May 19, 2019

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Old 02-15-2019, 07:10 PM
JimStoneRiver JimStoneRiver is offline
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Default A Note From StoneRiver Outfitters

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Last edited by JimStoneRiver; 02-21-2019 at 03:53 PM.
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Old 02-16-2019, 08:29 AM
nhwrench01 nhwrench01 is offline
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wow, interesting. As we all know there are 2 sides to every story.
thank you for sharing yours, and I hope things workout for everyone.
Glad the shop will be staying around for some time.
Good luck to everyone.
Dave
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Old 02-17-2019, 09:36 AM
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The local Fly Fishing community will certainly draw their own opinions regarding the situation at SRO. Here's mine.

All you need to do is read the other thread started in the "general" section of FFiNH regarding SRO, and the replies to the post on the SRO Facebook page, which clearly show overwhelming support for the STAFF at SRO. As countless others have already stated, Nate and Dan always went above and beyond to help anyone who walked into the shop, and were instrumental in successfully outfitting so many anglers (myself included). There are plenty of places to purchase Fly Fishing gear - customers shopped and supported SRO because of Nate and Dan, and the personal relationships they established with them over the years.

This post speaks volumes about SRO ownership and how they treat their longstanding employees. "Airing out" private business discussions on a public Fly Fishing forum in an obvious attempt to discredit a former employee is unprofessional to say the least.

I'd like wish Nate, Dan AND CHRIS (who also worked for SRO for as long as I can remember, but is never mentioned) the best of luck in the future, and thank them for their years of service to the local Fly Fishing community.
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Old 02-17-2019, 01:29 PM
CH20man CH20man is offline
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I saw this post this morning and vacillated on whether or not to respond. I need to state up front that in my limited exposure to both Nate, Danny, Chris, AND Stone River ownership, I harbor no ill will, nor negative sentiment toward ANY of the people involved. My individual experiences with each of them has been very good, and in many cases exceptional.

I'll give you my thoughts in 2 versions - the Bottom Line, Up Front (BLUF), and the long-winded, full version, which tells you why I think the way I do. Please read whichever one you like (or have the time for). Not sure how much space I’m allowed, so if this gets cut off, I’ll continue it in a subsequent post.

BLUF: This was a proposed business acquisition that just didn’t pan out. It wasn’t a "Good Actor" vs. "Bad Actor" scenario. Ultimately, when an employee makes an earnest attempt to purchase the business where they've been working, it starts a time clock for their separation from the current owner - either for reasons of success (they are able to purchase the business and the old owners phase out) or failure (they are unable to execute the purchase, and it's time to move on). I think this is exactly what has happened here.

Normally, I wouldn’t comment on posts like this, but this hits home for me since I went through a nearly identical situation. I thought I'd share my thoughts, and let people take it for what they will. I’m not going to take sides, and I’m going to explain why I think nobody else should either.
My own background includes 19 years of retail experience.
- I started stocking shelves
- I became a lead/subject-matter expert in several areas
- I helped build out and open new stores
- I managed staff
- I worked for good owners (and bad)
- I attempted to purchase a business I once managed.
I have seen it all - including the pitfalls that come at every level. Retail is a difficult business to work in, a difficult business to manage in, and an even more difficult business to own.

I'm a firm believer that everyone should work in retail at some point in their lives - it teaches you politeness/respect toward others, how to understand and “read” people (sometimes what they say isn't really what they mean), and above all, that proper treatment of others can and will go a long way toward success or failure for the rest of your life. The only problem with retail is that you learn all of these valuable life lessons at (typically) a much lower wage/salary than you do in other career paths. So when you see people who have been in retail for more than 10 years, value what they bring to the table - they're there because they love what they do, and they're probably pretty darn good at it. But at that point, great retail employees discover something vital – in order to really get ahead in life, you’ll have to own a piece of the pie.
For retail owners, keeping quality people becomes an even more difficult challenge to manage. Until the early 2000s, people with client service skills were valued, those who excelled were highly sought after, and it was possible to provide good people with a reasonable wage. Then along came the Internet, and customer attitudes changed drastically. The customer sentiment of "I buy EVERYTHING I NEED at Shop X because they know me, they recommend what I really need, and if I have a problem, they'll fix it (or me)" have largely disappeared. It’s now "how to i figure out what to buy, and then where is the absolute cheapest place I can buy it?" To compete with warehouses that don’t have to pay for good people like Danny, Nate, and Chris, small business owners have to shave their profit to the narrowest margins so they CAN keep good people around. The whole “support your local fly shop” thing isn’t just marketing – it’s a “no kidding, choosing to save $10 on a $500 rod by shopping online can make or break your local business” thing. Internet vendors don't have to pay for pretty retail storefronts, nor do they have to find qualified employees to answer your questions. They offer you a cheap price with no service. If you buy a product and don’t like it, good luck.
Jim’s post talks about Nate’s interest in purchasing the business, along with some numbers. While the numbers are relevant, I think it’s the structure of the offer that needs to be examined, because I think that’s where things may have come apart. Business valuation at a higher level can be broken down into 3 primary categories:
- Balance Sheet - (assets such as furnishings and inventory value (depreciated if older), debts (leases, etc.), and various other issues. This is probably the easiest of the 3 to address.
- Residual Value – are you buying/selling a 3-month-old business with no proven history, or a well-established business that guarantees money will be coming through the door?
- Goodwill – Valuation of the “what makes the customer smile when they walk through the door”. This is all about relationships and keeping people happy.
So here’s my take, based upon what I have seen:
- Based on typical profit margins, the $125K inventory figure probably represents $65-75K of actual investment. No mention if furnishings are included as part of this inventory or not. Based on this, if I were the seller, I would not consider $25K a viable offer, and would decline.
- Residual Value – based on facts as well as conversations I’ve seen/heard, Stone River has been in business for 14 years, with reasonably steady business performance. Someone who buys the shop is not going to be faced with answering the question of “Stone who?” “What are they again?” They’re a known entity, with demonstrated stability
- The Goodwill of the shop is always the tricky part, and usually where more silent owners let themselves down. In this case, the Goodwill is Danny, Nate, and Chris. THEY are what clients expect to see when they walk through the door, and it’s their friendly expertise that keeps clients coming back. If owners want to place a dollar value on Goodwill, then they need to maintain visibility with their clientele by being in the shop themselves. In addition, labor costs are the single most controllable expense a retail business has, so spending time in the shop can help preserve profit margins as well.
My Summary:
- I don’t know all the details surrounding the changes at Stone River, nor am I entitled to know – and I don’t want to. It’s none of my business.
- Nate made repeated offers for the business that were declined. It’s Nate’s right to make offers; it’s Stone River’s right to accept/decline. It’s business.
- Once you go down the road of trying to buy a business, it’s hard (if not impossible) to go back. Life goes on, and decisions need to be made. Nate, Danny, and Chris have chosen to move on, and Kristen and Jim must make business decisions based on their circumstances.
- All of us are saddened by this turn of events, because it represents change that feels unwelcome. But this change may mean better things for Danny, Nate, and Chris, and it may mean better things for Stone River. Time will tell.
- I wish Danny, Nate, and Chris all the best in where they go from here. I wish Kristen and Jim the best in either continuing their operations or finding a new owner for Stone River. The saddest outcome would be if Stone River were to close simply because no acceptable outcome could be reached. If it is Danny & Nate’s sincere desire is to own Stone River, I wish them the ability and thoughtfulness to regroup and put a structured offer on the table in which both buyer and seller benefit equally.
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Old 02-17-2019, 08:25 PM
TGIF TGIF is offline
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I have been stewing on this since Friday, and am grateful that the two prior posts stated so eloquently what I was thinking... so I won’t repeat it.

What I do have to say to you Jim is that in 12 years of patronizing SRO, I was only ever aware of Dan and Nate. Like others, I thought they owned the joint, based on their overall commitment to their customers and the business. They outfitteded me, my children, and were always there with a smile on their face and a warm handshake and attentive ear. My trips there were therapeutic, even if it rewarded me with a lecture from my wife about the cost of chicken feathers.

What has come of your relationship is your business, but I can tell you that for 12 years you had two of the best ambassadors that you could have asked for. The replacements have big shoes to fill.

The last thing I would say is that I too am a business man, and have won and lost my fair share of deals. I fully understand why you would take to the interwebs to inform the community that you’re open for business.... however, the personal nature of your post is disappointing and exposes what I would call “defaming” notions that will probably not be well recieved by the people who grew to call Dan and Nate friends.

Good luck.

Tgif
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Old 02-18-2019, 01:15 PM
CH20man CH20man is offline
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Okay, I'm back on this because the whole situation just sticks in my head.. Maybe it's just me having a case of deja vu - but there are solutions to everything, and I can't help but feel that there is a solution available here that just needs to be uncovered.
And to be completely clear, I have ZERO skin in this game – I’m on the other side of the country, and writing this serves me no benefit, other than the hope of providing perspective to some good people whom I’ve come to meet. But in order to adequately state my point, I need to expand upon my earlier post.
After 12 years in Ski & Tennis shop retail/management, I was recruited to manage a tennis shop in California. The shop was owned by an older couple - she was the powerhouse of the two, handling the books, paying the bills (on time, very fastidious there); he was involved in the local tennis community and was the social connection, as well as having technical knowledge with regard to servicing racquets, etc.. They were very particular about how their clients were serviced, but we meshed well together because they saw my passion for the sport, technical expertise, and penchant for taking care of their clientele.
Over the next 7 years, they (not so) gradually retreated to the back office of the store and left me and my fellow staff of 1-2 other people to run things out front. I still collaborated with the owners on ordering, etc., and she still paid the bills - but the front side of the house was in my hands. This eventually became an issue, because they were prideful people, and when their friends came in and only saw me, their friends began laughingly referring to me as the owner - which didn't sit well with them (the current owners).
Ultimately, they got to a point where they were just done - they still paid the bills but spent zero time engaging their clientele. The mailing list of 5,000+ names they had maintained and considered a vital business asset over the years ceased to be updated/culled, and my staff and I were largely left to tend to daily business ourselves. I was quietly/respectfully approached by a couple of the owners' friends, asking me if I would consider purchasing the shop and relieving the current owners of their burden - which my wife and I had been considering for a couple years.
Stay with me, this story has a purpose, I swear.
My wife and I brought in some friends who were consultants on business acquisition and valuation, and we went over everything. The shop's hardgoods inventory (shoes, racquets, strings, etc.) were relatively current. The softgoods inventory was another deal entirely - many clothes over 3 years old that the owner didn't want to put on sale because she was emotionally attached to her purchases, etc... So we valued the inventory at about $26K, and other assets (including the name, which I intended to change) at about $4K more, or $30K total.
When I asked them if they had a price in mind, they said they wanted over $200K for the business. When I asked for a breakdown, they valued their inventory at FULL retail, then wanted $150K for business longevity and Goodwill.
We were stunned. Having been there for over half of the store's existence, I was the face and Goodwill of the business, and I wasn't going to pay them $150K for ME. After deliberating on our next move, we simply walked away from the deal. They were good people with good intentions but had far too much sentimental attachment in their business to look at it objectively. There was no way we would ever find a bridge between our $30K valuation and their $200K asking price. When I told them that we were declining their offer (I think they were surprised we didn't counter), they told me that they were therefore going to run on an abbreviated schedule and were serving me 2 weeks' notice that I would be laid off as they looked for another buyer. I moved on - sad things didn't work out, but knowing we made the right decision.

They sold the store 2 months later - for $8000.

This is my biggest concern for everyone involved in the ownership and operations of Stone River. Worst case scenario would be for SRO to not find new staffing/ownership, and go through the liquidation process. Jim – if Kristen is looking earnestly at selling the shop, then selling it to her former employees is very likely her best option, even if it doesn’t appear so at the moment. Had she been more involved in the day-to-day operations of the shop, that might be different, but from all viewpoints, that has not been the case.
You created the original post with the intent of providing some clarity and transparency into your situation. In the sake of fairness, as a past (and hopefully future) client of SRO, I would say with equal transparency that from my own perspective (and I suspect all the clients you are hoping to reach) I am looking for some level of confidence that SRO as a business entity will provide the sustained level of service it has become known for. To do that, the following statements from your original post (in my humble opinion) must be addressed for SRO to succeed. You don’t need to address these publicly if you don’t want to, but they are changes in philosophy that Kristen (or any owner) will need to have to make the business successful.
4) SRO entrusted the business to be run and managed by both former employees
*Owners own, employees manage. Owners are always ultimately responsible for the financial and strategic well-being of the business. You also stated "For the past almost 15 years they ran the business and did the best they could". If there were issues with their best not being good enough, ownership needed to participate in developing a plan to address the situation.
3) SRO was placed in a position that leaves us little choices.
* See above. Owners own, employees manage. Nate's interest in purchasing the business should have set off a red flag that staff turnover could be upcoming, especially if he were rebuffed in his attempt to purchase. In my earlier post, I mentioned some of the pitfalls of owners who are not engaged in day-to-day operations. Employees are not responsible for finding their own replacements.
5) SRO Capitol Owners in 15 years have invested over $1.0M into the business and feel the value is more than $25,000
*With over $1.0M invested, what were the associated sales/profits over that time? At the stated current sales rate of $400K/year as a basis point, that would indicate approximately $6M in sales over those 15 years. That should have more than sufficiently compensated for that initial investment, with admittedly little effort on the owners' part, since Nate/Danny/Chris have been handling operations. On a side note: capital investment amounts have no bearing on current business value. I addressed business valuation in my earlier post.
6) Ordering of materials and supplies from the shop have not been done in weeks despite there being plenty of credit available to purchase and fill orders. The inventory has been grossly run down.
*Not to be redundant… but see above. Did ownership come in, notice low inventory levels, and direct staff to order more, and the staff refused to place those orders? That doesn’t seem plausible, because nothing is more frustrating to a retail associate than having nothing to sell. This again appears to point issues other than employee performance.

In my opinion (and I’m doing this based on information that was freely provided), SRO needs to develop a revised Business Plan to place controls on each of the items I’ve identified above.

I understand and applaud Stone River’s ownership in quickly formulating a plan to re-energize the store. Based on Jim’s post, more owner engagement (be it current or future ownership) can only help the situation. It’s going to be a LOT of work from both Operations and PR perspectives. It is up to Kristen to determine whether she wants to shoulder that burden or attempt to recover what is reasonable based on the shop’s current status and transfer ownership to someone else. No matter her choice, I wish her the best. If keeping the store herself is her call, hopefully there are some positive takeaways for her. If she chooses to sell, an offer in the hand is worth 2 in the bush, and my guess is that bridges could be mended to a point where a deal might still be on the table.
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Old 02-20-2019, 06:59 AM
JimStoneRiver JimStoneRiver is offline
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CH from San Diego - Thank you for taking so much time to go through all this with such passion and understanding. The key facts you miss are that Dan has been an owner of the shop for the entire time. The reason the majority owner was not in front of customers was because their responsibility was investment & accounting. When they were requested to put more and more and more in over the years they did so. Dan and Nate were responsible for the operations of the store. Dan as an owner and Nate as an employee. Gross margins were theirs, ordering, sales, management, execution and running of the business was not the responsibility of the majority owner. When the money got tight tensions escalated. The shop was entrusted to those working in it. I have been gone for many years and my opinions are not those of the shop or the owner they are mine and mine alone and as the founder of the business I can tell you these facts are essential to know. While I agree with some of what you say the needed pieces of the puzzle you were not aware of. In addition the shop has a vibrant and daily revenue stream from its web based business. This business generates over 45% of the revenue. The value of that alone was not even considered in the offer given. Yes this situation is terrible and yes these are challenging times. I think when an investor is in a hostile environment and given ultimatums without warning these things can happen. However do not underestimate the power of family, devotion and dedication to solve a problem.
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