How Small Businesses are the real Job Creators.

As I look back on my work history, I’ve usually been happiest working for a smaller company. They feel more like family experiences and I’ve usually found them to be more satisfying on many levels. The interesting thing is those same companies usually did pretty well for themselves as well, and attracted the best people in addition to adding strength to the local economy.  I’d like to share with you my experience of working for a locally owned small business, and examine some of the things that made it special.   RSL_logo_black

During the 70’s and 80’s in Southern California most audio fans (and anyone who read the back cover of the Calendar section in the LA times) were familiar with RSL Speaker Systems and Rogersound Labs’ seven outlets scattered around the SoCal area. The store’s most unique features were the non-commissioned salespeople who worked in them. The speakers, designed by Howard Rodgers and manufactured in Canoga Park, California, were known for their quality construction and extreme bang-for-the-buck factory direct value.  A great example of a small business taking on the “big boys” and finding a way to win.

RSL’s 3600 Studio Monitors were also a familiar sight during the 70’s and 80’s in recording studios, movie studios and TV and Radio Stations.  RSL still sells great loudspeakers, factory direct and you can find a link to them in the link section.    Google the name and you’ll find lots of extremely positive reviews.

Besides the fun aspect of working with audio gear during an era when owning a great audio system was considered a part of the good life, there were a number of reasons working at RSL was such a memorable experience for me; it’s hard to find a place to start.

Probably the best path to take is by looking at Howard Rodgers.   Howard, who, along with partner Dennis Varga, founded RSL in the 70’s and by the mid 80’s had built it in to a substantial operation, was a man who believed in a better mousetrap and giving people a good deal.   Not just his customers, but his employees as well.    Howard and Dennis also had a knack for finding talented, bright and honest people.  Many people who worked there at one time have risen to management positions with a number of audio/video companies  some reaching the status of industry icons.  It would be hard for me to recall a better crew, top to bottom.  Employees also tended to stay with RSL for the long term; employees with tenures of 10 years or more were not uncommon in an industry noted for high turnover.

When I went to work at RSL in 1981, the 60’s and 70’s boom in audio had recently evolved a number of national and regional audio chains that basically operated as “bait and switch” operations.  In the 60’s and early 70’s, most stores were smaller “mom and pop” type stores and small local or regional chains, who by and large, were selling to people who who looked upon acquiring a piece of gear as part of a hobby, or at the very least were looking for something that performed better than the typical department  or appliance store “Stereo Console” that looked like a piece of furniture or a modular, all in one system with a turntable, radio, 8 track and speakers, sitting on a chrome tubular rack or cart.   Sometimes the “furniture” would even have a TV in it.

The actual sound quality of these devices was, in a word, awful. 

The term used by people who were looking for something a little bit better was “component audio”, where you could, in theory select the best product in any category and put together a system that might have JBL speakers, a Kenwood Receiver, an Aiwa cassette deck and a Dual turntable. The sound quality was considerably better and you also had the option to upgrade one part at a time.  The big stores got into the game at just about the time that component audio began to outsell the stuff that was selling in department and discount stores.  The hobbyists weren’t the only ones buying components.

At this point in time,  video cassette recorders and camcorders were starting to catch on and projection TV’s were starting to sell.   The traditional console TV was on it’s way out. Table top TV’s were beginning to outsell consoles.  Audio and TV had become audio/video.

Most of the new “superstores” were Audio/Video stores by this point, and as I stated earlier, operated in a bait and switch fashion.  They would advertise a 40 watt Stereo Receiver for say $199.  It might have a retail of $279.   The customer is thinking: “I’m getting $280 worth of sound for $200, that’s a good deal, I want one.”  If the customer went in to the store to buy the advertised item, several things would happen; most of them due to the fact that the store was paying the salesperson $2.50, if he was lucky, for selling it.

If the item was “on ad”, the salesperson wasn’t making any money on the sale.  “The fee is paid where the sale is made” being the theory here.   I should probably add that I know about this because I worked for such a grind house when I first moved to Southern California in 1980.   There were 30 salespeople employed there and it was a big shock to a small town kid such as myself.   Most of us tried our best to be honest and helpful, at least when we were first hired; but to sell a lot of stuff and make a decent living, one had a number of “it’s either him——-or me” type choices to make on a number of levels.  Freshly arrived kids from Iowa quickly became sharks within a couple of months.  The “ruthless” aspect also was extended to your fellow salespeople and must of us had a “partner” that looked out for your interests on days off. 

Going back to your $199 Receiver, when the customer asked to see it, he was  usually taken to a sound room, to “take a listen to it”  and maybe compare it to a competitive product.  The salesperson’s job was to “sell” the customer something else, anything else that had more profit in it.   Usually there was a “house brand” that had the most profit built into it, where the salesperson might be able to make up to $20 by selling the customer “up” to a $300 house brand that might not be any better than the $199 one.  An experienced sales person in a sound room has all sorts of ways to manipulate the process to his or her advantage.    Some of my fellow salespeople were shameless in terms of tactics. 

RSL didn’t work that way at all.  From the perspective of a salesman, the process was very different.: a win/win transaction.   RSL not only hired experienced sales people, they put them through an extensive training class as well.  You were expected to treat people with respect and the selling process was straight forward.  We actually wanted to sell the stuff we featured in advertising.  Items were sold on their own merits and if something was a good deal for the customer and RSL, it was a good deal for the salesman too.  Salespeople received a salary, and an additional amount based on how the store did, collectively.   Everyone was happy when someone else made a sale. This fostered a team like spirit. 

RSL was a great place to work because you never had to choose between selling a customer something you knew was crap and and not making any money if you didn’t .  We didn’t have to make up stories about how the item that was on sale would probably burn their house down, render them deaf or destroy their speakers.  We would try to sell them the best system they could afford if we thought that was what they needed or wanted, but you never had to feel like a swindler just to keep your job, or be tempted to do so by some commission scheme designed to reward avarice.

In any case, it would be short sighted to attribute the success of RSL solely on the commission structure for the salespeople.   The factory direct aspect would also deserve a large part of the credit, but I think the concept is indicative of a well run small business.   The owners cared about the workers as people, management treated us as if we had brains, almost always promoted from within and made us feel like we had a stake in the business.   Thought was given as to what the employees experience might be like; management understood that working conditions had an impact on the quality of employees it could attract.  Most retailers at the time had huge rates of turnover and the sales staff were treated as cannon fodder.  Job burnout was expected and there would be another drone happy to take the job.

I also think the RSL approach was better for the marketplace.  Why?   I think markets work best when you have a level field to play on.  Most of the retailers of the time spent a lot of time circumventing the market and trying to find ways to screw people.   They funneled people into one brand systems that, as I mentioned above, were little better than junk.   Retailers actually weren’t happy with brands like Luxman, which had a factory 5 year warranty, because they couldn’t sell a high profit extended warranty with a Luxman product..   And they mainly set about putting each other out of business.   Most of them are now gone.  The Federated Group, Pacific Stereo, The Good Guys, Circuit City, Tweeter, Silo and many others are now gone.  

What are also gone are most of the mid-level quality products and almost everything made in the USA.   The small stores that survived evolved into “high end” stores and most middle class hobbyists (unless they were willing to deprive their families) were priced out of the hobby.  (As an aside, there’s a small semi-underground DIY movement centered around inexpensive, simple speakers and electronics.)  The tail was now wagging the dog, as the methods used to sell products were determining what was being offered for sale, and not in a good way    When you have commissioned sales people biased towards promoting overpriced crap designed to fool consumers into thinking they’re getting value, there’s no real market pressure to build higher quality stuff.

This all has an impact is because we live in a consumer society.   It’s bad enough that most stuff is imported, so we’re sending jobs overseas, but when the way stuff gets into people’s hands is based on huge corporate entities  who seem to use the plantation as a model for deployment of “human resources”, the future does not look rosy.

Our future is largely dependant on how many “Good Jobs” we are able to produce.  If people don’t have enough money to purchase enough goods and services to keep things going, we’re in trouble.  With the way things seem to be going, with the collapse of retail and consumers choosing the path from manufacturer to consumer that employs the fewest low paid employees, something has to give.  Efficiency, it would seem, doesn’t come without a terrible cost if not carefully thought out.

While I’m not saying that what Howard Rodgers (and everybody else at RSL) managed to do in the 70’s and 80’s is an exact blueprint for success in the current market, it will be entrepreneurs like him who are willing to take a look at the way we do things and attempt to find a better way that are likely pave the way out of our economic crises. Locally owned business like RSL, selling locally made products, not only keep the profits in the community, but when they pay the employees decently and create career level, family supporting jobs they make the community a more attractive place to live.   It would seem to me that both sides of the political spectrum could get behind policies that favor locally owned small to medium sized businesses.   Then, we’d be helping the real “Job Creators”.

Author: fauxsuper

Guitarist since 1964, motorized vehicle enthusist all my life, Married with two step children. Born and rasied in Lebanon, Ore.

1 thought on “How Small Businesses are the real Job Creators.”

  1. Hello,
    I’m looking for contact or historical info on a friend I once knew and encouraged to pursue interests in the stereo world.
    His name was Dennis Varga, I’m remembering he lived in Porter Ranch area, and fell in love with my Marantz model 9s
    And told me he was going to try to get on board at RSL by offering to “work for free” just to learn the business.
    I wonder where he is now. . .?

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