Opening a Bookstore An edited excerpt from the Manual on Bookselling: Practical Advice for the Bookstore Professional. Today's bookselling environment is highly competitive. Challenges arise from many sources--not only from other bookstores, but also from nonbook outlets such as mass merchandisers, warehouse clubs, and supermarkets, and from entertainment options such as videos, movies, and hobbies, which increasingly vie for the consumer's leisure dollar. Gone are the days when a store could be opened with limited dollars but lots of enthusiasm. Enthusiasm is still a primary requirement, but equally essential is adequate capitalization, regardless of the size, projected gross sales, or type of retail store you are planning. Despite the changing retailing landscape, during the recessionary early 1990s bookstore sales showed continued growth, albeit slower than previously. Projections for that period put sales in excess of $8 billion. Based on surveys of bookstores and other retail establishments, indications are that, in general, bookstores have fared far better than many other types of retail businesses over the past few years. Variations in performance do exist, however, based on such factors as region, type of operation, and type of shopping environment. This chapter presents a brief overview of what prospective booksellers need to know to make informed choices. All of these topics are explored in depth in the Manual on Bookselling. How Should I Prepare for Opening a Bookstore? First, you should spend a great deal of time thinking about the factors involved in operating a retail business: the initial financial investment and the ongoing fiscal responsibility; the time and labor; the administrative tasks; and the necessary social interaction. If you have never worked in a bookstore, start by getting practical experience. Persuade a bookseller to hire you, even if only as temporary help. If the bookseller can't pay you, volunteer to work without compensation. Your goal should be to perform the ordinary tasks that are part of every bookseller's daily routine. These include receiving, unpacking, and shelving books; working with the store's inventory control system; selling; operating the cash register; wrapping gifts; setting up and dismantling displays; and cleaning. If you do not enjoy the physical experience of these daily routines, you should think twice about opening your own store. As part of your initial research, visit and talk with as many booksellers as possible. Make notes on aspects of their stores that are appealing or unappealing to you. Refer to these notes in your own store planning. Familiarize yourself with the subject categories represented in their stores, as well as the range of titles offered on each subject. Note the kinds of nonbook items offered for sale and how and where they are merchandised. Notice the number of staff working and what tasks they are doing. Look at the types of fixtures used for book displays as well as the signage and the checkout and receiving areas. Assess the atmosphere and image. To understand the industry and its current concerns, read back issues of Publishers Weekly, available on microfilm at the public library (some articles from their current issue can be found at www.bookwire.com/pw/), and Bookselling This Week, available from the American Booksellers Association. Selected articles from back issues of American Bookseller magazine and BTW are also found on BookWeb (www.bookweb.org/). As a prospective bookseller you can enhance your knowledge of what lies ahead by attending the national ABA Convention and BookExpo America Trade Show, held annually in the spring. The largest English-language book event in the world, it offers access to approximately 2,000 publishers, distributors, sideline vendors, and others. You can also purchase cassette tapes of panel sessions from the most recent ABA Convention and BookExpo USA Trade Show, as well as tapes from preceding years. If you are unable to attend the ABA Convention, there are a number of regional booksellers associations that hold their own trade shows, seminars, and workshops. A listing of some of these trade shows can be found on BookWeb (www.bookweb.org/). Another logical step in your store planning is to attend one of the many seminars and workshops offered by regional booksellers associations. In addition, ABA and Ingram Book Company have joined together to offer beginning and advanced sessions on financial management for booksellers. You might also want to increase your knowledge in the area of financial management by taking an extension course in accounting or small business management at a nearby college. The Small Business Administration (SBA) office near you should have information on available business-related courses. How Do I Choose Books for My Initial Inventory? There is no magic formula or standard inventory mix for a general or specialty bookstore. Title and format selection depend on the kind of store you want, your store location, and your prospective clientele. However, the average general bookstore's inventory consists of more than 50 percent paperback, with lesser percentages distributed among hardcover books, remainders, and sidelines. Publishers' representatives can be helpful in selecting titles. They are familiar with the trade record of titles from their own houses and can help you select a wide assortment of books. In addition, some wholesalers offer a computer printout of titles and quantities based on the information you provide regarding subject areas and dollar amount you wish to spend. The charges for these listings vary by wholesaler, but some waive the fee if the initial order exceeds an established minimum. A few wholesalers also have printouts of saleable titles or representatives who can assist you personally in title selection. How Much Should I Plan to Spend on Opening Inventory? The one rule of thumb in planning new store inventory is to be conservative. While it is better to be slightly under-inventoried and build, it is also important to present a breadth of stock when you open your doors. You want to make sure that customers who visit your store once find a reason to return to make future purchases. The dollars you allot to initial store inventory depend on the figures you have projected for sales. If you project a sales volume of $150,000 and anticipate an inventory turn (the total sales per year divided by the average inventory at retail) of three, your start-up inventory should be $50,000 at retail. If purchased at an average 40 percent discount, your initial inventory would cost about $30,000. If you are opening at a slower time of year, you might want the inventory to be at slightly below that level. Keep in mind that all new stores build their inventory as the business grows. It is essential to have a cash reserve when you first open the store to meet immediate expenses, as well as make necessary inventory adjustments. What Are Some of the Other Start-Up Expenses? In addition to the basic costs of construction, fixtures, and inventory, there will be costs for in-store equipment such as telephones, a fax machine, computers, cash registers, and calculators. There are the costs of dues and subscriptions for professional organizations and publications; deposits and fees for utilities, consultants, attorneys, and accountants; and a security deposit as part of your lease agreement (often three months' rent). In addition, you need to set aside money for advertising and promotion (including an ad in the Yellow Pages), as well as for supplies such as bags, wrapping paper, order forms, and gift certificates. What Discount Can I Expect on Books? Legally, there cannot be a standardized set of terms among publishers and wholesalers, but most sell their books to stores for resale on graduated discount schedules, based primarily on order quantity. Each supplier has its own discount schedule and terms. Some publishers allow you to combine hardback and paperback, new titles and backlist for discount, and sometimes provide opportunities for special discounts. Some will, at times, offer backlist titles at a greater discount, but on a nonreturnable basis. This is a great advantage for an experienced bookseller who knows the pattern and selling rates of backlist titles; however, beginners should buy very cautiously if they exercise this option. The ABA Book Buyer's Handbook, available only to ABA members, lists the majority of general trade publishers, wholesalers, and distributors and their individual terms of sale. Included are discounts, order quantities, returns privileges, freight policies, incentives for early or prepayment, and other vital terms of the publishing house. The Handbook is offered in both book and electronic (Windows) formats and will be available to ABA bookstore members on BookWeb (www.bookweb.org/) in the fall of 1998. For the purpose of initial planning of both inventory costs and planning ratios, the prospective bookseller should use a basic 40 percent discount from selling price. Remember to add estimated freight costs, which booksellers frequently pay. Discounts on nontrade titles, such as texts or scholarly reference titles, are usually smaller, 20 percent being the most common with special agency plans allowing up to 33 percent. Such titles are traditionally referred to as "short" discount titles, although there are also "net pricing" plans. These state only a set price to the bookseller without reference to a discount from a suggested list price. In addition, many publishers participate in the ABA's Single Title Order Plan, known as STOP. This plan enables a retail bookseller to order single copies (or sometimes multiple copies) and prepay, receiving a larger discount than would generally be available on single copy orders under the usual on-account system. STOP policies are designated by each publisher and are listed in the ABA Book Buyer's Handbook. The ABA has available, for bookstores only, preprinted STOP forms that may be sent to the publisher with payment or blank check enclosed. What Is a Book Wholesaler and Why Would I Deal with One? Wholesalers, independent distributors, and jobbers are in the order fulfillment business, stocking titles from a variety of publishers. A wholesaler generally stocks both hardback and paperback books, frontlist and backlist. There are several national wholesalers, with warehouses throughout the United States. In addition, almost every geographic area of the country is serviced by a regional wholesaler. A growing number of wholesalers specialize in a particular subject area, such as children's books, regional titles, religious books, or small press titles. An independent distributor (often called an I.D.) deals primarily in mass market paperbacks, periodicals, and newspapers. It may also carry a limited selection of hardback and paperback bestsellers. A jobber can either be a wholesaler or an independent distributor who adds the service of title selection, inventory maintenance, and returns. This service is called "jobbing," and it is utilized primarily by non-bookstore outlets such as airport newsstands, drugstores, and supermarkets. In addition to publishers, most bookstores deal directly with a variety of wholesalers and some with independent distributors. It is wise to find out which wholesalers service your area and establish accounts with several. There are many reasons why you would sometimes order from a wholesaler or distributor. Wholesalers stock titles from a wide range of publishers, so you can easily obtain needed inventory with one order and receive a good discount. The books arrive in one shipment with one invoice. The savings on freight (the minimums for free freight are often easily met) and paperwork are obvious. In addition, wholesalers provide fast shipment, sometimes same-day service. And, ironically, sometimes titles that are not available directly from the publisher are available from a wholesaler or distributor. Most wholesalers offer tools which provide booksellers with necessary information for ordering. These tools include microfiche and CD-ROM based computer systems which provide information on the wholesaler's inventory titles on hand, titles on order, and, in some cases, other newsworthy features such as forthcoming author tours and reviews. Many wholesalers also offer catalogs or newsletters with information about forthcoming titles. Two of the major national wholesalers are Ingram Book Company (www.ingrambook.com/) and Baker & Taylor Books (www.baker-taylor.com/). What Reference Tools Will I Need? Two of the publications that come with your ABA membership have been mentioned: ABA Book Buyer's Handbook and Bookselling This Week. There are a number of other invaluable information resources available from the ABA, in print and on the web, such as Bookstore Source Guide, ABACUS Expanded financial survey, and Manual on Bookselling. You can request a products catalog from the ABA that describes in detail the many tools the Association makes available to members and nonmembers. A number of other important reference tools are published by Reed Reference Publishing (www.reedref.com), including Books in Print; Forthcoming Books; and Subject Guide to Books in Print (available in book, CD-ROM formats, and via internet subscription). If you decide against CD-ROM based reference systems, you will want to subscribe to one or more wholesaler microfiche services. Subscriptions to weekly trade publications such as Publishers Weekly and the New York Times Book Review are also essential. Conclusion Most of the topics included in this excerpt are covered in greater detail in separate chapters of the Manual on Bookselling. As you continue to read, research, and learn, it is hoped that most of your questions will be answered and you will be in a better position to decide how--or if--you should proceed. Bookselling is not always an easy profession. If you are determined to forge ahead, however, rest assured that you will find it to be both stimulating and satisfying. MANUAL ON BOOKSELLING: Practical Advice for the Bookstore Professional, fifth edition, 1996, edited by Kate Whouley with Linda Miller & Rosemary Hawkins, published by the American Booksellers Association. ISBN: 1-879556-18-9. Out of print.