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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
mitch2
3,961 posts
 
You have received a lot of really good advice here, including;
@millercarbon 
No one knows the current worthlessness of the business like the current owner.
@noromance 
By keeping the name, inventory, and fixtures, he’s not really selling you anything other than an empty store that used to be a record store.
@jdane 
Minimally, you should ask to see his books in detail and study them carefully.
@uncledemp 
I think putting together a business plan would be time well spent.
All you are getting from this "deal" is the storefront with "ridiculously cheap rent in a good area of town" and a "steady customer base."  This guy is doing you no favors if he "will be taking all of his inventory and record storage bins."  Without the inventory and bins, all you are doing is renting a storefront and the "business" is worth zero.  The customers are already in the area.  Sheesh.....he has even become your instant web competitor who is selling his existing inventory from a website he is already advertising from your (future) shop!  Duh!

If the location is that good, and you are looking for a hobby, then open a coffee shop (serving something better than S'bucks), or a sandwich shop, where you can play good music for your customers and operate a B&M pick-up point for a vinyl web business.  Otherwise, in the wise words of: @millercarbon 
Its a rocks in your head thing to do if your goal is income.

mdalton's avatar
mdalton
458 posts
 
Also gotta know how many customers on his list before you can assess what you’re getting for $10k.  And how much marketing has he done to this list of customers previously?  if not much, they come to his store based on convenience of location, habit, comfort with his inventory, etc.  Wouldn’t pay for that.  You might also want to look into buying data - are there alternative lists out there one can purchase, and what does that cost?  (Why do I suddenly think of Glengarry Glen Ross?) Finally, idea for name?  Twist on one of the great bars of DC (“Off the Record”):  “On the Record”.
cd318
2,636 posts
 
Err yes, more good points neither California or Hong Kong would inspire much confidence right now.

Political stability is important for business. Everyone knows - unless you’re in the instability business of course - yes you Mr Soros!

If you want to run it as a boutique venture then you’ll need to work out just how much you can afford to lose each year.

I knew a few people who had inherited comicbook shops from their parents. They’d grown up themselves in the business.

One of them, in Birmingham, had to downsize gradually moving away from the city centre until he no longer even had a shop. The other was based in East London. I expect he’s long gone too.
noble100's avatar
noble100
2,419 posts
 


Quick, throw all your money in the fireplace and set it on fire. Yes, you'll be flat broke, but at least you'll get it done less gradually and frustratingly.

Tim
tablejockey
3,882 posts
 
Asking business advice on a internet forum....

Off to a bad start.
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