The Aha Moment: Dealing with Adversity

A veteran of many a business skirmish, Peter Janis shares how to deal with setbacks in the pro audio industry.
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Peter Janis, Exit-Plan

Peter Janis

Owning a business is mostly about dealing with adversity. The most common reaction to adversity is ether getting upset, losing your cool or simply getting really mad. Over the past 40 years, I can recall so many such situations; one of the earliest was doing business with a fellow named Richard in Montreal. We had just started out and Richard had a high-tech studio supply shop in Montreal and a sales guy named David, who was a huge ambassador. The problem was that Richard was always slow at paying his bills. I recall our having to often stop shipments until money was sent—but as a new company, we felt that we had no choice but to work with these types of customers.

One day, they needed some products shipped rush-rush, but they owed us over $30,000—so we held the order. David pleaded with us to fill the order as this would close a deal that would then enable them to make good on the money they owed us. We relinquished and a couple of days later, Richard declared bankruptcy. A few months after that, he opened a brand-new business.

The Aha Moment: Necessity Is the Mother of Invention

According to David, Richard was running two sets of books and using the money that he did not pay creditors to start his new venture. For a small company, $30,000 was huge. I was hurt both mentally and financially. How could a guy that I supported do this to me? The Aha moment here was Security. Sometimes you have to say no and forfeit a sale even when revenues are badly needed. The only solace is Karma.

A few years later, we were importing a boutique microphone brand from Eastern Europe and managed to get a number of wonderful retailers on board, including Washington Music and Sweetwater. Our ‘problem child’ was another, smaller retailer. With the internet now alive and well, and MAP pricing the accepted standard, we worked very hard at keeping price parity on line—but this retailer would not follow suit and would price the mics on his site below MAP.

Being that it was a high-end brand, I suggested the retailer find other ways of swaying customers, and insisted it had to maintain MAP pricing or we would have no choice but to cut them off. The retailer ignored us—so we cut them off. We soon discovered that the retailer was still delivering mics, yet wasn’t buying them from us. We contacted the microphone manufacturer and they said that they had no idea where he was sourcing the mics—so we set up a sting a means to catch the culprit by having someone order a mic from the retailer that could only come from the factory. The mic was delivered and we caught the manufacturer red-handed.

We, of course, abandoned the brand immediately as we could not do business with an unethical company. It is worth saying that the manufacturer, under the thumb of Russian control, had learned to do business differently. The black market thrived and this surely created a different mindset as to what is right and what is wrong. We moved on.

As an importer and distributor, the reality is that you will gain brands and lose them. You have to accept that products come and go, as do brand managers. You may believe that you are doing well, and one day, you will get a call that things have changed and the line has been pulled. The Ah-Ha moment was realizing that it is all part of doing business.

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I think it is human nature to always think of the worst, when in fact things are not as bad as they seem. One day, I got a message from Chick Corea’s management that they urgently had to speak with me. My first reaction was: “What did we do wrong?” Chick – being one of the most renowned keyboard players on the planet, was an important endorsee and I was concerned that they wanted to abandon us. We never paid any artist to use our products. I gathered the courage and called. Turns out they did not like the images we were using and merely wanted to send fresh photos. Ever since then, I call this natural reaction ‘The Chick Corea Effect.’ The Ah-Ha moment: to stop, take a deep breath and realize the sun will come up tomorrow.

Peter Janis, former CEO of Radial engineering, is a 40-year veteran of the music industry. Exit Plan, his consulting firm assists business owners to build their companies and prepare them for eventual sale.