Originally published in the October 9, 1995 issue of AB Bookman's Weekly, a Magazine for the specialist book world.Chapter One: Getting Started
You've decided that you want to own a bookstore that sells mainly secondhand books. You have two basic options: buy an existing bookstore, or start your own. There are advantages to both routes, but bear in mind that neither situation is likely to provide you with much of a return on your investment for some time, quite possibly two to three years. So, either way, you'll need a sizable amount of capital. Bank managers generally don't look favourably on lending money to buy or start a secondhand bookstore, unless you're in a position to take out a first or second mortgage on your home-- in that case, they don't care what you do with the money. Barring that option, however, you will have to either borrow the money privately or have already saved it. Buying a Store Up until a few years ago, it was still possible to start with as little as $10,000. It was a struggle and you needed some luck, but it could be done. I know someone who bought a small, dingy paperback store for $5000 in 1985. He took everything out of that store, gave it a good cleaning, repainted and installed some decent shelving. He threw away most of the books, put in some of his own, and bought many more paperbacks and hardcovers. His overall investment was about $10,000. Two years later he had a fairly successful bookstore. If he had concentrated his efforts solely on building up his business, I'm certain he would have been doing exceptionally well today. He inherited some of the old customers of the paperback store; he had a decent location where he was able to acquire new customers once they saw how the place had been cleaned up; and, he was lucky enough to begin with a very low rent because of the condition of the place when he first moved there. So what this person actually did was buy an existing store and start his own business as well, by substantially adding to the existing stock plus improving the decor. However, an opportunity such as the foregoing is unlikely to present itself to you. To be realistic, you should probably expect to need a minimum of $25,000 to get into the book business now. I asked a women who started a store in September 1993 what it had cost her to set up and open. She informed me that she had begun with $25,000 but she suggested that $30,000 would have been more reasonable. (Author's Note: 2008 equivalent for setting up a used-book store, probably $75,000-$100,000.) I bought my first retail bookstore in December, 1981 for $12,500. It was a bookstore that was providing a living for the owner and his family. You can be sure that any bookstore that's available for less than $20,000 today isn't making much money. You may still want to consider buying a store for between $15,000 and $20,000 but only if there's a good combination of certain factors. These include: past success (and therefore a temporary present decline); a steadily building sales record; reasonable rent and a good lease situation; a prime location; a decent stock. If you can purchase a store with the preceding characteristics for less than $20,000, then immediately spend an additional five to ten thousand dollars on extra inventory as well. You will then be placing yourself in a favourable situation--a situation where you should see an immediate increase in cash flow. From that cast flow you pay your bills and keep buying new stock, as dictated by the wants of your customers. If you're buying right, the more stock you have, the higher your sales will become. If you have more than $25,000 to invest, look around for a successful bookstore that's for sale strictly for reasons extraneous to the financial picture (i.e. owner's illness or wish to relocate). When buying a store like that, there are a couple of simple rules of thumb: if the last year's gross sales equals or is more than the asking price and the retail value of the inventory is equal to or greater than the gross sales, then the asking price is probably fair. For example: if the store's sales for the last fiscal year were $48,800 and the inventory is estimated to have a retail value of $55,000 to $60,000, then an asking price of about $45,000 is now unreasonable. This situation, of course, precludes any negative factors such as an imminent jump in rent or a notice that the building will soon be torn down and replaced. Relocating a store is a painful business. Don't get yourself into that sort of situation. Talk to the landlord before you buy a store and be sure of where you stand. If the present lease has only a short time to run, negotiate a new nease or an extension before you buy. Generally, unless you are wealthy and you find yourself obsessed with owning a specific successful bookstore no matter the price, you shouldn't spend more than $60,000 to buy an existing secondhand bookstore. There are many one and two-owner bookstores available in Canada and the United States for less than $60,000. If you have more than that amount available to you, you may as well start your store with handpicked stock and have a lot of fun doing so. (Author's Note: consider the 2008 equivalent to be $100,000.) Starting from Scratch There's an old saying that when starting your own business, the three most important factors to consider are: 1)location, 2)location, and 3)location. For a secondhand bookstore, we can modify these criteria to include: 1)good stock, 2)low and constant overhead, and 3)location. Location is important but mainly for access, not for walkby traffic as you might expect. All you need do is locate your store on a main street with easy access from all over the city. You don't have to be on one of the few streets that have the highest concentration of people, be they locals or tourists. To do so, you would most likely be forced to pay very high rents and be subject to frequent increases in rent. Find a good, solid, older building in a part of the city that is not likely to be razed in the next few years for new development. There are many buildings that have been in the same families for decades and are long since paid for. These landlords tend to be fair with their rents, just expecting a fair return year after year, with the only rent increases being made to cover maintenance and tax increases. Let costs dictate your location, not location dictate your costs. In the bookselling business, this is a very important axiom. Another very important axiom is "if you have the (good) books, people will come to you". The most important factor in starting your own bookstore is your opening day inventory. You'll want to make a good and lasting impression on your first customers. I think that the biggest mistake any owner of any new business can make is to open the doors with inadequate stock. But before we discuss books, let's consider fixtures. Once you have your store space leased, preferably with a one- or two-year lease and a two- or three-year option, you have to decide what fixtures are needed. Gone is the day of dark, dingy bookstores with poor organization. This type of used bookstore has lost its charm. Although you don't have to emulate new chain bookstores' plasticization, or create a sea of glass and stainless steel, you'll do well to appropriate the clean, bright, organized impression of the new bookstores. Believe me, it promotes extra sales! You can still create a cozy, old-fashioned atmosphere with a warm- hued carpet, dark-stained wooden shelving, hanging lamps and a few old prints and paintings, but install adequate shelf lighting and keep your store reasonably clean. One visit to your store will then dispel and antiquated ideas that many people still have of used bookstores. Once they see how bright and clean your store is and how easy it is to find books there, they'll not hesitate to return nor refrain from recommending your store to friends. People just want to feel comfortable where they shop and get good servide--you can provide both with a little effort. But don't go too far with this comfortable bit. You may want to provide an extra armchair or two for visitors, but try to restrict it to that. It's easy to establish a comfortable and convenient stop for hangers-on who buy very few or no books but wish to take up your time and drink your coffee. You can't avoid a certain amount of this activity (or non-activity) but you should try and control it right from the start. I realize that there are booksellers who pride themselves on this kind of open, friendly atmosphere where there are a half dozen people sitting around reading or discussing things at any given time, but I just don't feel that this atmosphere is conducive to the business of bookselling. It is my opinion that the people who take advantage of such facilities don't buy many books and they deprive the bookseller of the time necessary to spend with legitimate bookbuyers, thereby reducing sales. The other factor is space--to be successful, you must derive as many dollars of sales per square foot as possible. Yes, it's all very nice to be a friendly haven for kindred souls, but just like the major retailers, you must have a calculating view of realities as well. If you wish to sponsor a book discussion group, make your store available one evening a week, after regular business hours. One by ten-inch shelving boards are adequate for most hardcover books. My suggestion is six-shelf, seven-foot high by 30 to 36-inch wide units. If you're blessed with high ceilings, don't think about that space to start with; chances are you'll use that space later as you expand your stock. You should build three or four deeper units (using one by 12- or one by 14-inch lumber) and intersperse them throughout your store. These shelves will be necessary for larger format books such as art books, do-it-yourself books, some children's books and certain cookbooks and craft books. Do not nail your bookshelves together or fasten to the walls with nails. Use wood screws, preferably with a Robertson head. You only have to move your store once to appreciate this advice. The shape of your store will dictate the layout of your shelving but most store spaces are long and narrow. Whatever the shape of the store, all perimeter walls should be covered with bookshelves. If you have the width, you can run shelving perpendicular from the perimeter walls. If not, you can run one or two rows of back-to-back shelving down the centre of the store. Keep it simple, make it stable and label well. Conspicuous signing to identify book categories is essential because it saves so much time for you and your customers. This is something that new-book store owners have been doing well for a long time and used booksellers have lately been taking this direction with profitable advantage. The majority of booksellers carry at least some paperbacks now. Once you decide what categories of books you're going to carry, you'll have a better idea of how many paperbacks your store will have. If you plan to have a general bookstore, you'll probably be carrying some paperbacks in several sections: literature, self-help, biography, children's, poetry/drama, history/travel. One by four-inch shelving is adequate for paperbacks. Build several two to three-foot wide sections and integrate them throughout your store so that the paperbacks can be in close proximity to their hardcover counterparts. Build your paperback units with no more than six or seven inches between shelves, then lay the paperbacks flat. In this way, the title on the spine is easily read. Customers appreciate this convenience so that they don't have to cock their head like a rooster to read titles as they would if paperbacks were standing on end. If you plan on carrying large quantities of paperbacks, and this usually means lots of fiction, then you should consider building drawer units. When I entered the retail book business, I bought an existing store and there were about 50 lineal feet of drawer units in the store. They had been built by a cabinetmaker specifically for storing paperback books. The units were sturdy and the drawers opened and closed very smoothly. After more than 13 years of constant use plus one traumatic move to new premises, the drawers still work like new. And the units were already 12 years old when I bought them. So, if you decide to go this route, it will pay great dividends to spend a little more and have them built by a very competent carpenter. There are several advantages in having drawers available for storing paperback fiction. The first advantage is space. Most of the drawers in my store are used to hold books by the most prolific authors. The space above the drawers holds my science-fiction, detective fiction, espionage/adventure and general fiction categories, in alphabetical order by author. If books by authors like Agatha Christie, Erle Stanley Gardner and Piers Anthony were shelved with the other detective and science fiction/fantasy authors, the C's, G's and A's in those categories would take up a lot of shelf space. Add other names like Rex Stout, John Creasey, Dick Francis, Robert Heinlein, Isaac Asimov and Star Trek novels, and you're talking some serious shelf space! (Author's Note: substitute names of more current popular authors.) On the other hand, my units have a total of 137 drawers, holding between 40 and 50 paperbacks each--that's over 6000 paperbacks out of sight, but carefully organized. Customers appreciate organization, especially today when many people often have only minutes to shop. When someone can walk in the door, go directly to the detective fiction section, look under the B's and quickly select the latest Lilian Jackson Braun "The Cat Who..." book, then pull out the "Dick Francis drawer" and select a title yet unread, then walk up and pay for the books, all in less than five minutes, that's a happy customer. If customers have to spend too much time looking, they're going to spend very little money in your store. This penchant for organization should also apply to your hardcover sections of course. Any fiction sections should be alphabetized by author. Small sections of two or three shelves, such as art, music, poetry and drama in my store are allowed to be randomly arranged because a customer can look them over quickly. However, any large sections should be arranged in a number of sub-categories. For instance, if you have a large cookbook section, try to keep all the Oriental cookbooks together, all the dessert books and so on. Once this is done, always encourage customers to put books back in the space they found them. Two more comments on organizing your store: 1)whether you have your sales counter at the front or the rear of your store, try to arrange your sections so that your more expensive books are close to where you spend a lot of your time; 2)try to have a fairly open floor plan with good sightlines so that you always have a good view of your stock and your customers. The vast majority of visitors to your store will be completely honest, but it will benefit you to take precautions against potential "stock shrinkage". XXXXX Terry A. Stillman
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