Slide 1

We have been very fortunate to continue a 4^th generation business. What makes a company survive, develop and change order time has much to do with the economic climate, the entrepreneurial aspirations, luck, risk taking, determination, personal integrity, adaptability, and core business ideas and strengths. History can teach us valuable lessons and also endow us with values that are part of our daily practices. So as we review the history of Chesbro, my hope is that you will understand not only a business, but the people behind the business. For only the attitudes, [practices and relations one has with others can be taken with us as we pass this life and passes on as a legacy to others.

Slide 2 Pictures of Horace Chesbro and his Seattle store.

Slide 3- Background

Founder
3^rd of 6 children born in Connecticut
Father struggled financially (Itinerant spiritualist minister)
Adaptable- Moved several times as a child all over the country including Iowa, Sacramento California, Portland Oregon and Sandy River Oregon.
Limited education/ Life Trained. In and out of school. At age 12 he had quit school and was helping to support his family as a messenger boy.
Music Talents. At age 14 he became apprenticed in a retail music business in Seattle. It is believed that Horace lived with is employer and mentor. He learned to play various instruments including the piano and violin. He showed such promise on the violin that his employer encouraged him to obtain further music instruction. He was accepted and completed a two year program at Valparaiso Conservatory of Music (part of Northern Indiana Normal School)

Slide 4- Business Decisions

Returned to Seattle to work in another music store and sold pianos door to door as a separate business arrangement. (Showed his enthusiasm to try new things and to be an owner of a business)
Slow Growth- After the death of his business partner, he kept his full time job, but wanted to keep the part time business until it grew larger so he convinced his brother Harry to join him as a commissioned salesperson.
Shortened the family name- He shortened the family name from Chesebrough to Chesbro and named the business Chesbro Music Company.
Used own capital- He rented a building and hired his brother Harry to work as a commissioned employee and hired a young woman (Ella Holm) to also help the store. He later married Ella.

Critical Business Decisions and moves

After ten years (approximately 1910), the company had severe cash flow problems, slow piano sales and uncollectible accounts receivable.
No backup capital reserves to tide him over until sales or economy could pick up.
He went insolvent and closed his doors.
His largest creditor was a piano manufacturer. He negotiated with them a long term repayment

schedule instead of declaring bankruptcy. Slide 5 Lessons Learned

Gained experience through hard knocks
He gained a reputation in the industry of integrity
Partnering with suppliers was critical- we continue to use this principle with payment terms and COD addons/

• Never, Never, Never give up (Winston Churchill) Slide 6- New Beginnings in Idaho (1911-1918)

• New unofficial marketing plan- go to an area where there was a demand and more discretionary dollars.

The was a common practice during this period. Slide 7- Move to Successful areas

He heard that Idaho was growing
Farmers had large families

Farmers had discretionary money to spend. Slide 8- Growth, Planning and Financial Management

Moved to St. Anthony- Lived above the rented store
Saved costs
Offered 24/7 service (even before Wal-Mart)
Ella operated the store when Horace was away selling pianos door to door.
Continued paying of business debts.

Moved to the larger, faster growing city of Idaho Falls in 1915.

He purchased a building and adjoining land for further expansion.
He expanded the business to sell a variety of music instruments, print music, and photographs. Every successful business keeps evaluating what the consumer wants and supplies the products and services. Over the years we have sold console TS, records, CB radios, guitars, drums, band instruments, music themed gift items, blue books music directories.

Horace still doing major functions of the business, including sales, marketing, purchasing and delivering.

Henry tried to expand retail business to Twin Falls- only positive in that situation was he met his future wife Mary Jane. Slide 9- Turning Points- Horace

Needed to create a demand for music. So when there was no demand, he created one. There was no organized music program in the school, only private instruction and so only the richer kids were receiving the opportunity to learn music.

• School Bands 1925

Created demand for his products in local schools.

Rented or purchased a band instrument
Chebro hired band leaders
Schools provided a teaching facility
Students paid $10 for 6 weeks of lessons.

It was very successful program and business venture. Soon schools hired their own teachers and staffing their own music programs.

• Bands created and serviced all over southeast Idaho from Moreland to Jackson and Afton Wyoming Slide 10- Great Depression

The problem was no discretionary income. How do you keep a business going with decreasing cash flows. It looked like a recurrence of the Seattle Days.

He bartered and extended credit to his customers
Employees lived with the Chebro family at the 1^st street house.
He negotiated with vendors for payment terms. He convinced creditors that the people in the area would eventually pay and it would be more costly to repossess the items than extend the terms.

He expanded into new markets ( Wholesaling business)

He researched the new business idea first.
It was a bold move to expand in to the wholesale market.
Mapped out a 100 mile radius.
Identified the suppliers that were not selling in this market and negotiated territory, return privileges and favorable payment terms.
Hired road salesman (Ray Johnson who sold in Utah, Idaho Montana and Wyoming)

• Rack Jobbing and mini Chesbro stores (pictures) Slide 12- Other Opportunities-

Horace kept looking for opportunities to expand. He tried California but was not successful. Small communities and outlying areas worked well for Chesbro. Slide 14- Personal Factors

Trained musician and teacher. Played the piano, violin. He also taught music lessons and tuned pianos. Giving lessons and tuning pianos help in difficult times.
He was a self taught business man
Entrepreneur Spirit- He wanted to earn a living in a field that he loved and was willing to take the risks as an owner to accomplish this.
Supportive/entrepreneurial wife- Ella supported this business and worked in the business as well. She also encouraged their descendants to also work.
Marketing and sales prowess- always looking for new products and ideas
Researched idea before jumping- Before entering wholesale business, they researched and trained in New York and Chicago.
Community involvement- Mason organization opened doors
Capital involvement- Earnings, manufacturer, vendor terms, one time company bonds

Slide 15- Family Environment

Hired only person he could trust, had integrity and had their personal lives in order.
At times the employees lived with the Chesbro family and worked for room and board.
Loyal to employees
Expected high standards
Private man/ Philosopher: He was not active in any formal religion. Didn’t tend to participate in the

community and wrote a book discussing his personal philosophies Slide 18- Legacy

Business passed to son Henry and his wife Mary Jane in 1950
Henry and his wife both passed away in 1953

Joan Chesbro runs/owns the store for 40 + years.

1953-1975

Strong business economy and growth
Women staying home to support family
Wholesale business continued to expand
Company grew to 85 employees
Implemented committee management
Financial controls
Employee benefits
Computer system. On of 1^st distributor to invest n computers
New main line instrument relationships with family owned Japanese company
Strong business relationships formed to fund growth
Account base increased

1975 – 1981

Satellite warehouse in CA
Serving 17 western states
UPS negotiation

1982-1995

Family members activity involved
Major growth with Hoshino relationship
Formal succession planning
Service 2000 active accounts out of 8000 music dealers in the U.S.
Offer largest music selection to consumers west of the Mississippi (1000,000 titles in warehouse)
Variety of businesses continue

1999 Joan Chesbro passed away

• Joan’s heirs (Tana, Vanetta, and Scott)

Slide 25- Current business practices continued

Expanded and grew in each generation

Territory
Product offerings

Funded growth through same principles of retained earnings, bank loans and vendor accounts receivables
Hired good people
Expected to work hard and learn business
Participate and give back to the community and to others
Honest, fair in dealings with everyone
Employees considered family
Look for new business opportunities and adjust with technologies
Early education/exposure to music is critical not only for business bust for side benefits (talents, patience, group participations, fund, lifetime opportunities)
Grass roots programs are the most successful. We work also with trade associations and lobby groups to keep music alive in the schools

Continuing business expansion purchase of business or other opportunities. Slide 26- Problems/ Challenges

Technology
Channels of distribution changing
Business and capital expansion resources
Family and personal interests

Dynamic personnel issues Conclusion I feel very fortunate to enjoy the legacy that my ancestors started. I too get excited about new opportunities in the business and I must also feel the same feelings and challenges that my ancestors did. What is history? We’ve covered historical events and hopefully you have received a perception of a company and the individuals that have made up that company. What we see are glimpses of the values, practices, beliefs that have been passed down. They have helped

determine who we are and we then add to these qualities or traits by the choices and decisions we make. What are the values that I see?

Determination, focus and persistence to succeed.
All have worried about the business continuation, making a living as well as caring for the employees
Calculated risk takers

Committed to employees

Agonized over doing the right thing
Set up pension plans
Insurance plans

Family and business were always entertained
Taught to give back to the community and others
Taught management to self and to be fiscally responsible
Religious background influence how we were to treat each other
Integrity let to respect from others
Thought and sought for business problem resolution
Hire good people. Many people have worked and retired from Chebro after 20, 30, 40 years of

service So ultimately, what can I learn from my family history?

Feel honored to be apart of this business legacy
Realize that the company was built by people who lived, breathed the business 24 hours a day to get it to the company it is today

3. They scarified much While a mature business was left to us as the 4^th generation, I feel that no matter how the business transpires, what matters most is the impact that these people who went before have had on my life. As I gain more wisdom and have more life challenges, I come to respect these early pioneers, and most of all their personal trait of integrity that they followed in their lives. Every family has values they pass on from generation to generation and I can only hope to emulate their fine values and pass these on to the next generation. Thanks for inviting me to come and speak to you about my family and to take the time to reflect

on my roots. Thanks to my assistant Chuckie for putting this PowerPoint presentation together.