For New Bookstore Owners, Learning the Art & Science of Bookselling

We celebrate each new opening of an independent bookstore. Shelf-Awareness, ABA’s Bookselling This Week, and Publishers Weekly all do a good job of announcing new store openings. It’s interesting to learn how a dream has become reality, but sometimes a single photo can tell us that we’ll soon see an announcement of the store closing.

One of the common pitfalls in opening a new bookstore is understanding the financial dynamics of a bookstore to get the business plan assumptions right. The margins in the book business are tight, and metrics, like inventory turns are essential to clarifying what sales need to be in order for the business to grow beyond break-even.

While no one wants to lose money, it’s surprising when a new bookseller will say, “I can’t afford the time” to come to a workshop to learn the business that will require thousands and thousands of dollars to launch.

Our response is, “can you afford NOT to?”

Lean inventory levels will need sluggish sales and struggle to keep the bookstore afloat.

Lean inventory levels will need sluggish sales and struggle to keep the bookstore afloat.

The photo we’re featuring has been modified to post in this blog, but it’s one of the photos that indicate the bookseller has opened on “a wing and a prayer”, driven by a dream, but uninformed and positioned for early failure.

All retail businesses are based on the buying and selling of goods. Inventory turns is a key metric that measures the productivity of our inventory. You take your inventory at its retail value and multiply it three to five times to forecast your annual sales.

The key question then becomes, “Is this enough?”

We recommend that a full and interesting selection of books and non-book items should run about $125 per square foot at its retail value, $75 per square foot at cost. The inventory in this photo appears to be at about $15 per square foot at cost.

Launching a dream for a bookstore is a wonderful contribution to community, but only if the story of this new business continues. It’s painful for everyone when a dream crashes. Those of us in the book industry want to see more success stories. The margins are tighter in the book industry than other forms of retail.  It pays to learn the complexities of the book industry and the basics of retail management before you dive right in.

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