In the age of the e-book and Amazon, it’s easy to conclude that bookstores are a dying breed, but quite the contrary. Many people still love to browse the aisles of local bookstores, seeking literary treasures and perhaps finding a cozy spot to read. Independent bookstores have, in fact, been making a comeback thanks to “support local” movements.
So, if you’ve always dreamed of opening your own bookstore, the opportunity still exists, but you need to understand the process. Here you’ll find guidance and insights that can help you achieve bookstore success.
Choose a Niche and Concept
Many small bookstores choose to specialize in certain types of books. You could offer rare books, the classics, used books, or whatever you choose. You should do some research into bookstores in your area to see what they offer and perhaps choose a niche that’s missing in your market.
You’ll also need to design a concept for your bookstore. Many independent bookstores are designed to be neighborhood gathering places, with seating areas where book clubs can meet, or even with small cafes. Even adding a wine bar to your bookstore concept could make your store more appealing as a neighborhood hangout.
Understand Your Costs
To open an independent bookstore, you’ll have to make an investment. You’ll need to consider the costs of renting a storefront and preparing your store based on the concept you’ve chosen. That will require shelving and furniture at minimum, and you’ll also need a point of sale system. Then, of course, you’ll have to purchase inventory to stock your shelves. Also consider the costs of setting up a website, getting business licenses and permits, and insuring your business.
All in all, your costs will likely be $20,000 to $40,000 at minimum. If you don’t have the funds personally, consider family and friends funding, or perhaps a bank or SBA loan. You might also try a crowdfunding site like Kickstarter.
Create a Business Plan
No business can succeed without a well-designed plan, which you’ll also need if you’re going to try to obtain funding of any kind. A good business plan requires research and has several key elements.
- A company overview that includes your mission and vision, business structure, and anything you’ve accomplished thus far
- A description of your products and your bookstore concept
- An analysis of the bookstore market, both overall and locally
- A summary of your competitors, their strengths and weaknesses, and – most importantly – how you will gain an advantage over your competitors
- A summary of your marketing and sales plan
- Your operational plan, meaning how you will operate your bookstore on a daily basis
- A summary of your management and personnel plan – who will run the business and who will you hire
- A financial plan that includes your startup costs and your sales and cost projections
- An executive summary of all the key points of your whole plan. You’ll write this section last, but it will be the beginning of your plan. It should be no more than one to two pages long.
Do not skip writing a business plan, even if you’re not seeking funding! The process of creating your plan is a learning process and will help you to develop your strategy.
Find a Location
An independent bookstore generally needs a location with a lot of foot traffic to be successful. Downtown historic areas that are full of shops, antique stores, and small restaurants that attract a lot of visitors are generally best. You’ll also want to try to find a location where you won’t have any direct competitors.
Choose a Business Structure
Now you’ll need to determine what type of business entity you’ll form. If you just open the bookstore and don’t form a business entity with your state, you’ll be operating as a sole proprietorship by default. However, with a sole proprietorship, you and the business are considered the same entity which means that you’ll be personally liable for the debts and obligations of your bookstore. Your bookstore name will also have to be your name unless you register a “doing business as” name with your state.
Most new business owners choose to instead form a limited liability company (LLC). As the name implies, with an LLC, you are not personally liable for the business’ obligations. An LLC is also not taxable because the profits will pass through to you to be reported on your personal tax returns, which is also true of a sole proprietorship.
If you were instead to form a corporation, the corporation would be subject to corporate taxes. You’d also pay taxes on your salary and on any dividends paid to you from the profits of the corporation.
An LLC is simple to form by simply filing a document, most often called the articles of organization, with your state. In almost all states, you can do this online, generally on the Secretary of State’s website. A fee is involved, and, depending on the state, will be between $40 and $500.
Get Business Licenses and Permits
You’ll need to check with your state and local governments to find out what licenses and permits you may need. If your state has a sales tax, you’ll likely need a sales tax permit. On a local level, you may need a sign permit for your bookstore signage.
Every state and local government is different, so be sure to check for specific requirements.
Insure Your Business
Next, you should have a sit-down with your insurance agent to get their business insurance recommendations. You’ll likely need general liability insurance and business property insurance for your bookstore.
Obtain an EIN
If you’re going to have employees or if your bookstore has more than one owner, you’re required to have an Employer Identification Number (EIN), which identifies your business for tax purposes. You can easily apply for one on the IRS website and its free.
If you have employees, you’ll also need to register for payroll taxes. Payroll taxes can be quite complex, so you may want to engage a payroll service to help you.
Open a Business Bank Account
Finally, you’ll need to open a business bank account so that you can keep your business and personal taxes separate. Most banks offer several business bank account options, so check with your current bank to see what they have to offer.
Once you follow all the steps described, you can get to work preparing to open your doors. Be sure not to skip any of the steps so that your business will have a clear path to success. When in doubt, consult with your attorney or tax advisor for help. You can also often find many resources through your local small business development center.
Now it’s time to start living your bookstore dream!
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