Everyone knows that opening a bookstore is more complicated than just filling the shelves, hanging a sign out front and unlocking the door. Whether everyone knew that 15 or 20 years ago is debatable, but the new and prospective indie booksellers I've met during the past couple of years strike me as a much more business savvy crowd than many I encountered during the 1990s. They know the stakes; they do their homework; they harbor fewer delusions.
I mentioned last week that I'd been asked how Connie and Chris Brooks prepared for their entry into the business as owners of Battenkill Books, Cambridge, N.Y.; how they had learned about the intricacies unique to retail bookselling, and what led them to believe they could be successful.
They didn't take any formal bookseller training, relying "primarily on our own research and backgrounds," said Connie. "Chris already owns a small business and has an MBA, so his experience in particular was very important. It is important to note that we took over a smaller existing store with a 24-year history in our village. We began drafting a business plan (nights, weekends, and coffee breaks) in January 2009, then presented it to a counselor at the Small Business Development Center in Albany, N.Y., in May for feedback. We had a relatively complete plan to present to two loan officers in June 2009, and opened our doors November 1, 2009."
She added that from the beginning they "knew we had a community of readers and one that would be inclined to support a small, independent bookstore. Analyzing census data and incorporating it with a book buying behavior study and an NEA report on trends in reading confirmed this in quantitative terms. We used some planning tools like a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis and Porter's Five Forces Model of Competitive Analysis. These are instructive. Guess what our top 'Weakness' was? 'Lack of experience running a retail operation.' It also shows up as a 'Barrier to Entry' to the industry in our Competitive Analysis."
Geography also played a significant role, since "the nearest big box bookstores are 45 minutes away and the nearest brethren indies are about 30-40 minutes away," Connie said. As part of their preparation, they took "recon" trips to bookstores in the region and discussed "what was good about each and what we would use or change if it were our shop. We took a map, outlined how far we would drive for a good bookstore and started adding up the population in that area, their income, and (based on the studies noted above) what they could be expected to spend on new books. Along with a conservative estimate of the market share of that total new book spending Battenkill Books could expect (i.e., versus online sales and regional competition), we arrived at a first year top line revenue figure."
They assumed "cost of goods sold to be 60%, based on buying from distributors to start, which brought us to our gross profit," said Connie, noting that by checking anticipated expenses "against ABA's Abacus as a rough guide, we had a handle on our pro-forma income and expenses."
On paper, the numbers didn't work initially, she admitted, and only with "a lot of thought and revision" did they begin to make sense. Ultimately it "came down to controlling expenses. If you take a look at the industry, that is what it is about. Gross profit is essentially fixed. So this is an expense controlled, cash flow business. We found a way to make it work on paper, by prioritizing spending on basic needs and areas that would support increased sales."
In an earlier column, I outlined how they handled the real estate aspect of this venture, but Connie said the "big splurge was on a computerized POS system that has paid dividends and will pay more as we use more of its functionality. I spent most of the months preparing to open the store learning the basics of running a retail operation--setting up tax exempt resale status, learning New York's labor laws, researching business, workers comp, and disability insurance, learning about sales tax, etc. I set up a relatively few accounts with book distributors, and am still very much learning on the ground how to run a bookstore."
Conceding that a course for future booksellers might have helped, Connie noted they "had no budget for it and little time. There are still terms that I don't understand and whole areas of the business that are as yet foreign (remainder buying, handling used books, how to make the most of a sales rep call, etc.), but I also am a believer that at some point you just have to take the plunge and get on with it--there are some aspects of the business that you can only learn by doing and over time."--Robert Gray (column archives available at Fresh Eyes Now)
Note: Photo by Leslie Parke, whose painting, "Moths," is on the wall behind the information desk.