Start a bookstore by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your bookstore. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a bookstore?
Your startup costs will be highly variable based on your location, square footage, local labor costs, buildout expenses, and many other factors.
- First month’s rent and utilities – $2,000
- Fixtures – $4,000
- Inventory control system – $7,500
- External and internal signage and furnishings – $5,500
- Logo and business cards – $600
- Buildout – $500
- Grand opening promotion – $1,000
- One month’s operating expenses – $3,500
This might only serve as rough guidance in your case, since your rent and initial inventory costs might be much higher. But it does give you an idea of some of the costs you’ll have to consider. Also, how long can you go without paying yourself a salary? Finally, consider ancillary costs if you’re going to sell coffee, postcards, t-shirts, or other items.
This might only serve as rough guidance in your case, since your rent and initial inventory and other costs might be much higher. But it does give an idea of some of the cost items you’ll have to think about. Also, how long can you go without paying yourself a salary? Take that into consideration as well. Also, consider ancillary costs if you’re going to sell coffee, postcards, t-shirts or other items.
As with any kind of business, you must start by writing a realistic business plan. Then look at your per-unit profit margin and estimate how many books you’ll have to sell every day to break even. Does that number seem realistic? Ask yourself hard questions like that.
Read our bookstore purchasing guide to learn about the materials and equipment you'll need to start a bookstore, how much to budget, and where to make purchases.
What are the ongoing expenses for a bookstore?
Rent and inventory will be your two largest ongoing expenses. Rent is, of course, easy to estimate, but your inventory levels will vary depending on sales. Employee costs can also be high if you’ve hired staff, so make sure you don’t take on that investment until you must.
Who is the target market?
Your market niche will define your audience. For example, children’s literature appeals to parents, travel writing draws in readers with wanderlust, etc. Regardless of theme, your customers will be eager readers, or at least curious enough to want to know about your topic of choice. If you’ve chosen your primary genre wisely, it’s an area you know much about, so you’ll probably have an innate understanding of your audience and their preferences.
How does a bookstore make money?
Publishers will typically grant small retailers a 40% discount on their books’ cover prices, so that’s your maximum profit margin on new releases. If you buy and sell used books, you might have much higher margins. Perhaps you’ll buy a paperback in decent shape for fifty cents and sell it for $2.50. It’s also possible to buy large collections of books on eBay, Amazon, or other sites at a low per-unit cost for resale.
In addition to books, you might sell additional items that at least loosely tie in with your bookstore theme. This might be coffee, postcards, stationery, music, posters, mugs or muffins—whatever might fit your space and your customers’ tastes at a reasonable profit margin.
How much can you charge customers?
You won’t have anywhere near the buying power of Amazon or the large national chains, so you can’t expect to be able to compete on price. Book publishers put the suggested retail price on their books, so you can’t exceed that figure (and you wouldn’t have any customers if you tried).
You’ll have more leeway if you’re running a used bookstore. Consider pricing your inventory at about half of a book’s cover price, with discounts for multiple purchases. Most of your customers read a lot, so quality and quantity are of equal importance.
How much profit can a bookstore make?
Your profit margin, if you’re selling new books, should be in the 40% range.
How can you make your business more profitable?
Research ancillary services that can add value for your clientele, and consider expanding your business into the digital world. Make your website an ecommerce site, and encourage online orders. Some successful indie bookstores expect that online purchases will make up nearly 30% of their annual sales in the coming years.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your bookstore is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
Certificate of Occupancy
A bookstore is generally run out of a small retail location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a bookstore.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build your bookstore:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your bookstore will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a bookstore
Regardless of your store’s primary focus, the prospective customers for any bookstore like to read. If you connect with them on social media, they’ll be motivated to read about your store, and to interact with you as the proprietor.
Also, after the near-death of bookstores, the launch of a new one is still newsworthy in many communities. If that’s the case in your locale, it should be easy to get media coverage. Then you can link your social media to this valuable free publicity to maximize its value.
Find a graphic designer to make an attractive logo, and invest in signage. If you’ve chosen your storefront location well, your signs and welcoming interior will encourage foot traffic.
How to keep customers coming back
Engage with your readers. Let them see that your store is a place where book talk is welcome, and that you share their passion for reading. If you have a café, or host book club gatherings, this can create additional opportunities to draw like-minded customers through your doors.
Make sure your store has a Facebook page, and connect through other forms of social media as well. Include photos of your store’s interior and exterior, and shelves full of books. Discuss books and authors on your social media, rather than just endlessly self-promoting. Throw out questions, and involve yourself in your readers’ topics.
Consider sending out a monthly newsletter, with book trivia, author profiles, coming releases and other news of interest. Remember—these people love to read.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Bookstore In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
The ideal bookstore owner has a skill set that includes enthusiasm for books and reading, retail sales, customer service, and business excellence. Since book lovers tend to enjoy their privacy, and those who are good at sales are often more outgoing and eager to meet the public, you must be adept at what many would consider to be clashing personal characteristics. Do your unique skills strike this balance? Can you create not just a store, but a community of customers who share your passion for books and reading? This is your challenge.
What happens during a typical day at a bookstore?
- Reading book industry publications such as Publishers Weekly and Book Business to stay abreast of upcoming releases and industry trends.
- Interacting with social media to communicate with followers, and mentioning new product offerings, sales events, and upcoming author signings.
- Opening your store, meeting customers, and keeping shelves tidy and properly organized.
- Scheduling staff work shifts, if you have employees.
- Ordering new releases (or buy from your public if you’re a used book retailer).
- Communicating with authors, musicians, or others who schedule visits.
- Planning new promotions.
What are some skills and experiences that will help you build a successful bookstore?
Start by giving very careful attention to your market niche. If you choose to be a generalist who carries “everything,” you’ll be placing yourself in direct competition with the likes of Barnes & Noble and Amazon. How savvy does that sound?
Filling a niche also has the advantage of allowing you to go deeply into your genre or area of specialty, without having to spend beyond your means with startup inventory. In other words, you might not have to invest too heavily in order to fill your shelves with every book you can find on travel writing, whereas if you were trying to comprehensively carry 20 different areas of interest, your startup costs could be exorbitant.
This niche strategy will also help you quickly identify and attract your readers. If, for instance, you own the only science fiction and fantasy bookstore in half your state, you might draw at least an occasion visit (or more frequent online business) from sci-fi fans hundreds of miles away.
Get to know your customers, solicit contact information, and draw them to your social media presence. When they visit your store, they should find it to be a source of the kind of book talk they can’t get from a virtual vendor such as Amazon. Build your community of readers, and invite them to experience author readings, signings, and other events. Maybe you’ll even have acoustic musicians performing while customers browse. In short, you must be creative enough to figure out how to draw people into your store, and sharp enough as a marketer to give them reasons to keep coming back.
What is the growth potential for a bookstore?
According to the U.S. Census Bureau, bookstore sales increased 2.5% between 2014 and 2015. That might not seem like a dramatic increase, but considering the long downward trend that had seemingly consumed the industry, the year-to-year growth rate is promising.
Your single-store sales might be limited by floor space, but you might also increase revenue through your ancillary product sales. Physical growth can come from expansion of your existing space into adjoining territory, or even an additional location if your business continues to thrive.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a bookstore?
In this Denver Post article, Nicole Sullivan, owner of independent bookstore BookBar, credits her success with building a “hybrid business.” BookBar also includes a wine bar and coffee shop, and conducts such events as happy hour and book socials, with the intent of giving her customers a leisurely social experience.
If you can add ancillary products or services that complement your core business, it can provide you with new income streams. In fact, your ancillary business might even do better than the book business, or at the very least it can provide cash flow while your bookstore’s reputation gets established within your community.
How and when to build a team
When you have the need (and the financial resources) to add employees, make sure you grow a workforce with a passion about reading that matches your own. With that in mind, consider hiring college students studying literature, English, creative writing, or similar pursuits. During the interview, ask them about their reading habits. What kinds of books do they typically read? Who are some favorite authors?
Start with part-time employment because that’s likely to be all you can afford at first. If you have two or three part-time staff members, it will give you scheduling flexibility and reduce the need to provide group health care coverage—which would be one of your steepest overhead costs.
Read our bookstore hiring guide to learn about the different roles a bookstore typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.