Business Overview


Due to the growth and success of digital and streaming music services, such as Spotify and iTunes, record stores no longer appeal to most mainstream consumers of music. Today’s successful record store businesses serve as a resource for individuals with a deep interest in a particular musical style or styles. In a record store, one can find rare albums and collectibles that are not found elsewhere easily. The customers may be collectors or just ordinary music lovers. Vintage record players are usually on display for sale. The record store owner(s) and staff are like walking encyclopedias about favorite music styles and their enthusiastic love for music is contagious.

Who is this business right for?

Do you like listening to music? People attracted to this business love listening to music. They enjoy understanding the detailed history of music (“musicology”). They know how the creation of a music style happened, who performed it, and how popular a style became. They enjoy serving as an authority/guide for others as a curator for specific styles. Independent record stores are not particularly lucrative and are best suited for music lovers, who are content with marginal profits.

What happens during a typical day at a record store?

The daily activities for the staff or owner of a record store include:

  • Marketing efforts to find customers - A combination of selling online with a physical retail presence is most effective. The physical retail store may be very modest. In fact, it should be. However, profits do exist from managing vast catalogs of acquired materials and selling them both online and offline. The marketing budget is usually limited to free postings online such as offerings on Craigslist or eBay. Posting flyers around town and at music events or collector conventions is also helpful.
  • Closing out the accounting for daily sales and updating inventory records – Every day, enter the sales from the day before in the accounting system and update inventory records to reflect the sales.
  • Order fulfillment – Process any sales that need shipment and prepare the packages for pickup by the shipping company.
  • Cash management – Count cash in the register(s) to verify the correct amount exists according to the transactions made. Note any discrepancies. Make change from the register proceeds for large cash bills to make sure the change is available for cash-paying customers. Deposit any excess over the baseline cash requirements into the business banking account.
  • Clean the store – This includes making sure to clean all areas of the store according to a posted daily schedule. Additionally, check the bins for vinyl records for proper alphabetization and artist/genre categories to make sure the correct product, offered for sale, is in the correct place.
  • Promotional materials – Put up and keep current the display of promotional materials.

What is the target market?

People who love listening to music and collecting it are the ones attracted to this business. Another customer type is a DJ looking for extended play or dance mix albums to use in clubs.

How does a record store make money?

Records sell at retail prices with sales tax. For online sales, shipping and handling charges are additional.

What is the growth potential for a record store?

There are no significant franchise opportunities. The trend with record stores is that they are largely independent. This is a very niche area where there are no longer many retail chains. There is less possibility for expansion when starting with one store. Some of the best independent record stores closed down, so this industry sector is reducing not expanding.

Getting Started


What are some skills and experiences that will help you build a successful record store?

You have to love listening to music. The best ones in this business love learning the detailed trivia about the music, including information about its creation, who performed it, and why a particular record is significant.

What are the costs involved in opening a record store?

By far the largest expense when getting started is investment in inventory. In order to have a nice selection, the investment in inventory is around $100,000. Some store owners use their own personal collection of items acquired over decades and open a record store in order to liquidate their personal collection.

Equipment needed is a cash register(s), bins to hold items for sale, appropriate lighting, and decorations to make the store attractive. The other thing needed is exterior signage. These add up to an additional $10,000 to the startup costs.

Finally, a deposit is often required to sign a long-term lease. The deposit amount depends on the monthly rent and the size of the retail location.

What are the steps to start a record store?

Once you're ready to start your record store, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

  1. Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
  2. Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your record store is sued.
  3. Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
  4. Open a business bank account. A dedicated checking account for your record store keeps your finances organized and makes your business appear more professional to your customers.
  5. Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
  6. Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
  7. Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
  8. Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
  9. Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Recommended: Fizzle.co offers video courses and a supportive online community of like-minded entrepreneurs. Try one month membership for for free.

Growing Your Business


How to promote & market a record store

Establishing your store as an expert resource for a particular music genre(s) is critical. Some record stores cater to DJs looking for the newest released long-play vinyl records. Owning physical records is necessary to DJs for the type of mixing they do in a live club scene by hand. Other clients that come to these specialty record stores are looking for rare items, hard to find elsewhere.

The good news is that vinyl record sales are increasing dramatically. A report from Forbes says that the sales of vinyl records are up 30% in 2015, with a total of around $12 million in sales of records in the USA during 2015.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

To take advantage of renewed consumer interest in vinyl records, a record store will do well by having many in-store record signing events to promote sales of signed items in the record store. Members of bands who appear for record signings, famous DJs, or others who are well-known for their musical importance are all potential candidates for such in-store events.

How and when to build a team

Usually, the store owners do most of the work. If any staff is hired, the pay rate is typically close to minimum wage as revenues in this business seldom support large payrolls. It is important to hire staff that have a love for music, know a lot about it, and are enthusiastic about sharing their knowledge with customers.

Legal Considerations


State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to open a record store. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, check out our informative guide, Sales Tax for Small Businesses.

In addition, certain local licensing or regulatory requirements may apply. For more information:

Music Licensing

In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP and BMI.

Reduce Personal Liability

Structuring your business as a limited liability company (LLC) ensures your personal assets are protected in the event your business is sued.

What is an LLC?

Form an LLC in 5 easy steps

Earning Potential


How much can you charge customers?

Retail sales average around $24 per buying customer. Extremely rare collectibles can sell for many thousands of dollars.

What are the ongoing expenses for a record store?

The main expenses are rent, electricity, and staff costs. To succeed, these need to be as low as possible. For example, renting a high-traffic location in a high-priced shopping mall is completely the wrong idea. The rent needs to be very low and the location can be in a very odd place or even out of the way. The attraction is the inventory and store-owner knowledge, not necessarily the location of the store.

How much profit can a record store make?

There may be low sales during any particular week. Then, a regular collector may come in and buy a significant amount of items. A small record store might make $800 to $1,000 per week in average sales or $41,600 to $52,000 in sales per year. Approximately 25% of the sales are profits, which equals $8,350 to $10,500 per year.

How can you make your business more profitable?

Great strategies to improve profitability of a record store business include:

  • Acquire entire collections at bargain prices from estate sales.
  • Find valuable old records in second-hand stores and at garage sales at low prices.
  • Take rare items in on consignment.
  • Sell both from the shop and online.
  • Sell CDs and DVDs in addition to records.
  • Feature in-store performances.

Next Steps

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