Financial Aspects of Starting a Bookstore

Introduction

I am one of the trainers for CirclePOS. The aim of ‘opening the books’ and sharing my situation is to help people wanting to start a bookstore avoid costly mistakes. This is one case example in Australia but can probably be extrapolated to get a ballpark idea of what is needed in many other markets. We invite other stores to comment and share their experiences to broaden the picture and help more new bookstores.

This article focuses on the financial aspects, it should be read in conjunction with How to Open a Bookstore

About the Book Barn

(thebookbarn.com.au)

The Book Barn stores (two) are well established businesses. The Belgrave Book Barn has operated for 30+ years, the Rosebud store has operated for 20+ years. During this time, we have expanded our stock range beyond books. We now carry art materials, board games, and collectables. These factors should be taken into consideration when calculating our stock value footprint. Art materials in particular tend to have a small footprint, but high wholesale value.

We would currently operate with $400/m², increasing to roughly $500/m² during peak periods. It should be noted that both stores would be considered very large as independent bookshops. Belgrave Book Barn is 300/m² & Rosebud Book Barn is 400/m².

Stock

A medium size bookshop would be 150/m². To comfortably stock this store we estimate a bookseller would require $30,000 to $35,000 worth of stock. This would ensure that the store was neither overstocked nor understocked. Aside from the obvious financial burden (most new accounts with publishers will be created pro forma), overstocking a store potentially overwhelms your customers. Makes it more difficult for them to find what they are looking for, and makes browsing the aisles a chore. Understocking a store leaves the customer disappointed with the new bookshop. An understocked business gives the impression that the store is closing, or not a permanent fixture.

Floor Plan, Design & Shop Fitting

It is important to consider the best floor plan for a store. It is traditional for bookstores to have their children’s sections at the rear of the premises, as these are usually popular parts of the store, customers would be forced to view the entire store to reach them. The idea being that a customer may potentially buy extra items that they see along the way.

Front counter style and location need to be decided as well. While many stores choose to have their counter at the entrance of the store, this may be impacted by factors such as window displays and product placement. Recently, there has been a trend to move store counters to a central location in the shop.

Shop Fittings and shelving are often dictated by the style of bookshop, and its location. Shops in affluent areas tend to invest in custom made, purpose built shelving. This potentially raises the cost of fitting out a medium sized store in excess of $10,000.

A more cost effective option would be to use pre built shelving, designed for bookstores. There is also the option of used or second hand shelving, with many Shopfitters supplying both new and used. We estimate fitting a medium sized bookshop this way could be done for $6,000 to $8,000.

It is worth noting that some premises may already have suitable shelving.

Signage & Branding

You will need to have branding designed for your new business. This extends to the signage on your shopfront. This is not only window signage, as you may need A-Frames, flags and other signage placed on awnings or external walls. Depending on requirements, a new bookstore could be investing $2,000 to $4,000 on signage and branding.

Hardware & Equipment

Computer(s) to run POS & Inventory Management
Receipt Printer(s). It is an Australian requirement that you provide a receipt or proof of purchase for items over $75.
Cash Drawer
Barcode Scanner(s)
Barcode Printer(s), while not a requirement, this removes the need for additional ways to price goods
Label Printer, not a requirement, but should be considered if the store intends to focus on ecommerce
A4 Printer, not a requirement, but some accounts (educational) may require a printed copy of invoice
EFTPOS Terminal(s), may be provided by a Bank, stores may choose to use a third party. Potentially integrated with POS.

This is by no means an exhaustive list of hardware and equipment a bookshop may have, it certainly covers many of the day to day requirements a store might encounter. Depending on the store's needs and whether items are purchased new or refurbished, a bookstore may spend $2,000 to $3,000 on equipment.

Other Considerations

When finding the premises it is important to not only consider rent. There are also additional outgoings (utilities).
Wages. Your own wage, and any additional staff members you may need.
Work Cover & insurance

(Non)-Essential Items & Other Boring Bits

Stationery & general store supplies
Customer Bags, while certainly not a requirement, most stores would often carry bags either complimentary or allowing customers to purchase. In Australia, bags would have to be paper or reusable plastic. This potentially allows stores to brand the bags as a form of advertising
Complimentary bookmarks, these would be branded with the shops information
Gift Cards or Vouchers, either cardstock (cardboard or heavy paper) or plastic (barcoded & reusable)
Advertising

Conclusion

A medium size bookstore 150/m² opening in Australia would potentially require the following :

$30,000 to $35,000 worth of stock
$6,000 to $8,000 shop fitting, counter & displays
$2,000 to $4,000 signage & branding
$2,000 to $3,000 hardware & equipment

In conclusion, starting a bookstore requires careful consideration of various financial aspects. From stocking an appropriate amount of inventory to designing an efficient floor plan, every detail impacts the success of the business. Understanding the costs involved in shop fitting, signage, branding, hardware, and other essentials is crucial for planning and budgeting. By being aware of these financial aspects and making informed decisions, aspiring bookstore owners can avoid costly mistakes and create a successful and sustainable business.

Useful additional references

If you would like to learn more about CirclePOS, email sales@circlesoft.net or book a demo