A bang-up business: Robert Zildjian used an old formula to start a new
company

Financial Post – Canada
Mar 28, 2005

While some age-old family recipes call for a dash of basil or a pinch
of garlic, Robert Zildjian’s family blend is a secret combination of
copper and tin that has been used to make cymbals since 1623.

The name Zildjian has been synonymous with cymbal manufacturing since
17th-century Constantiople, when Sultan Osman II gave the name
(meaning “son of cymbal maker”) to an Armenian alchemist named Avedis.

Mr. Zildjian, 81, is the 13th generation of cymbal makers to inherit
Avedis’ coveted family recipe. He has also developed a few recipes of
his own, including one for a successful startup.

In 1981, Mr. Zildjian started Sabian Cymbals Ltd. in Meductic,
N.B. The founding of Sabian formalized a break from the centuries’ old
family business — Boston, Mass.-based Avedis Zildjian Co., where
Mr. Zildjian worked until 1979. A legal battle turned family feud saw
Mr. Zildjian split from the company. He took his recipe and his
business saavy to the sleepy eastern town of Meductic and has watched
Sabian grow ever since.

In little more than two decades, Sabian has become a major player in
the global cymbal market, quickly gulping up market share previously
held by its major rivals, Zildjian Co. and Paiste Co. — both more
than a century old.

Sabian has grown to a workforce of 130 employees worldwide and now
manufactures more than 900,000 cymbals a year — the most in the
industry, according to Mr. Zildjian.

About 97% of Sabian cymbals are exported outside Canada. Sabian was
responsible for 36% of total cymbal sales in the United States last
year and estimates it has captured about 35% of the European
market. It is also making inroads into the Middle East and Asia.

The Sabian logo adorns the cymbals of some of the biggest names in pop
music — from Neil Peart, drummer for Rush, to Chris Wilson of Good
Charlotte, Incubus’s Jose Pasillas, and Chad Smith of the Red Hot
Chili Peppers. It is remarkable growth for a company that had to
establish itself under the shadow of industry giants, but Mr. Zildjian
says the formula for success in the up-start market is pretty
straightforward.

“You have to have good people around you,” he says. “In small
business, you have to be tough, you have to have good financial
backing, and you have to have inspiration. But, in the end, it’s the
people around you that matter most.”

One of the people Mr. Zildjian credits with Sabian’s success is the
company’s president, Daniel Bar-ker. Mr. Barker joined Sabian as
vice-president in 1985, when it was still quite small. With his
extensive background in the music industry — including 12 years at
Zildjian Co. and a stint as an entrepreneur — Mr. Barker successfully
steered Sabian through the problems that are virtually universal for
entrepreneurs.

“Like any startup company, we had a great deal of difficulty at
first,” Mr. Barker says. “In the first few years, people didn’t come
running to the door. It wasn’t until 1987 that we started using black
ink. But by 1991, we were doing fairly well, and we’ve been growing
ever since.”

Sabian’s growth has been staggering by industry standards. For all but
two years since its inception, Sabian has experienced double-digit
increases and is rumoured to have grossed as much as $35-million last
year.

“We feel that, if we are number two in revenue (in the industry),
we’re so close to being number one we can taste it,” Mr. Barker says.

Success required one part financing and two parts persistence, he
says.

“Bob (Zildjian) and his family had a passion for this. They couldn’t
see failure. They were going to make this work one way or the
other. There was just no middle ground,” he says. “And to the family’s
credit, they put the money right back in the business to make it
grow. They did not take money out of the business. That helped finance
a lot internally. I can’t think of too many cases where I’ve ever seen
that.”

A solid relationship with the banks and other financiers is also
vital. “Many entrepreneurs go on a dream or have a good idea,”
Mr. Barker says. “They might get the startup money from investors or
by working with banks, but they don’t know how to turn that around —
they don’t know how to use it properly. Entrepreneurs who are looking
for fast growth need to establish good credit with the banks, get
their interest rates down, and then turn their money over and invest
in capital projects or inventory.”

A good relationship with the bank, he says, is based on a few simple
rules: Always pay your bills on time, and know where you are headed.

“A solid business plan is a key here, but a business plan has to be
followed up.”

Mr. Barker recommends entrepreneurs raise double the capital they
originally planned because unexpected expenses will always find their
way on to the balance sheet. And anyone not familiar with a balance
sheet should take some courses.

“It’s not enough to have a passion for it. Not everyone who goes into
business has that MBA background and sometimes some of the simplest
things — such as the tax implications — could be fundamental in a
startup.”

Finally, Mr. Barker warns prospective entrepreneurs not to get swept
away in small, inital successes.

“People figure if they invent the next best mouse trap, everything’s
golden,” he says. “So they get investors involved and raise a bunch of
capital and then go out and buy a $1,000 copying machine when a $250
one would suffice. It’s almost an ego thing — they just don’t make
the proper investments. With every purchase you should be asking
yourself, how will this help me grow?”