How can I tell if a record store for sale makes money?

A record store’s total sales hide very different businesses under one roof. New releases, used collections, an online marketplace shop and a busy event day each behave differently and need different work from the owner. Your task is not to reach a verdict from one number. It is to see which parts of the shop earn their keep, and whose labour makes them work.

Split the sales by stream

Ask the seller for sales broken into new vinyl, used vinyl, other formats, merchandise, the online marketplace, the shop’s own webstore, and events. Ask for the same split across several seasons, not one. A shop that leans on one stream, or on a handful of busy days, carries a different set of risks from one with steady sales across the year.

Look at the busy days

Record Store Day and similar events can bring a rush of customers and a pile of special releases. Ask what the shop sold on those days, what it cost to stock and staff them, and whether the shop’s allocation of releases depends on a relationship with the owner. A rush is useful to know about, but it is not the same as an ordinary week.

Count the unpaid labour

Owners of record shops often spend long hours buying collections, grading, pricing and listing online. Ask who does that work, how many hours it takes and whether it is paid. If you would need to hire someone to replace it, that cost belongs in your picture of the business. Your accountant can help you adjust the statements to show it.

Tie every claim to a record

Match the seller’s sales figures to financial statements, bank deposits, point-of-sale reports and marketplace payout reports. Where a number cannot be matched, ask why. Do not rely on a summary alone, and do not assume a number is wrong either. The aim is a clear, documented picture you and your advisers can read together.

• Sales by stream across several seasons.
• Marketplace and webstore payout reports.
• A description of the owner’s weekly duties and hours.
• Notes on any releases or events the shop relies on.

The same method works for a neighbouring trade, as in how to tell if a comic book store is profitable, and how to check a record store’s used vinyl stock is the next question.