Opening a Second Record Shop? You Can't Scale Mess

By Adam Stott, founder of Big Business Entrepreneurs and business growth expert

Key takeaways

• The first rule of scaling is that you can't scale mess. Make store one repeatable before you open store two, or you'll just get more uncertainty.

• Passing trade is unpredictable. An independent shop needs an acquisition process that drives people in, and an online side that works with the store rather than separately.

• Recurring revenue and premium events can add more to a shop than a second site. Imagine 100 members at £97 a month: that's £9,700 a month before anyone walks in.

The business owner in this article has been anonymised to protect their privacy.

At a recent event, I brought the owner of an independent record shop up into the hotseat.

The business has done really well. It sells new and second-hand vinyl in a physical shop and online, and it turns over around £700,000 a year across the two.

When I asked what great looks like, her answer was clear. She wanted to be confident in their processes, get even better at what they do now, and then replicate it with a second store.

What was getting in the way? As the shop had grown, people originally hired to do a bit of everything had grown into roles that were never designed. There was a lot of uncertainty about where things stood.

Should you open a second shop to grow your retail business?

Not until the first shop is repeatable. A second store copies everything about the first one, including the problems. If your sales, processes and customer flow aren't predictable in store one, store two simply doubles the uncertainty. Get store one working like a model you can copy, then build it out.

This is what I told her on stage:

"The first rule of scaling... is that you can't scale mess."

I used the example of Nando's. The reason they could open hundreds of restaurants is that they got the first one right. They made it cookie cutter, then opened the next one. "Store one was no different from store two, from store three." They had a repeatable business model, so they could build it out and scale it.

To her credit, she got it straight away.

What does "process" really mean for an independent shop?

Process isn't just staff rotas, admin and dotting the i's. It's three things: a marketing process that brings customers in, a sales process that makes money from those customers, and an operational process that makes sure you deliver. If any of those depends on luck, the business isn't ready to copy.

Her biggest gap was the first one. Her shop was in a busy spot, so most customers were walk-ins. That's earned, and it's good business, but it's unpredictable. You need a different acquisition method that actively drives people in.

How do you make a shop's sales more predictable?

Stop relying on passing trade. Use paid ads that make a return, and connect your online and in-store sales so each one feeds the other. Then add recurring revenue, such as a membership, so a good part of your income arrives every month whether or not people walk through the door.

Right now, the business doesn't know when people will come in, when the sales will come in, or whether a sale will be £4, £40 or £100. One day is good, the next isn't.

Instead of opening more stores, I'd be looking at the offer mix and at building out the online side. That means paid ads that make a return, online customers who visit the store and buy more when they do, and a more experiential store that gives people a reason to come in. When that works, "the online has synergy with the in-store, so they're both serving each other."

Can a record shop build recurring revenue?

Yes. A shop with a loyal, collector-style customer base can turn that loyalty into a paid membership or club, with a monthly fee in return for curated records, community and access. Even a modest number of members gives the business predictable income it doesn't get from walk-ins.

There's no reason you couldn't build more of a tribe-type community for people who collect records. Imagine members paying £97 a month to be part of your record club, with new records and other things sent out to them.

• 100 members is £9,700 a month.

• 500 members is close to £50,000 a month, which is around £600,000 a year.

How can events add premium revenue to a shop?

Use the store and the community as the base for premium, ticketed experiences: events, retreats and artist appearances for your most engaged customers. These bring in high-ticket revenue, feed your membership and online sales, and don't need a second site.

She told me they already run events, so the foundation is there. Imagine record retreats, or events where you bring artists in and sell tickets. Each one feeds the community, which feeds the online side, which feeds the store.

How do you choose between opening a second store and growing the first?

Ask whether store one is repeatable and predictable yet. If customers depend on passing trade, sales swing from day to day and your marketing, sales and operational processes aren't set, a second store will just copy the uncertainty. Build more revenue opportunities from the store you have first.

Ask yourself these questions:

1. Is store one a model you can copy? Nando's could open the next store because "store one was no different from store two."

2. Is your customer acquisition predictable? If it relies on people walking past, it isn't yet.

3. Do you have all three processes? A marketing process, a sales process and an operational process.

4. Do you know what tomorrow's sales will be? If a sale could be £4, £40 or £100 and one day is never like the next, you don't have certainty yet.

5. Have you used up the revenue opportunities you already have? As I put it to her: "You definitely don't need more stores. You need more revenue opportunities and you need more predictability."

Passing trade vs predictable revenue: what changes?

Relying on passing trade means you don't know who will walk in, what they'll spend or how the month will end. Predictable revenue means paid ads that make a return, an online side that sends people to the store, monthly members and premium events, all built around the shop you already have.

Here's the side-by-side for this business:

• Getting customers: mostly walk-ins → paid ads that make a return, plus an acquisition method that drives people in.

• Online and in-store: online sales had dropped → the online side built out and blended with the store, so each one sends customers to the other.

• Income: every sale could be £4, £40 or £100 → recurring revenue from a record club.

• Events: they already run events → premium ticketed experiences, such as retreats and artist events.

• Growth plan: open a second store → more revenue opportunities and more predictability from the first.

5 steps to grow a record shop before opening a second store

1. Don't copy a mess. Before you open a second site, check that your first one runs the same way every week.

2. Fix your three processes. Write down how you get customers, how you sell to them and how you deliver. Start with the weakest.

3. Build an acquisition method. Use paid ads that make a return, so you're not relying on passing trade.

4. Connect online and in-store. Make each channel send customers to the other.

5. Add recurring and premium revenue. Start a membership or club for your most loyal customers, and use your space for ticketed events.

She didn't need a second store yet. She needed more predictability from the first one, and that took about ten minutes to work out.

Frequently asked questions

When should an independent shop open a second store?

When the first store is repeatable. That means predictable customer acquisition, a clear sales process and operations that run the same way every time. Opening before then copies the problems and adds uncertainty.

How can a record shop get more customers than passing trade?

Use an acquisition method that actively drives people in, such as paid ads that make a return, and connect online and in-store so online customers visit the shop and shoppers buy online.

What recurring revenue can a retail shop add?

A membership or club for loyal customers is one option. Adam Stott's example was a record club at £97 a month: 100 members would bring in £9,700 a month.

Is it better to grow online or open another shop?

Adam Stott's advice is to build the online side and blend it with the existing store first. When the two work together, alongside recurring revenue and premium events, the business can grow without the cost and risk of a new site.

About Adam Stott

Adam Stott is the founder of Big Business Entrepreneurs and a business growth expert. He has built three eight-figure businesses and helps business owners scale through events, training and coaching.

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