What-You-Should-Know

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					                        What You Should Know Before Starting
                   Your Own Bookstore — or Buying an Existing Store

  What could be more rewarding than being a champion of       4. Know the value of your business. What is your vision
books and reading — while making connections within           of success? How much of that has to do with what you can
your community and creating a career where you’re in          earn while owning a bookstore? When you’re buying an
charge? Owning a bookstore can be satisfying in so many       existing business, rely on a thorough business valuation
ways.                                                         conducted by a CPA for that answer. Using official tax re-
                                                              cords, you’ll know whether it’s enough. If you’re a start-
   We’re glad that you value independent bookstores and       up, how long can you go without taking a salary? It can
think that you might want to own one. Yet we want you to take up to three years to establish a new business and break
know there’s a reason that there are an equal number of       even. If that idea keeps you awake at night, maybe it’s a
stores that open and close each year — too many under-        risk that is too great at this time. Know what value you can
estimate the challenges involved. As with any career transi- build over time — or what you are buying.
tion, it takes time to learn a new industry, pick up skills,
and know about the things that can make a big difference      5. Develop your network. Both within your community
for your long-term success.                                   and within the book industry, you’ll need to meet new peo-
                                                              ple who will be important to your success. From joining
   Are you ready to own a retail business?                    booksellers associations to learning the difference between
Here are five things you should know before you jump in: buying through wholesalers and publishers, there are many
1. It’s a unique and somewhat quirky industry. Unlike         people to meet who power the world of books. Inside your
the gift and toy industries, the book industry operates on    community, you’ll need vendors, a bank, credit card proc-
what we call ―short margins‖. The gross margin in the book essing — plus you’ll need to know members of the media,
industry is roughly ten percent less than the others — and    business organizations, and other owners of indie retail op-
that means fewer dollars to cover overhead costs and leave erations. Keep gathering those business cards.
a profit at the end of the day. When you find a jewelry store    Starting a bookstore can cost at least $100 per square
or gift store successfully operating for years, keep in mind foot. Many run much higher than that. The good news is
that their margins are much higher, so they can better af-    that there are formal training opportunities, trade associa-
ford the best locations. Learn more about these and other     tions with valuable resources, and book industry vendors
nuances specific to the book industry.                        with critical products and services who want you to suc-
2. Retail is hard work. If you’ve never stood on your feet        ceed. Your education will require more than taking a cur-
all day, lifted heavy boxes, multi-tasked constantly, been an     rent bookseller out to lunch, however – or a cookie-cutter
employer, paid payroll and sales taxes, managed a staff           guide to owning a retail business. Invest in your success.
schedule for around 70 hours a week, or balanced a cash           Take your time to learn, plan, and implement your dream.
drawer, there’s a lot to learn. If you love to cook, that won’t
necessarily translate to being a successful restaurateur. If
you love to read and recommend books, that doesn’t mean                        Learn, Plan, Open!
you’ll enjoy being the owner of a retail bookstore business.
Try retail to see if it’s a good fit for you.                             Subscribe to our free e-newsletter
3. Don’t fall in love. With a location, that is. You might                  Indie Bookstore Entrepreneur
have started this journey of owning a bookstore because the                          Visit online for:
perfect location has become available in your community.                    Free Reports
Some of the worst-case scenarios are when a new owner                       Opening A Bookstore: The Essential
signs a lease before fully understanding a bookstore income                 Planning Guide
statement — and agrees to pay at rates that the business can                Bookstore Design Gallery
never afford. Location costs (which include rent and associ-                Workshop Retreat Schedule
ated fees, utilities, and maintenance) should not exceed ten
percent of what you think you can sell annually. Be willing                         Paz BookBiz.com
to walk away — and know when you should.                                              800.260.8605

				
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posted:11/18/2012
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