How to Open a Record Shop

With the music industry facing its worst crisis in decades and music shops folding like houses of cards, only a fool would join them--or so goes the conventional wisdom. Constant battles over formats and the shriveling of the mass market for new releases makes the prospective record shop owner's lot tougher still. However, with a little bit of common sense, it is possible to succeed, especially with the resurgence of the vinyl-based collector's market. Success is not guaranteed, but the chance to turn musical passions into a viable business will make the long hours and uncertain conditions worthwhile.

Difficulty: Challenging

Instructions

Things You'll Need:

• Catalog
• Collectible compact disc or vinyl album stock
• Desktop publishing program
• Mailing list
• Website
• Promotional fliers, handbills and T-shirts
• Record price guide

Settle On Your Chosen Specialty

1. Take stock of your own musical tastes, and decide on the genres you plan to offer. Avoid the cutthroat competition for new releases--so-called "big box" stores offer deep discounts on new music to get customers in the door. Specialize in used compact disc or vinyl of genres that excite collectors--such as '60s garage, '70s funk and soul, indie releases or reggae--and plan accordingly.

2. Decide the parameters of your business, which greatly depends on available start-up capital. If a retail space is too costly, work from home until that prospect becomes affordable. If you cannot buy lots of quality collectible records, make your own stock the starting point. If you envision something grander, only a bank loan can make that happen--just be careful not to risk more than you can afford to lose.

3. Visit other stores and observe the types of records being sold, how employees relate to customers and what promotional incentives are used to lure them back. Previous retail experience is often the best indicator of success, so it's worth picking the brains of people who have stood behind the counter, just like you will.

4. Print fliers, handbills and other promotional materials to tout your business before opening it. Avoid shelling out cash for elaborate artwork--the classic photocopied punk-style flier still works, depending on your situation. Word of mouth is the best referral, so talk up your business with friends and relatives, especially if they like music.

5. Browse other record stores or go online to find the best deals on the types of music you will offer. Your net profit boils down to the record's markup value, minus the price per copy and costs of shipping it to the customer. Taking an overly small markup leaves little or no profit, while an overly big one may lose the sale. Mastering this skill requires trial and error to learn but is vital to your survival. A price guide will help you discern rarities from common pressings to help you set the correct price.

Do Not Feel Intimidated

6. 
   Rhino Records is the most famous example of a record retailer that started as a hobby.

   When you build enough sales to justify a retail space, make some hard decisions about financing. If your own credit precludes a conventional loan, you may have to borrow from family and friends--or burn through savings accounts. Add up monthly business expenses and personal savings, because you will have consider both factors in determining how much money to borrow. Income from your business is a long way off.

7. Do not feel intimidated--there is no magical way of starting, as the Pennsylvanian operators of the Angry Young & Poor store explain on their website. Working with a friend's father, the co-owners managed to find a location and get their crucial questions answered, after they reached a certain conclusion: "We soon discovered that there are thousands of small towns like Lancaster (Pa.) that are not lucky enough to have a punk store." Your own tastes and life experiences should give you a similar angle.

8. Start building your mailing list. Repeat customers are the lifeblood of any business, and without a consistent way to reach them, you will get lost in the shuffle before you even start. There are numerous desktop publishing programs to design something simple and attention-getting. The same holds for catalogs, which can be developed into unique items in their own right to promote your shop.

9. Get as much free advertising as possible. Stake out a presence online by registering as a dealer on eBay--the most widespread e-commerce site worldwide--and GEMM.com or starting your own Facebook, Myspace or Twitter website, to name three layouts that can be updated without paying or relying on a designer. Post regularly on message boards catering to the collectors that you hope to reach.

Reach For The Next Level

10. Whether you operate with a business plan or not, always evaluate where your store is headed. This is recommended for every six months, but there is no standard time line--your gut feelings are the best guide. Vowing to become your area's top northern soul music specialist is a different proposition than hosting live events to draw customers.

11. Develop incentives to build loyalty, and draw repeat customers--free shipping, deep discounts and points programs are some of the more obvious examples. Do not think yourself only as a retailer. New customers want a low-key introduction to music they might love, but it's the experience of doing business with you that will attract them back.

12. Consider hosting autograph signings, concerts, films or other types of live events to make your store stand out. Check your lease and local zoning regulations before you start planning, to rule out events that may cause problems. Allow at least six to eight weeks' lead time to make sure your event will be promoted properly--otherwise, the reward is an empty store, negating all the groundwork that you have done.

Tips & Warnings

• Always operate with a target in mind, based on your experience with the types of music that you offer. Vowing to grow your business by "X" percent in years one and two beats saying, "I'm going to be the best local hip-hop store." Never feel embarrassed when something does not work. If an event or promotional scheme backfires, talk frankly with your partners about what happened. Mistakes can help you grow, as long as you learn something.
• Do not rely on the Internet to boost revenues, because you will be competing with millions of others trying to achieve the same goal. Ideally, your website should complement your store's print catalog, and vice versa. If you work with one or more partners, vet them carefully to make sure that you share common goals. It is not necessary to agree on everything, but failure to talk out potential problem areas may hobble your dream before it starts. Relying on friends' and relatives' help is a necessary evil of starting any new business. Keep this in mind when you borrow money from them or feel tempted to argue with them for doing something that meets your displeasure. Losing a business is hard enough, but losing a relationship is harder.

References

• About Angry, Young & Poor
• Need info starting a record store/online record store
• Open a record store

Resources

• Can independent record stores survive?
• In digital age, vinyl's making a comeback