And lots of things are simple even for people who have never done them. I have owned and run a small restaurant. I mentioned the one difference I can see that makes a record store different. And record stores are less regulated than a restaurant.
My experience with people doing things they’ve never done before under the conviction that they’re simple is that they very often do them wrong. YMMV.
That’s relevant experience, yes. I wouldn’t have thought it was simple. Maybe we mean different things by the word.
My family has owned the business I’m still working at for just shy of 45 years. We’ve seen a lot of other business show up and then crash and burn within a few years. Sometimes it’s just the way it works out, sometimes it arrogance*, sometimes they just don’t know what they’re doing. Just recently I watched someone buy a 40 year old, very well liked business and run it into the ground. They had zero idea what they were doing. I don’t think they could have done a worse job had they been trying.
And it was a lot of little, and not so little, things that they didn’t know they didn’t know which became overwhelming.
*Thinking you know better than the USDA or local health inspector is never a good idea.
Seriously, if you’re doing something that requires a USDA inspector over your shoulder all the time, maybe just do what they tell you to do or ask them if you can do things differently. They’re not a fan of surprises.
Running any kind of store is not simple for anyone who hasn’t done it before, especially if you haven’t even worked in that type of store before. Have you considered working or volunteering at a used record first to see first hand the difference between casually flipping through a record bin and running a record store. At the very least you should have a chat with a record store owner/operator and ask about how they got into the business.
A restaurant is a far more complicated business than a record store. I had to be food safety certified, purchase fresh food on a daily basis under varying and unpredictable circumstances, and employ many more people than a small record store would require, even for a very small restaurant. In addition I had to do most of the cooking, and all of the major food prep. The rest is simple in comparison. Even the licensing and permits required for a record store will be simpler.
It’s not that complicated to manage a small retail operation, except as I mentioned in knowing how to purchase stock at reasonable prices. That doesn’t mean easy necessarily, the work has to be done, but you don’t need a technical degree to apply for a business license or operate a cash register.
This is the first metric I need to figure out. But of course I won’t know my overhead until I lease a location, and I’ve just started looking. Conversely, I should have a realistic idea of how much volume I can do, and only lease a location I can afford based on that. And of course location influences volume, so it’s kind of a chicken-and-egg thing.
I have zero intention of running this business from my home.
This is key. I’m learning that the same album can have wildly divergent values based on when and where it was pressed. So I have to be able to accurately assess what people bring in and then price it appropriately.
I’ve had a couple of those conversations, and I love the idea of working a shift or two to gain experience.
That, in the age of digital streaming, should be a red flag because it may very well indicate there isn’t a big enough demand to support one. I know that, even if you were a block away from me for ten years, I probably wouldn’t ever had entered even once. I’m not saying that you shouldn’t pursue your passion, but I am agreeing with you that you definitely shouldn’t quit your full time job.
I’m sure that’s what will matter most to you. If you’re not prepared to do that you have to be careful about engaging in a partnership. I didn’t have experience managing a small restaurant, but plenty of experience in commercial cooking and I knew restaurant owners and talked to them about about the complicated aspects of it. Perhaps you need to do more research into this aspect of the business before moving ahead.
I’m aware that >90% of music these days is purchased digitally, but streaming and shopping for physical media are fundamentally different experiences with different (but overlapping) audiences. You and millions of others might never shop at my store, but I know a bunch of 20-somethings who love buying records.
Could you try this out as an online store initially? A brick and mortar location might do better, but you could also have a chance to evaluate the potential market and your ability to price stock for purchase and for sale.
You’ll need a lawyer and an accountant. Lawyer to set up your company, and to keep in your back pocket for if you need more lawyerin’ down the road. And an accountant to do your taxes. For my small business I do 90% of our taxes (with the help of Quickbooks Payroll) and once each quarter I send all my tax payment receipts to our accountant who verifies and tells me if there’s anything I missed, and does one or two forms for me. At the end of the year I send them all my info and they do all our W2s and stuff. I think our investment for accounting is about $2500/year.
You can have Quickbooks or accounting software do more or less than I have it do. You’ll need a point-of-sale system (POS) - lots of small businesses use a Stripe or ApplePay terminal. I’m not in retail so I don’t know the finer details of this.
It wouldn’t hurt to ask around to other small businesses in your area and ask what they use for POS and who their accountant and lawyer are. If there’s a chamber of commerce, or a small business consortium in your area you might do well to join up and start going to their meetings. Doing so can also give you some leads on leasing.
Allow me to share an anecdote from about 30 years ago. At the time, my neighbor was the manager of two locations of a chain of record/CD stores located in our town.
One day I asked him why the store did not stock or sell any used records or CDs. He actually seemed a bit surprised that I asked and explained that used records and CDs actually have value. They represented financial investment. He went on to explain that the records and CDs in the store had NO value at all until they were sold. If the store had 50 units of a title that didn’t sell, they just went back to the distributor, where they were (most likely) destroyed or remaindered through some other channel. If they got stolen or damaged, the store owed nothing for them. As he put it, “The most valuable assets in the stores are the shelves.”
But selling used records and CDs would change that completely. They required investment and the likelihood that they could be sold at a reasonable profit. The record store chain had no desire at all to take that chance.
This is probably not relevant to your case, but it’s something that’s stuck in my mind.
Glad you brought this up. This might be SMB suicide, but I have no intention of doing any business online. (I’ll have a website, of course, but no eCommerce functionality.) I have two reasons for this.
- In-person shopping is a different experience – one that people will travel to do. I occasionally by records or CDs online if I know exactly what I want, but I much prefer the wandering, the rifling through the stacks, and the discovery of the unknown. I’m betting I’m not the only one.
- I don’t want the hassle of fulfillment, returns, etc.
I know I’m probably leaving money on the table by not having an online store, but it’s just not something I want to do. And this whole project is a “want-to” endeavor.
A lawyer was on my mental list. (Accountant not so much, but your explanation makes sense.) In your opinion, should I set up an LLC right away, or is there another entity that makes more sense.
I appreciate your entire post. Thanks!
Interesting! (The whole post, not just the line I quoted.) I have no idea if stores still acquire new records on spec like that, but it’s worth looking into. I’ll probably carry a mix of new and used records and CDs.
How much money do you have to invest in this endeavor, and how long can you continue to operate it at a loss before it starts to make a profit?
I think we got our accountant first, who was the accountant of another local business person we trusted. And then the accountant said “you should set up an LLC because that’s the best way for your company of 3 people [now 2] to operate.”
Then we went to a lawyer and they did the LLC for us. So maybe accountant first, then lawyer. No idea if an LLC is the best thing for you - you’re a different person in a totally different business in a different state. An accountant who specializes in small businesses should be able to tell ya, tho.
Also, you don’t have to have an accountant on retainer or anything. But you definitely want someone to help you set everything up, and probably do or guide you through accounting and taxes the first year, and after that you’re on your own.
My accountant doesn’t do anything with my day-to-day accounting, but they did help me figure out my Quickbooks “chart of accounts.”
With accounting you can probably suffer through everything and hope maybe you get it right, or just pay someone who can easily and confidently make it right.
ETA: You also need to choose a bank. Not all banks are good for business. You might not want to put your business stuff with your personal bank. Another good thing to ask the other local business people.
I don’t see anything here about employees. You don’t want to get trapped into a situation where your absence means the store must shut down. That’s just the clock ticking away money.
Hiring good employees is always hard. But it’s ten times as hard for a used record business. How many customers will be satisfied by just walking around until they find something? How many will be looking for something very specific? The assumption will always be that the person behind the counter knows the stock and also knows what’s not in the stock, so that they can suggest alternatives or try to get things for the customer. They’ll also have to know the fine points of condition, the variations that make one cover or album worth more than another, and whatever POS sales mechanisms you use.
See if any of the other record people want to work part time for you at first or if they have recommendations for good staff. That would be huge.
I’m curious why you see having an online store as a problem. For one thing, you can reach much further than the local market. But the main reason I suggest it is to develop that experience in purchasing and pricing used records before you dive in deeper.
If you do open a brick and mortar store, do you plan on selling anything besides records? Posters, T-shirts, I don’t know what the kids are into these days. I remember record stores that sold mainly records, some hifi accessories, and eventually some of them became ‘novelty stores’ (head shops really).
This is a very important question. It’s very hard to start up a business and break even right off the bat, much less produce any profit. I think you have to be prepared to cover a significant portions of the operating costs of this business out of your own pocket for at least a year.
Aside from leaving money on the table, bear in mind that your major competitors do not have a storefront. And they don’t even have an online store. So many records these days are being sold via facebook marketplace, craigslist, etc.etc. These folks have no staff costs, no rental costs, no business costs at all. For many, it’s a side-gig. Some are collectors themselves, with a deep knowledge of prices and the market.
They are also competing with you to purchase used vinyl. They put ads out offering to buy collections. They can often offer more money than you can to bring in stock. I recently sold 30 albums from the 80’s (Fleetwood Mac, Queen, Rolling Stones, Beatles) to a dude in a parking lot for 50% more than the local record store was offering me. He handed me $900 in cash and took the box away. He likely flipped them for $1200, and I was fine with that.