Do you want to start a bookstore business online? If YES, here is a complete guide to starting a bookstore business with NO money and no experience plus a sample bookstore business plan template. If you have a passion for books and are thinking of how to make money from this passion, then starting a bookstore business might be just what you need.
Before starting this business however, it is important that you conduct a thorough research on the industry as there are many traditional bookstores in the united states, with several online bookstores starting to take over the industry as well. Conducting a research will not only help you identify the niche you intend going into but will also allow you know if you should open a traditional bookstore or an online bookstore.
Stocking your bookstore is very important as you will not only need to stock your personal favorites but also include books that will appeal to your target market. There are several ways to stock your bookstore, and you can either order books from a distributor’s catalog or buy out the inventory of bookstores that are closing so as to add their books to your collection.
Also, you might need to contact local libraries that are looking to get rid of duplicate book inventories. Ensure that you have an agreement with them where you can even offer to donate a percentage of your earnings. You should bear in mind that books that are rare or specialized are often sold at higher prices.
If you still need more convincing about starting a bookstore business, then reading through this article will definitely help you.
17 Steps to Starting a Bookstore Business
1. Understand the Industry
The bookstore industry is one that is segmented into general, college as well as specialty bookstores. Bookstores that sell general books are ones that mostly deal in trade books such as fiction, adult, nonfiction as well as children books. College bookstores are those that sell mostly textbooks; while specialty bookstores sell self-help books, religious books, financial books and others like it.
General and college books account for about 30 percent of the industry’s revenue, while revenue from religious books account for 5 percent of the entire industry’s revenue. This is one of the reasons why bookstores usually sell other stuffs such as CDs, music, toys, mugs, magazines, tee shirts and gifts.
According to Pricewaterhouse Coopers’ Global Entertainment and Media Outlook for the periods of 2015 to 2019; sale of books globally generated revenue $120 billion annually. The growth in the bookstore industry is expected to come from india and this is due to their growing middle class. However, countries like the United States, the united kingdom, South Korea as well as Singapore have gone a step further by penetrating the ‘e’ market and are expected to earn high revenue from its sales of e-books.
In the United States of America, there are about 19,700 bookstores in existence that have employed more than 109,000 people. These bookstores have brought in a combined revenue of $14 billion; however, for the period of 2011 and 2016, there has been a decline in the industry and growth has been hampered and this has been projected to -3.1%.
The reason is due to changes in the behaviour of consumers as well as an increase in competition from alternative retailers and online retailers. This declining trend is expected to continue till 2022, however, some proactive operators who have exploited new technologies like e-readers will benefit despite the decline the industry is experiencing.
The bookstores of today are different from those of the past, as modern bookstores of today do not have the luxury of just selling books as the marketplace has changed which is exerting pressure on independent and chain bookstores; this is because consumers now shop at any stores – not necessarily bookstores – that carry the books they love out of convenience.
This has caused small scale bookstores to close up because of low traffic from customers. Large scale bookstores and large independent stores have therefore had to rev up their publicity and marketing, selling via the internet and other such measures as well as engage in other activities in order to attract customers and retain customers.
The number of independent bookstores has continued to decrease against large chain stores. Between the periods of 1993 to 2004, independent bookstores have decreased from 4,700 to 2,000. Part of the decline can be attributed to the fact that large chain stores have a price advantage to independent stores. Surviving independent bookstores have had to choose specialized niches and also focus on customer service. Knowing what their customers want and providing more personalized services has proven to be one element of success for independent bookstores.
Reading periods between 2004 and 2008 showed a decline by 3 hours compared to an increase of 120 hours spent on other media in the same time period. According to indicators, the bookstore industry is one that is highly competitive and aggressive with a serious decline in the number of independent bookstores.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those that constitute the market for bookstores are those within the ages of 45 to 64. They include;
- Those that are married but with no children
- Those that earn high incomes
- College graduates
- Those that reside in the western side of the United States of America
- Those that are married but have children that are of school age or even older.
From the above demographics for the bookstore industry, it shows that this is not something that can be restricted to a particular group or race of people. Those that spend more in buying books are those that have a college degree and baby boomers who need a new leisure due to their empty nests.
3. Decide Which Niche to Concentrate On
There are different varieties of books which has made some bookstores to specialize in one or several niche markets so as to concentrate on particular groups in their target market. However, while it is more convenient for larger bookstores to be able to stock as many niches and book titles as possible, smaller bookstores do not have that luxury due to majorly, the size of the facility and capital base.
However, niches are one way by which a bookstore can stand out from others and be able to compete favorably in the industry. If you are thinking of what niches are available in the bookstore industry, here are some;
- Religious books
- Children books
- Science Fiction
- Fiction
- Autobiographies
- Self-help books
- Mystery books
- Romance books
- History books
- Educational books
- Health books
- Financial books
The Level of Competition in the Industry
Before the advent of the internet, competition in the bookstore industry was dependent on the location of a bookstore, which made large scale bookstores who had facilities in more than one location to have a large share of the market. However, with the advent of the internet that has led to the cropping up of online bookstores, competition is no more solely dependent on the location of the book store.
Demand in the bookstore industry is one that is driven solely by what the consumer earns. This is to say that those with middle to high incomes had money to buy more books than those with low incomes. Also, the profitability of a bookstore is dependent on their inventory as well as marketing strategies.
Large scale bookstores for instance are able to provide more books to customers at a cheaper rate due to the economies of scale. However, smaller bookstores can on the other hand compete by offering selected niches or concentrating on the needs of their target market.
The bookstore industry in the United States of America is one that is highly concentrated as the 50 largest companies account for 85 percent of the revenue. Also, the competition in the industry has been redefined as there is stiff competition amongst mass merchandisers and between the former and online customers.
4. Know Your Major Competitors in the Industry
Every industry has brands that are regarded as the front runners due to several factors – marketing, large scale of operation, customer care attitude and publicity – which might have worked in their favor to make them so popular. The bookstore industry is no different from other industries and has several well-known brands as well.
Therefore, below are the lists of well-known bookstores in the United States of America;
- Barnes and Noble
- Amazon.com
- Borders
- Books-A-Million
- Follett
- Bn.com
- Apple iBookstore
Economic Analysis
The bookstore business industry is one that has seen major buyouts and consolidation trends as well as an increase in internet sales. The competition is very intense in the industry amongst different levels such as, between independent bookstores and large chain stores and also between traditional brick and mortar bookstores against online bookstores.
However, even though the marketplace is quite stiff with competition, the industry has continued to grow modestly by implementing new technology in order to attract new and retain old customers. This industry with its modest growth is one that still faces challenges.
Out of the three kinds of bookstore organizations in the industry – independent, big chain stores and online bookstores – the independent bookstore is the one that has the most challenges because unlike the big chain stores that can be found everywhere, and the online bookstore that can be reached by a wider market, the independent bookstore has to make do with one or two locations, which is why most independent bookstores are turning to the internet.
Also, smaller bookstores have carved a niche for themselves and in this way are still able to exist and compete in the industry. These smaller bookstores are offering their customers personalized service in order to retain them, a feat that the large chain bookstores cannot accomplish.
5. Decide Whether to Buy a Franchise or Start from Scratch
Starting your bookstore as an independent or being part of a chain store should be highly dependent on what vision and goals you have for your bookstore. It is highly difficult to operate as an independent bookstore as you would need to deal with price competition from large chain stores; however, there are still independent stores still in existence who have learnt to be proactive while also having a strong relationship with their customers. Also, most independent stores engage in selling niche books and this has helped them stand out from their competitors.
Being part of a large chain store can lead to starting the business smoothly without experiencing any hiccups that an independent is likely to experience, as marketing, inventory and publicity will likely be taken care of, leaving you with less aspects of the business to bother about. Whatever decision you intend making as regards starting from the scratch or buying a franchise solely depends on you.
6. Know the Possible Threats and Challenges You Will Face
Threats and challenges are not new to any business; as an entrepreneur, you should be prepared to face any threats and challenges that will arise during the course of starting or running your bookstore business. How well you prepare for these challenges will show if your business will succeed or fail.
Therefore some of the threats and challenges that you are likely to face are dwindling revenue from lack of reading customers, intense competition from large scale bookstores and online bookstores, improving technology and economic downturn.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
One very important decision that you will need to make for your business is the decision of what legal structure would be best for your business. This is because whatever legal entity you decide to choose for your business comes with consequences.
If you are however confused about what legal entity is best for your bookstore business, then you might need to approach an attorney or a certified public accountant, who has a good knowledge of the industry to give you the best advice on what would suit your bookstore business in the short and long run.
There are mostly four legal entities that you can choose from for your bookstore business and they are sole proprietorship, partnership, corporation and Limited Liability Company. The sole proprietorship is the simplest form of legal entity and is quite popular for small business owners.
The partnership kind of legal entity is usually divided into two types; the general partnership and the limited partnership. In a general partnership, all the partners share everything, from rewards to risks, while in the limited partnership; the limited partner has limited liability in the company. This kind of legal entity is also easy to start up as the costs for start-up is quite low. Also, in the partnership legal entity, there are tax benefits.
A corporation is a form of legal entity where the business is regarded as a separate entity from the owner (s) and so in case of any liability, the business will be held liable and not the owners. This means that the owners are only liable to the extent of their investment in the corporation. There are two types of corporations, the S-corporation and the C Corporation. The S Corporation is more common, while the C Corporation is used mostly to set up ventures that are of high profile.
8. Choose a Catchy Business Name
Choosing the right business name for your bookstore business is very important as you would need to satisfy certain criteria such as unique, innovative, creative and memorable, as this will create a perception in the minds of the industry’s stakeholders. Also, the name you pick should indicate to your target market what business you intend doing.
If you are therefore considering starting your own bookstore business and are wondering what name you can choose, then here are some;
- Jilly Children and Teen Bookstores
- Bookworm Inc
- Wordsmith Bookstores
- Script edge Bookstores
- Doves Bookstores
9. Discuss with an Agent to Know the Best Insurance Policies for You
No matter what kind of business you intend to open in the United States of America, you are required to have at least basic insurance policies. Having an insurance policy would allow you to be protected should any sort of incident occur to or around your business. You would need to approach an insurance agent or broker to advise you on the most appropriate insurance policies to choose for your bookstore business.
Therefore, some of the basic insurance policies that you should consider purchasing if you intend starting your own bookstore business in the United States of America are;
- General Insurance
- Property Insurance
- Liability Insurance
- Workers’ Compensation Insurance
- Payment protection Insurance
- Business Owner’s Policy Group Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Even though the bookstore industry is one that involves the sale of physical products, applying for intellectual property protection is something that is not usually considered by those in this industry and this is because what is involved is the sale of the intellectual properties of others, and so no other bookstore can be stopped from selling the same books as another bookstore. There are however other aspects that you can consider applying for intellectual property protection for.
If however you are considering applying for an intellectual property protection, you can do so for your company logo, media production concept or any other property that you feel is unique to your company. To apply for an intellectual property protection, you will need to approach an attorney to help you out by filing for an IPP with the USPTO. However, most entrepreneurs in this industry do not always consider applying for an intellectual property protection a priority.
11. Get the Necessary Professional Certification
The bookstore business is not one that requires any sort of professional certification before one can start the business. What is usually required is that one is able to meet the needs of the target market that it has decided to focus on.
One needs to however be knowledgeable about certain books in order to be able to engage several customers. Also, joining associations might be required, not for only networking purposes, but in order to have a covering.
12. Get the Necessary Legal Documents You Need to Operate
Having legal documentations in place before starting your bookstore business is a legal requirement by the authorities in the United States, and you stand a risk of being banned from running that business and losing money through fine, if you do not have the required documents.
Therefore, it is vital that you conduct proper research before starting your bookstore business in order to determine what documentations you will need to run your business. Some of the basic legal documents that you will therefore need in order to run your bookstore business successfully in the United States of America are;
- Certificate of Incorporation
- Operating Agreement
- Business License
- Business Plan
- Employment Agreement
- Insurance policy
- Online Terms of Use
- Contract Documents
- Federal Tax Identification Number
- Employee Identification Number (EIN)
13. Raise the Needed Startup Capital
Even though you have a love for books, making money from starting a bookstore business is a different ballgame all together. This is why it is important to write a business plan where you will be able to determine where you will get money from to start your bookstore business.
The business plan will help you formulate a plan on how not to only get your capital but also convince your intended investors on your seriousness in starting your bookstore business, and how you intend to pay them back. Below are some of the financing options that that you can explore when sourcing for capital for your bookstore business;
- Raising money from your personal savings
- Source for soft loans from friends and family members
- Approach venture capitalists and convince them to invest in your business
- Apply for loan from the bank
14. Choose a Suitable Location for your Business
Before starting your bookstore business, it is absolutely necessary that you know what location would best suit your business. If you intend to run a traditional brick and mortar bookstore, then you would need to ensure that it is in an area where there is high foot traffic as opposed to vehicular traffic.
If you prefer to run an online bookstore, then you must ensure that you have certain strategies in place that will allow you pull enough traffic to your site. This is why it is important that you conduct a research on what location would be best for your bookstore.
Several factors have to be put into consideration when selecting the right location for your bookstore business asides foot traffic. You would need to find out if there are any laws as regards the location you intend to locate your business. Some cities zone out locations to certain businesses and so you would not want to locate your bookstore close to a meat factory except your bookstore’s niche is on meat, which even at that, would be better off close to a restaurant or Grocery Store than a meat mart.
If you are going to be running an online bookstore, then you have no need to look for a facility for your business as you can clearly run this kind of business from home. All you need to do is employ a Search Engine Consultant (SEO) to drive the traffic you would need to your website.
15. Hire Employees for your Technical and Manpower Needs
A bookstore’s primary mission is to sell books depending on the niche it intends to run the business in. The cropping up of online bookstores hasn’t changed this perspective even though it has brought in virtual books to be sold.
A bookstore often requires a large amount of book titles either new or fairly old in order to be able to meet the needs of its customers. The equipment that you would need to run your bookstore successfully includes shelves, cabinets, ladders, tables, chairs, computers, printers and phones.
Equally, the number of employees you would need to help kick start your bookstore business and run it successfully will depend on the scale with which you intend to run your business. However, the basic staff you will need are; Chief Executive Officer (owner), general manager, supervisor, cashier, front desk officer, cleaner, book handlers, marketing executive and business development officer.
From the above, you will likely need a total of at least 8 employees to help you run your bookstore to success.
The Service Delivery Process of the Business
The service process is very vital for a bookstore because in order to give the right service to your customers, certain things have to be in place, especially as a bookstore business basically means selling printed books or e-books. Any successful bookstore invests heavily in the kind of staff they have because they are the ones who would engage and sell physically to the customers.
Another process that has to be managed in order to have a successful bookstore business is the efficient management of the book inventory. This simply means that you would need to stock different books, and then constantly have them analyzed as regards their sales rate so as to keep turning the stock.
Other things you would need to look into are managing inventory especially against shoplifting. Also, when getting the books, ensure that the ones the customers can easily pick are in heavy paperbacks that cannot be usually hidden.
16. Write a Marketing Plan Packed with ideas & Strategies
Before creating a marketing budget, it is important that a market research be conducted so as to determine what the target market is expecting from you and also what you expect from the target market. Also, conducting a market research will allow you know what marketing strategies are mostly effective and would most likely work for your bookstore depending on your location.
After conducting a marketing survey, you can then start to create your marketing strategies. Some bookstores usually hire a marketing consultant who understands the industry thoroughly and who have long and successful portfolios to help them draft effective marketing strategies that will not only allow them stand out but also enable them to compete favorably against competitors in the industry.
The internet has made it easy for bookstores to be able to reach more of their target market whilst also not making a huge strain on their budget, and so bookstores have incorporated the use of the internet, such as their websites and social media platforms in order to market their services to their target market.
Therefore, below are some of the platforms that can be utilized to market your bookstore business;
- Place adverts for your bookstore business in local newspapers and magazines as well as on radio and television stations
- Use social media platforms such as Facebook, Twitter, Linkedin, Google plus and your official website to market your bookstore
- Distribute fliers and handbills in strategic locations
- Ensure that your bookstore is listed in Yellow Pages as well as in online directories
- Engage in book signings and reading clubs so as to bring in potential customers into your bookstore
- Place flexi banners in strategic locations in order to increase awareness about your bookstore to potential customers
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
It is important that you have strategies that will help you boost the brand of your bookstore and allow you create a unique identity that would make you stand out from your competitors. You should note that there is stiff competition in this industry not only from major traditional bookstore retailers but also from online bookstores; as such it is important that you craft the right strategies that will help communicate and boost your business brand.
One secret of popular bookstores is that they engage in publicity constantly so as to keep remaining in the minds of their target market. If you therefore intend to grow your business from becoming a local bookstore to becoming a national brand, then you must be ready to budget a certain amount of money towards promoting your brand and ensuring that you bring it to the awareness of not only your target market but also that of your competitors and other stakeholders in the industry.
Nowadays, promotion and publicity have been made easier for businesses due to the internet. This means that businesses can make use of a combination of physical and online means of promoting and creating awareness for their products and or services. If you are on a tight budget, then you can use make more use of online and social media platforms to promote your bookstore. Not only is this means cheap, it is also effective and reaches more of your audience faster.
If you are stumped about how best to promote your bookstore business, then you might need to hire the services of a publicity consultant who understands your industry well to help you draft out effective publicity strategies that will not only communicate the brand of your bookstore to your target market but also allow you generate enough revenue to grow and sustain your business.
Below are the platforms that you can leverage on in order to boost your brand and also promote your bookstore business;
- Engaging in book readings and signings for best sellers
- Leverage on social media platforms such as Facebook, Twitter, Instagram, Linkedin, Google Plus to promote your bookstore
- Distribute handbills and paste fliers in different strategic locations in and around where you are located
- Engage in and sponsor relevant programs in the community especially those that are book related
- Encourage your local customers to help spread the word about your bookstore business
- Place adverts in local newspapers and magazines as well as on radio and television stations