Selling or Buying a Bookstore
How much is a bookstore worth? What’s involved in putting a bookstore up for sale? How do you buy a bookstore?
Life has many chapters and whether you’re ready to retire or simply ready to do something else with your life, it’s good to be thinking about preparing your bookstore business for sale months (if not a few years) in advance. Many people still dream of owning a bookstore and when an existing bookstore is available, it can make good sense to buy an existing store rather than start up a new bookstore and work for years to build business.
How much is a bookstore worth? It depends on a number of factors, mostly the strength of your bookstore business operations and financial performance.
Here are some of the items we consider when determining a fair price range for an independent bookstore:
- History of sales volume and profitability
- Expenses as they relate to industry averages
- Health of your inventory and credit status with vendors
- Current value of assets like your fixtures, furnishings, and computerized management system
- Strength of operations like buying, inventory management, and marketing
- Customer mailing lists and loyalty programs
- Institutional clients and contracts
- Reputation with publishers and ability to attract authors for events
- Strength of your brand; the range of marketing activities that support growth in sales and profits
- Tenure of your staff, pay levels, and how tasks are assigned
- Terms of your lease and whether its assumable
- Reputation in your community
While there are a number of approaches to determine a fair range for a business, not all are appropriate for retail, plus there are aspects of a bookstore business that make it different from other types of businesses. There are various books on how to value a business, but what we’ve found is that formulas or ratios, when used alone, will actually minimize a bookstore’s true worth. Retail bookselling is nuanced. And a bookstore is valuable to the quality of life in a community.
When we do bookstore valuations, we use only ratios appropriate for retail businesses, identify all of the intangibles that would take a new owner years and years to develop on their own, and identify any investments a new owner would need to make.
There are many instances when a business broker isn’t necessary, or isn’t willing to take on a small retail operation. Brokers also charge fees similar to real estate agents. You may not need a broker at all if you believe a new owner can be found within your community (which is most often the case); instead, you can manage a transition with a team you form on your own, including your accountant, lawyer, and a group like ours who will help you with marketing and facilitation of the process.
There are several steps in selling a bookstore and we are here to help you with each:
Planning & Preparation
- Conduct a business valuation by an objective, qualified third party to determine a fair price
- Develop your message to staff, customers, and the media to announce the bookstore is up for sale
- Prepare documents, including a Non-Disclosure Agreement, questionnaire, marketing flyer (1-2 pages), and business overview (often 50+ pages with details about your financial performance, operations, owners compensation, opportunities)
Facilitating the Sale
- Handle inquiries (preferably not done on the sales floor)
- Qualify prospects
- Schedule meetings between owner and qualified buyers
- Answer questions and respond to information requests
- Prompt offers
- Help you identify terms and plan the transition
Our goal is to keep independent bookstores in business and contributing to the quality of life in our culture, so we work with bookstores of all sizes and will work with you even if your business has not been showing a profit. Buyers as well as sellers of bookstores have looked to us over the years, so we know the transition from both sides and believe that what works best is what’s fair for everyone involved.
We are optimistic about the future of bookstores. And we want yours to continue in capable hands when you’re ready for the next chapter in life.
All of our work is held in complete confidence.
Let us know what’s on your mind. Your first consultation is free. Send us a confidential message through our website or give us a call at (904) 277-2664.