How to Start Your Own Record Shop

Do you have an enormous, unwanted record collection? Or do you just have an intense love for music you’d like to share with others? Starting a record business can be fraught with business, financial, and legal hurdles, but with the right preparation and commitment, it could be an exciting and fruitful journey.

Part 1

Part 1 of 3:

Gathering Music Industry Information

You could also work for someone involved with the music industry . Learning from someone already making money in music will undoubtedly provide invaluable experience.
2
Visit potential competitor stores. Go inside, look around, talk to some employees, conduct an analysis of the threat they pose. Gather as much information as you can about their stock, their tastes, the current trends, or any other pertinent data that may help you stand out or above them.
- Note which music they stock. If they are heavy into one genre, covertly ask someone why they have so much, or why there isn’t more of a different type. Get a real feel for which music they are selling.
- Observe the total stock. Seeing how much inventory they have on the shelves may indicate their financial strength or their preferences.
- Look where they stock specific music. Are they using end-caps for top hits or for collector items? Do they have rap near the front of the store and classic rock buried in the back corner? Try to determine which type of store they are, and what type of people visit their establishment.
- Compare prices for all their stock. Try to determine which items are selling for higher valuations. See which items are hot. Look for marked-down stickers and sale stickers to gauge which items may not be the most popular at the moment.
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3
Research industry trends. Knowing what’s hot and what’s not could save you from potential failure or other catastrophic mistakes. You may love contemporary bluegrass enough to think it will be the backbone of your store, but your research may prove it to be unpopular at the current moment. Try to gather all the information you can.
- Read magazines like Billboard, Music Week, and Musical America Worldwide. Supplement the strictly music magazines with entertainment magazines like Entertainment Weekly, Rolling Stone, and Variety.^{[1]XResearch source}
- Look at music information online. Focus on the services that offer streaming radio like Pandora, TuneIn Radio, Vevo, iHeart Radio, Spotify, and Jango. Browse these services for the trending hits, the music that is rising up the charts, and the top rated playlists.
- Check the charts. Go to the Billboard 100, MTV's top 20, or the top iTunes downloads.^{[2]XResearch source}
- Study successful records and hits. Are ballads currently popular? Is music from the south taking off? Look at the music currently succeeding to understand what’s popular and what might sell.
4
Develop your niche. Starting a record shop where there is an opening, or a hole in the industry, is a great way to develop a business. Your offering must be something that stands out.
- Look for competitor weaknesses. If all the record businesses are focusing on the classics, offering obscure and underground records could be a great way to develop a following your competitors are missing.
- Choose your favorites. If you have a particular love or interest for a genre or era of music, focus your attention there. Be the authority on “Malt Shop Oldies” or “Honky-Tonk Country.”
- Offer in-store opportunities related to the music you offer. Customers could listen to samples of the records, or you could provide small amounts of trivia related to the records being offered.
- Think about your target audience. If you’d like to attract a specific crowd, you may want to research the demographics of your area. This will help you not only determine the market, but also the items that may attract their attention.
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Part 2

Part 2 of 3:

Setting Up the Store

1
Build your record collection. To have a record shop, you’ll need a ton of merchandise. Even if you have a vast collection from which to start, you’ll need to replenish various items once you start making sales. Conduct your search in a variety of locations for the best results.
- Search online. Try auction sites like ebay and seller sites like Amazon. People may be selling their entire collection or just one at a time. Once you find a record seller, check out their other listings to see if they are offering multiple items. You can often contact the seller and get a discount on shipping if you’re willing to buy more than one item.
- Try vintage stores for a great selection. Vintage stores typically know if they have something good or not, but they don’t always know the full value. If you’re looking for something trendy or offbeat, vintage stores might have that specific flair you want.
- Flea markets are a great place to stock up on records. While some may be a little pricey because they realize the rise in vinyl popularity, there are often great deals to be had.
- Go to yard or garage sales. Get up early on the weekend and look for the best, biggest sales. People often get rid of large vinyl collections for pennies on the dollar. Thumb through the bin or buy the whole lot.
You want it to feel like a music-lover’s utopia when they walk in the store. The atmosphere must exude music. Choose decorations on the walls, the tunes cranking through the sound system, employee outfits, even the paint colors that speak to what your store reflects. For instance, if you want to focus on grunge, flannel shirts and Nirvana on repeat would be a good start.
3
Attract customers with advertising. Once you have the store and the merchandise, you’ll need to draw in business. Try to canvass the market with a variety of advertising to reach the widest variety of potential customers.
- Flyers are great for advertising. Include pertinent information about your business and put them in mailboxes, on doors, on car windshields, and on bulletin boards citywide.
- Newspaper ads reach a wide audience. Include enough information to be found and remembered, but choose your words carefully. Once you write your ad, get in touch with the local newspapers.
- Create a local radio or tv ad. Come up with an eye-catching offer or a catchy jingle for it to be memorable. Once you start to get customers, have some give testimonials for your shop.
- Create a social media presence. Aside from having ads on Facebook and other sites, be sure to post regularly and respond quickly whenever someone mentions your shop’s name or services.
4
Attract employees. Make your shop somewhere fun to work. Somewhere music-lovers want to spend their days. Hire the right people with the following ideas:
- Let the employees choose the music they listen to when they work. Provided they aren’t listening to music with which you have issue, letting them choose their favorite music will create a pleasing environment for them.
- Give employees records as bonuses. When an employee goes above and beyond, reward them with some choice merchandise.
- Allow the aspiring musicians who work for you to perform on their off-days. Having live music in a location is a great way to draw in a crowd.
5
Choose the right location for your store. Knowing whether the shop will be successful is not certain, but placing your business in a beneficial location will certainly help. There are multiple factors to consider.
- Consider the area. Do you want to start a new business in a run-down area? Will a record shop be looked at kindly in a small, rural environment? Make sure your store matches the overall image of your location.^{[3]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source}
- Factor in the proximity to your competitors. Setting up shop next door to your rival may not be the best move. Look for complementary businesses, places that identify and align with your shop’s offerings. For instance, if you're focusing on 50s records, a malt or ice cream shop would be perfect.
- Determine if there will be available labor. Depending on the record shop, there may be a need for highly knowledgeable musician staff or entry-level employees. Know which type you need and ensure the employees are available in the area.
- Include your plans for the future. Do not pigeonhole yourself into a smaller location if you anticipate expansion in the near future. Find a location that has sufficient space for excess stock, rooms for supplementary offerings (maybe a private studio), and whatever else you want aside from future expansion.
- There are good parts of town and bad parts of town. Steer clear of the locations rife with crime, especially things like break-ins. Not only is this a potential hazard for a business, but customers and employees won’t want to come to a store when they feel in danger.
- Contact the local planning agency to determine what kind of zoning regulations there are. You’ll need to know whether it is commercial or residential, and whether or not any building is permitted.^{[4]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source}
Look for local bands, singers, and musicians in the area to be part of your store. Introduce yourself, ask them for support, and allow them to be part of your grand opening. Perhaps they could be a regular attraction to draw in business.
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Part 3

Part 3 of 3:

Working on Business Details

Write a detailed business plan. A business plan is a great way to double-check every detail. It is not only about attracting funding. Future plans, financials, market data, staffing, and industry strength, among many other things, are important for a successful business.^{[5]XResearch source}
The description should explain the type of business, why it will be successful, and what will be sold. Be clear about your intentions to focus on records. It should also break down the marketplace deficiencies (e.g. growing online purchases), the customers who will be reached, and the reasons it will succeed (e.g. prime real estate, your expertise, knowledgeable employees).^{[6]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source}
3
Conduct a market analysis of music in the area. The market analysis should be a comprehensive look at every characteristic that could affect the business, including related regulatory issues.^{[7]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source} Be sure you include details about local noise ordinances.
- Industry details - Research the industry size, potential for growth, current trends (e.g. music’s movement away from vinyl towards digital), and the customers likely to frequent your store. Look at your potential competition - record shops as well as all-purpose music shops - and how you’ll compare.
- Market data - Why would your customers come to your record store? Find out who your potential customers are and whether their numbers are likely to grow. Determine their purchase impulses and interests. Factor in the size of your potential store’s market, and how you plan to gain the percentage you desire.
- Calculate financials - Service costs like material cost, labor, gross margin, and overhead need to be figured out. Comparing your prices to competitors is an absolute must and determines if you plan on charging more – perhaps for exclusive content or better-trained staff – or less than your competition.^{[8]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source} Factor in what the others charge for records as well as CDs, the cost for newer products, and the price trends for specific genres.
The executive summary is the last portion of the business plan to be written. New businesses don’t have the information, history, or financial background that established businesses do. As such, an executive summary for a startup should be focused on market research, your personal experience, your knowledge of the industry, and why you believe you can succeed.^{[9]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source} Your knowledge and enthusiasm will likely carry some weight here.
5
Finance your business. Most people don’t have the money lying around to start up a business. You’ll need to not only figure out how to run the business, but how to pay for all the items required for success. Considering record inventory, chairs, tables, computers, cash registers, decoration, lighting, taxes, rent, etc., there are a ton of financial loopholes for which to prepare. Try supplementing your start-up costs with a few of the options below:
- Get a government loan or grant. There are multiple types of loans available, like the 7(a) General Small Business Loan, Microloans, and Real Estate & Equipment Loans. Research if your business is eligible for one or multiple types.^{[10]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source}
- Venture capitalists are a great way to get financial support. With the right sales pitch and business idea, you could spark the interest of someone willing to either loan you the money or buy into the business itself.^{[11]XTrustworthy SourceHarvard Business ReviewOnline and print journal covering topics related to business management practicesGo to source}
- Ask local artists if they would be willing to contribute. Many small bands and singers struggle to become noticed. By offering your shop as a potential source of revenue, new fans, or place to play shows, they might be willing to contribute.
- Approach artist managers in the area. They typically have the pulse of the music industry, and access to influential people in it. With knowledge of everything from where to get large record supplies to booking gigs, they may chip in to your business idea if you wow them with your plans.^{[12]XResearch source}
- Music teachers are a potential great source of information and funding. Not only could they could steer classes, students, and tutors to your location, but they may also be aware of funding in the local area. Perhaps a school/university sponsorship of some kind could be used to add value.
- Consider crowdfunding. Whether you choose Kickstarter, Indiegogo, GoFundMe, Fundable, Micro-ventures, Tilt, the list goes on and on. Find one that fits your desires, and pitch your campaign to those who may contribute.
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Determine which kind of business it will be. Your funding situation may determine this for you, but there needs to be serious consideration about whether or not you want to do start a record shop alone. There are multiple options available if you don’t feel like taking on all the risk.
- Proprietorship – If you don’t plan on having employees, and you plan on keeping it small, being a sole proprietorship may be a good option. The primary benefit to this is the lack of cost to establish your proprietorship. The primary detriment is the lack of tax advantage.
- Partnership – Much like the proprietorship, a partnership – technically more than one person – has no major tax advantages, and members report gains and losses when filing their own taxes. Additionally, members of the partnership have ultimate responsibility and liability for any losses the business incurs.
- Limited Liability Company (LLC) – Starting an LLC allows for members to reap the financial benefits, and be taxed according to their investment, while avoiding potential judgments or debts. You can form a LLC as an individual or with a group. One major tax advantage is each member’s share is taxed at their individual tax rate, and not the tax rate of the business.^{[13]XResearch source}^{[14]XResearch source}
Whatever it is, the name should speak volumes about your record store. Choose a brief name that simultaneously conveys the essence of the store as well as something with which the greatest number of intended customers will identify and enjoy.^{[15]XResearch source} You’ll need to file your “Doing Business As” (DBA) with your state at the very least. It’s a matter of creating a public record so people can identify a name behind the business. If you form an LLC, the process of registering with the state is automatic. You could also get a trademark with the U.S. Patent and Trademark Office.
In general, a record shop probably won’t need a federal business license, but if you plan on doing any live broadcasting in the future, you’ll have to talk to the Federal Communications Commission (FCC) first. ^{[16]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source} Licenses vary by location, and depending on your state there may be several permits required.^{[17]XTrustworthy SourceU.S. Small Business AdministrationU.S. government agency focused on supporting small businessesGo to source}
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