pay dividends because it has chosen growth over profit, investors are unlikely to be banging down the door, chequebooks in hand.

To get around this, UK companies have been turning to the banks for credit. This of course, has the very obvious effect of reducing profit even more.

The demise of Sound Control is a classical example of a small company seeking to grow in an already overcrowded market, where potential for growth is just not there. To do this through debt is to make your demise inevitable.

The price sensitivity (technically known as price elasticity of demand) for MI is about 2. That is to say, a 1% increase in price leads to a 2% decrease in sales.

The bad news is that most turnover is being made with digital equipment and software and here price sensitivity is far greater and can in some sectors be as high as ten. Rather like fuel, you only have to be slightly more expensive to sell almost nothing.

The competition to UK MI retailers is no longer the other guy on the High Street, but eBay, Dolphin, Music Store and Thomann. Here is where the price is set and it is pretty much set in stone for the retailer. To charge more is to sell nothing.

If the price is a given, then the only way to generate more profit is to cut costs.

This is done, firstly, by buying directly in Shanghai and Taiwan from the manufacturer and also buying directly from US, UK and German manufacturers.

Secondly, all costs such as wages, credit, rents, etc., have to be parred to the very bone.

In the UK, retailers of all types have relied too long on high mark-ups in rented shops by publicly owned companies, loaded with debt. In food retailing, the UK has been a very happy hunting ground for Lidl and Aldi, both totally private businesses, using low mark-up and always owning their shops outright.

Both Lidl and Aldi have been growing slowly across Europe for the past 50 years. You cannot become a shareholder in these companies, because they are owned outright by one person. The same applies to Music Store and Thomann. Each is owned by one person.

The owner of Music Store even had an Aldi sign in his office. That was his business model. Once when accused of being a box-shifter, he laughed and said "Well, do you expect me to not shift them then!"

Sound Control seemed to abuse the all the rules of business and therefore the market is healthier and better off without it.
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Re: Sound Control + Turnkey go into administration...

Postby forumuser788714 » Thu May 01, 2008 12:08 pm

I was, up until yesterday, Administrator for Soundcontrol [Forum Admin: for clarification, this poster is NOT to be confused with the offically appointed Administrator for Sound Control, which is Deloitte] and I have to say it was the toughest challenge i've ever faced.
Because everything was controlled by the Head Office in Dunfirmlaine who were quite often incompetent it was very difficult to correct mistakes that were being made, our Management were constantly battling to get the Stocks required, customers were being let down because Orders werent being placed or Transfered quick enough to the Customer.
I feel (to blow my own trumpet) that they just made the one person that gave it all the Customer Service/ discipline needed, the Boot...it goes to show that they really do not have a clue what they are doing, I have to point out that Sound Control Staff go outside the Boundaries to help the Customer whilst being paid a very small amount in doing so so they are not to be blamed.

Even the Location Managers have no choices as far as i'm concerned, the whole thing is doomed from today..which is a shame for the customer as prices will now increase!

In the meantime I may lose my flat & was due to be married whilst some big boss is escaping all this on a golfing holiday..think on and here's hope for the small business!
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Re: Sound Control + Turnkey go into administration...

Postby pups » Thu May 01, 2008 12:15 pm

They were contempories of ours at TSC/Computerwarehouse for 21years sad to see them go.

We are currently recruiting for our music division so if there are any product specialists/sales people looking for jobs please contact

Mark Mccormack on 0208 400 4327 or send cv's to

mark.mccormack@computerwarehouse.co.uk
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Re: Sound Control + Turnkey go into administration...

Postby Steve Hill » Thu May 01, 2008 12:21 pm

I assume you don't mean you are/were the court-appointed administrator from Deloitte (!). Commiserations anyway. But retail prices will not go up, especially on the edge of a recession with retailers in all sectors reporting reduced sales. We're just seeing a shake-out, which happens in straitened economic times, and the ones with the weaker business models fail first.

There's some sort of Darwinian logic about it, which leaves the sector as a whole stronger and more competitive. It was ever thus. That's not to take away anything from the victims in these situations.
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Re: Sound Control + Turnkey go into administration...

Postby directresolution.com » Thu May 01, 2008 12:28 pm

Steve Hill wrote:

There's some sort of Darwinian logic about it, which leaves the sector as a whole stronger and more competitive. It was ever thus. That's not to take away anything from the victims in these situations.

I thought the goverment (tax payer)comes in and start throwing money at you :headbang:

I too am an ex staff member (who isn't) mixed feelings. Quite a shock though.
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Re: Sound Control + Turnkey go into administration...

Postby The Bunk » Thu May 01, 2008 12:33 pm

First of all, my sympathy and best wishes for all the staff that may lose out on this.

A great deal of what's been said above has talked about the figures, the numbers, the accountants...and a little, but not enough IMO, about the people, particularly front-of-house. And that seems sadly typical of a way a lot of businesses are run today, despite what various company "mission statements" may say. My experiences in Turnkey, whilst never unpleasant, usually deterred me from going there; I'm a bit of a musical novice and always felt uncomfortable in there. That is not necessarily the fault of the staff in there. It is a management training issue.

Sound Control was generally better but whenever I went in there, it was like a new set of faces every time. So there was, I presume, high staff turnover. That's not a good sign, but my guess is that accountants (and no offence intended to any here who are) ain't looking at staff turnover, they're looking at bottom lines.

The store that I go to to buy my gear now is probably overstaffed; it almost certainly is if you go by the accountant's preferred ratio of wages being 50% of turnover. However, in the several years I've been going there, I see pretty much the same faces, always get served promptly and without any condescension whatsoever. I might pay slightly more than elsewhere, but I'll go back, time and time again. Because I like the people there and shopping is a pleasant experience.

I work in a customer-focused industry (health and fitness), and if accountants started running the place, we'd soon fail. Our particular strength is our staff, especially front-of-house and front line staff; our wage bill is over the top, but we make a profit, hit budgets, and keep the punters coming back. There's a perfectly adequately equipped competitor down the road from us; people choose to stay with us because of our staff.

Don't get me wrong, this is not a go at accountants!! But, personally, while the financiers obviously have their place, there is too much reliance on them. We are fast forgetting that people really can make a difference. Look at Terminal 5; the whole fiasco started because they forgot the most important resource they had - their staff - couldn't get into the damn building in the first place on the first morning. They just hadn't thought that far down the chain.

It really is time we stopped talking numbers and talked people.
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Re: Sound Control + Turnkey go into administration...

Postby Guest » Thu May 01, 2008 12:45 pm

Legacy..F.Yeah! wrote:I was, up until yesterday, Administrator for Soundcontrol and I have to say it was the toughest challenge i've ever faced.
Because everything was controlled by the Head Office in Dunfirmlaine who were quite often incompetent it was very difficult to correct mistakes that were being made, our Management were constantly battling to get the Stocks required, customers were being let down because Orders werent being placed or Transfered quick enough to the Customer.


I totally believe that somewhere higher up there was some serious incompetence. If you are working on the frontline you are bound to be giving loads of feedback on stock problems - after that it's up to the bods in charge to sort it.

I was a bit harsh on them in my earlier post, but to re-iterate most of the staff were really helpful and knew exactly what they were talking about. It's clearly not an average retail job and they needed to know a fair deal to offer a good service.

The reason I used to go back there despite the problems I encountered was because it's nice to pop up to Denmark St and potter around the music shops as well pick up your gear.

The Rose Morris Pro Audio shop isn't bad but Turnkey had loads of staff all over the place, plus their starting prices were always lower than Rose Morris as well
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Re: Sound Control + Turnkey go into administration...

Postby Skyline » Thu May 01, 2008 12:45 pm

Legacy..F.Yeah! wrote:I was, up until yesterday, Administrator for Soundcontrol and I have to say it was the toughest challenge i've ever faced.
Because everything was controlled by the Head Office in Dunfirmlaine who were quite often incompetent it was very difficult to correct mistakes that were being made, our Management were constantly battling to get the Stocks required, customers were being let down because Orders werent being placed or Transfered quick enough to the Customer.
I feel (to blow my own trumpet) that they just made the one person that gave it all the Customer Service/ discipline needed, the Boot...it goes to show that they really do not have a clue what they are doing, I have to point out that Sound Control Staff go outside the Boundaries to help the Customer whilst being paid a very small amount in doing so so they are not to be blamed.

Even the Location Managers have no choices as far as i'm concerned, the whole thing is doomed from today..which is a shame for the customer as prices will now increase!

In the meantime I may lose my flat & was due to be married whilst some big boss is escaping all this on a golfing holiday..think on and here's hope for the small business!

My deepest sympathies. The fallout from these things is very real to employees who tried hard to serve their customers despite admin issues.

It sounds like the catastrophe was not so much about a flawed business model as a dash for growth that ruptured the systems and internal communication processes that made the initial simple growth possible. One shop clones its successful model to make two, three, etc. until a step change is needed in terms of financing, IT systems, HR, etc. Many small, ambitious firms fall over at this point; when the owners and/or managers simply don't have the skills to scale all the processes up at the same pace as the growth in their personal ambitions.

One of the most crucial hurdles in rapid growth is to implement the economies of scale that come with centralising many processes to a head office, leaving the shops to perform only those tasks essential to front-end customer service, whilst at the same time retaining the 'good bits' and the spirit of the old, smaller (but no longer feasible) structure.

I hope things work out for you in new endeavours.
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Re: Sound Control + Turnkey go into administration...

Postby Kwaidan » Thu May 01, 2008 1:00 pm

What a sad loss for Sound Control, I know Dave Hopkins and the staff at Dunfermline, they've always been great, i'm glad that store is still open, because Sound Control is the only stockist in the UK of Elektron gear, and i always get great deals too. My nearest store was Kirkcaldy and that's shut, so it's a trip to Dunfermline for me next time round when i require gear etc.
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Re: Sound Control + Turnkey go into administration...

Postby Ian Stewart » Thu May 01, 2008 1:12 pm

HandM wrote:
It really is time we stopped talking numbers and talked people.

Excellent post HandM.

I also worked freelance for a company that stopped treating people well, with good fees, but instead brought in a tough director who bullied and insulted people into doing more work for less money, while saying she could loose all the staff and the company wouldn't suffer at all. Only the artistic director was important. She also pointed out that it was inappropriate for staff to even comment on management decisions. The company has attracted nearly a million pounds of lottery money but can't get anyone to work for them. They are also considered a company that does substandard work and few people use them.
Compare that with a company my wife has just done consultancy work with. They pay well over the rates so they get good staff and keep them.
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Re: Sound Control + Turnkey go into administration...

Postby hogberto » Thu May 01, 2008 1:52 pm

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Re: Sound Control + Turnkey go into administration...

Postby Forum Admin » Thu May 01, 2008 1:53 pm

Gary M wrote:best of luck to all the staff that have lost their jobs. No mater what you thought of the service this is peoples lives and i hope they have no trouble in finding work.

All at SOS sympathise with SC staff who have been adversely affected by this recent event. That's why we are not removing the TSC job advert post from this thread, in case it helps some of you find employment.

I think this will have a massive impact on the industry...

It WILL. :frown:

p.s. surprised its not in SOS news.

It is now - until there was an official Administrator's press release available, it would have been wrong of us to speculate. The SOS news story is here:
http://www.soundonsound.com/news?NewsID=10049

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Re: Sound Control + Turnkey go into administration...

Postby ellenne » Thu May 01, 2008 2:08 pm

Are we certain the Leeds branches are closing? That will be a shame, if so.


Leeds City branch on Kirkstall Road is still trading, I rang them to check.

It won't help in any practical way but I'd just like to say how sorry I am to hear about all this, and particularly for those who have lost their jobs. I've bought quite a few things from SC over the years and have always found them friendly and helpful, as well as generally willing to match internet prices if asked. Until it moved to its present site a few months ago, SC Leeds City was 5 minutes' walk from my office and so was effectively my local music shop!

I hope something can be salvaged from it.
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Re: Sound Control + Turnkey go into administration...

Postby forumuser788714 » Thu May 01, 2008 2:25 pm

I assume you don't mean you are/were the court-appointed administrator from Deloitte

God no!

And whether or not Prices go up or down doesn't really matter to me anyway..but they will go up! haha!

Anyway big thanks to all of you who do show sympathy to us who lost our jobs I certainly appreciate it so thanks
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Re: Sound Control + Turnkey go into administration...

Postby JonR » Thu May 01, 2008 2:32 pm

I just wanted to express my sympathy for those who are now out of work.

I have been buying kit from the Glasgow city branch for decades now and the staff were always helpful and friendly, in particular the guy who runs the bass department is a top bloke who made each visit to the store a pleasure.

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Re: Sound Control + Turnkey go into administration...

Postby Kwackman » Thu May 01, 2008 3:05 pm

As others have said, sympathies to those of you out of work.

I remember when Thatched Cottage Audio went bust years ago.
In the days before emails and internet (at least for us ordiary folks) they were sending out leaflets explaining multitrack recordings etc. I'd used them for years by mail order building up my home studio. They were always great on the phone and very helpful.
After months of hard thinking, I rang to order my first 8track machine, costing £1500 which was a fortune to me back then (Still is!). I rang back the next day and got no reply. I kept ringing and eventually someone answered. It was the guy who'd taken my order, and he was now telling me they'd gone bust and he was just clearing out the office of personal stuff. But, on the previous day when I placed my order, he thought something was going wrong, and God bless him, he hadn't put my order through (and hadn't taken the money) just in case. I was SO grateful the someone about to lose their job was kind enough to think of the plight of a small customer.
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