Start a Bookstore
Starting a bookstore can provide a great opportunity for you to turn your passion into your livelihood. Small, independent bookstores can prove to be quite successful, and will enrich their surrounding community. While it can be intimidating and quite challenging to start a business and compete against the big retailers, by following a few steps you can learn how to start a bookstore.
Steps
- Do your research. Study the retail markets in your area, especially booksellers. Determine if the market will support an additional business, and what niches might be unexplored. Talk to other small business owners in the area; use their information to decide how your business might best be structured to address the available markets. Ask friends or even conduct a poll about what community members would want to see in a new bookstore.
- Put together a business plan. A business plan is a formal document describing your proposed venture; it will state your goals, why you think those goals are achievable, and how you plan to reach them. You will be pitching your business plan primarily to lenders and investors, so financing your endeavor will depend on putting together a solid business plan. A business plan has many key components.
- Be sure to include a good executive summary. The executive summary presents an overview of your entire business in just 1 page. If you don't impress your reader with the executive summary, they may not even read the rest of the business plan.
- Include a solid marketing plan. This is likely the most important part of the business plan. The marketing plan demonstrates to your reader that you have analyzed your target market and that you understand the market. Include details about your product, your distribution strategy, your pricing scheme, and your marketing budget.
- Don't neglect the financial documents. Lenders and investors look at this section first. Include 3 years worth of projected balance sheets, income statements, and cash flow statements. Prove to investors that they can see a quick return, and show lenders that you are not a risk for default.
- Find a location. Finding a good rental space is essential to running a successful business. Make sure your bookstore is located in an area with a lot of pedestrian traffic, if possible. Be sure to comply with local zoning ordinances (in general, you will need a property zoned for commercial usage). Pay attention to how much tenant improvement (TI) you will have to do, such as installing bookshelves and a counter.
- Obtain financing. Determine how much start-up capital you will need, and then formulate a plan to get that money. This money will come from 3 primary sources: yourself, investors, and lenders. Achieving a balance between these 3 sources is crucial to the financial health of your business.
- Prepare to put some of your own money into the business. Lenders like to see this, because it shows them you have a vested interest in not defaulting on your loans.
- Attract money from investors. Get in touch with friends or venture capitalists and convince them that your business is a promising investment. When investors give you money, they establish equity in your business, meaning they become part owners. You are not obligated to pay them back if the business flops, but they will expect a high return in exchange for shouldering that risk.
- Get a bank loan. There are plenty of small business loan programs available. Loans have the benefit of costing less than equity (the interest rates will be lower than an investor's expected return), but you are obligated to pay them back.
- Note that there is actually such a thing as having too much start-up capital. If you have wads of money, you will generally be more reckless in spending it and won't pay enough attention to market signals.
- Make your business legal. This means applying for a business license, and deciding on your legal business form. If you incorporate, your personal assets will not be at stake, but your income will be taxed both as corporate and personal income. If you operate as a sole proprietorship, you risk losing even your personal assets (like your car or home).
- Stock your bookstore. Order books from suppliers and publishers and start filling your shelves. If you are running a used bookstore, look for deals on book collections online, at estate sales, or even at yard sales. Make sure your stock of books aligns with the market niche you indicated you would explore in your business plan.
- Advertise your business. Prior to opening, make sure people in the surrounding community know about your new bookstore. Consider printing fliers, putting ads or coupons in the local newspapers, advertising online, or holding a grand opening sale. Make sure to take advantage of social media technologies to spread the word about your new store.
- Consider offering other services at your bookstore. Schedule book readings and book signings. Offer classes or seminars on topics appropriate to your bookstore's niche. Consider opening a small cafe in your bookstore. All these options are a good way to bring in revenue while distinguishing your store from the big retail chains.
Tips
- You could consider opening an online bookstore. This will save you money on rental space, as you will only need inventory space.
Things You'll Need
- Business plan
- Business license
- Books
- Fliers or coupons
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