In article , John A. Stovall
wrote:

I've bought collections in the past but now I have the opportunity to
by a book store in the town where I work. It is a general used
bookstore. The present owner a University professor (not at mine but
one 70 miles away) and his wife have run it for 7 years but only
opened it 3 days a week and closed it all summer. I don't plan to
quit my day job but have a wife to run it and the building is included
with the stock of some 40,000+ volumes (80/20 hb/pb). The store has
never listed on line.

What questions should I be asking and considering when thinking about
this possible purchase?


Hang out for a couple of hours & count the walk-ins & the sales. If it's
six people walk-in (four of those merely with boxes of books they hoped to
sell) & zero sales, extrapolate from there.

You need to see complete & uncooked bookkeeping on income & expenditure &
especially tax returns which nearly always paint an uglier picture than
the eager business-sellers will otherwise confess. A three-day-a-week
closed-all-summer shop is actually just a storage unit with storefront
windows, often in economically depressed areas where storefronts are so
difficult to keep rented that they can be used as though they were
windowless mini-storage rentals.

There are a great many "how to buy an existing business" type books, & it
should be worth reading a couple of them. After weeding out any such books
that are poorly disguised pump-pamphlets for companies that are actually
in the business of selling businesses, you'll likely find most of their
advice when applied to use bookstores will "prove" a used book store is
worth minus dollars. It might be worth hiring a completely independent
business valuation analyst who will run some quick figures that 99 times
out of ten for a used book store will prove it to be worth little or
nothing even if has a bit of noticeable action. Or at least get business
evaluation formulas from the Small Business Administration so you can run
some realistic figures yourself (some companies selling business valuation
services, books, & software, are oriented toward appraisals for business
sellers rather than buyers; or will provide sales pitches rather than
formulas; or have formulas to maximize the illusion of value even where
there is none, all for the sellers' benefits or to maximize an owner's
leverage or loan possibilities or for insurance purposes, which will not
inform buyers honestly; but the SBA doesn't monkey around with the truth).

As a generality, a used bookstore is worth not one penny more as an open
shop than it would be as a buy-out of the entire stock to haul off
elsewhere. Indeed, having to take the open shop with the stock cold
subtract from the value. If only 20% of the stock is actually apt to be
salable (tas an optomistic percentage), that'd be the percentage to base
the value on -- the rest is worth nothing unless to a paper recycler.

Part-time bookshops are nearly always subsidized in some way & not
carrying any of their weight. And never underestimate how being trapped as
an owner in a low-foot-traffic few-sales shop, unable to afford even one
worker, can be an endless nightmare of tedium even if you can afford the
store-like storage unit. It could easily become an endless data-entry job
to keep stock updated on the web.

If there have been any emergency-fund "sales" at the shop, or the owner
careless in aquisitions, 40,000 books could mean two or three hundred
actually salable books, so assess the stock brutally. If you couldn't find
lots & lots of the sorts of books you'd personally buy to take home for
your own book shelves, don't imagine anyone else will either.

-paghat the ratgirl

--
"Of what are you afraid, my child?" inquired the kindly teacher.
"Oh, sir! The flowers, they are wild," replied the timid creature.
-from Peter Newell's "Wild Flowers"
See the Garden of Paghat the Ratgirl: http://www.paghat.com/