Opening Record Store


Looking for advice from my fellow audiogoners...I have the potential to move into a store front that is already being operated as a record store (lps only) and become the new shop proprieter/owner. The owner has offered me the space (rediculously cheap rent) in a good area of town. He has had his store for about 5 years now and has a steady customer base. He will be taking all of his inventory and record storage bins that were in the store.He has a web site set up already and signs out front indicating the name of the shop...I plan on rebranding the shop with name change and interior upgrades. It is not a large space maybe 800-1000 square feet. I have a rather large inventory of my own so my up front investment of vinyl would be minimal. The owner wants me to buy him out..basically give cash in return for his customer base and the potential to get my hands on pretty good collections. I am trying to come up with a fair valuation of something like this and I am looking for advice..What do you think something like this is worth? Thank you in advance.
fromunda

Showing 1 response by fleschler

Millercarbon is mostly correct.  Do not listen to anything nonoise utters.  In SoCal, there are several successful LP/CD retail stores.   They generally have an on-line presence, have both new and used stock and large collections, mostly in storage.  Some use special discount dates a few times annually to draw in customers.   One store gives away 100 LPs for a $20 in store purchase (they purchase 250,000 LPs annually and give away stock that is mostly unsaleable at $5 or more).  

For those who have steady income, can afford private schools and live in a good community, California is attractive still.   As a businessman, I do not invest in any new Calif. business which is subject to increasing regulations (apartment ownership-low yields of 4-4.5%, increasing costs and regulations, why they still like hot cakes I don't understand and I was a commercial real estate appraiser for 28+ years).   I only own single family rental homes in Calif. where I have the option to sell to owners if the rent is insecure (all 23 tenants have paid rent in 2020 due to below market rents and 24 hour repair service-many decade long tenancies).  Some friends and relatives have moved out of state due to business reasons.   

Before purchasing any business, one needs a business operation education.  In Calif., there are no simple brick and motor businesses that one can just open.  Many posters have provided you with the requirements and pitfalls of opening any business, let alone a retail record store.   I would do it as a hobby only but time is precious and I rather listen to music with a few friends then create the "High Fidelity" scenario.   My other investments include recession proof businesses out of state.   I extremely warn you against buying this record store.