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Buying a Bookstore?
On Sat, 20 Dec 2003 15:26:06 GMT, 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? 1. Is the business successful now? 2. If it isn't, why would it be in the future? However, these two paramount questions are mitigated by advantages that you have that the previous owner may not have shared... And these would the questions to ask of yourself: 1. Am I now successful selling on-line and by mail-order? 2. Will this store augment or detract from my current business? A general used bookstore that seemingly depends upon the student body is a chancey thing, on the other hand, said student body is probably a good source of cheap re-stock. Certainly if the cost is low enough and the store is anyway near self-sustaining now, you could make a go of it as you have considerable expertise in what to buy in terms of collections. I may be wrong, but I'm of the opinion that unless you're on the busiest street of a major city, the only real benefit of a storefront is that you will get collections brought in by people unwilling to put in the time and energy to sell their books on eBay. The caveat here is "Is the store in a population center sufficient to have such occurences take place on a regular basis and can you establish your store as THE place to sell books?" Our own paghat has also written a wonderful essay on the subject, which I believe is still up at www.violetbooks.com Cheers, John |
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#2
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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/ |
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John -
Why should you buy it is the first question. As a sideline hobby? Viable business? Something for the wife to do? A tax writeoff? (all of these are the background reasons for stores within an hour of where I sit). There are 3 things of value in a bookstore when you're buying it: stock, real estate, and customers. Also community goodwill which is harder to measure but can affect your business in a substantial way. Paghat dealt mostly with the first - the value of the stock. The value of the real estate is fairly simple - get three local appraisers to give you an opinion, and look at trendlines for real estate values over the last 5 years to get a sense of which way the real estate values are going. The third is harder - the customers and the value of the good will in the community. This is the place to focus, and the one that Paghat didn't talk much about - it is also the driving factor behind what brings sales in the door. If you are buying the business as a "going concern" rather than a storefront to rent and a stock to pick and list online, this is what you have to focus on since it is hardest to quantify. There is a great book by Dale Gilbert called "Complete Guide to Starting a Used Bookstore" with lots of practical advice. One of the biggest things he talks about is location, location, location. Is the location of the current store good? Good parking? You can only have as many customers as you have places to park unless you're in a high traffic walking area. Look at the fixed overheads you can't get around (and which might not be listed on tax returns either) like heat, electric, permits, insurance, etc. Those are fixed costs you can't get around. It is really pre-internet so there are many things that are different. Be VERY skeptical of the value of the stock. Has the owner picked it, or allowed one or two dealers to do so? If so there probably isn't much really saleable stuff left. I've bought 2 stores towards the end of this process and DONT recommend it. 10% useful at best, most slow sellers. Don't let them run a sale to bring in cash unless you've been allowed to store the good stuff away and the sale is to clear the shelves of "Stuff". Lastly be VERY hard on your evaluation of how vibrant the customer community is at the existing store - these will be the people that keep you afloat as you learn the local business (every used bookstore has a local population they cater to and you have to learn that group and what their needs are). Many bookstores have died in the last few years. The internet has changed the walkin traffic substantially, and also affected the number of dealers coming through. Be smart if you do buy it and put stuff on the shelves that are real bargains for the dealers etc who come through - don't price everything at net prices or you'll lose whatever dealer population you do have quickly. The best local stores here leave stuff on the shelves that is not listed online at better prices even if they do list some of the store stock online. Keeps people coming back. Good luck, hope some of these thoughts are useful. David Gregor in Seattle Washington teaches a course for booksellers that is practical as well and you might want to see if he's running a program near you or would be willing to talk by phone - very practical guy, strong marketing sense, and runs his own open shop quite successfully too. Best, John Kuenzig Bookseller 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? ************************************************* ****** ""Lord!" he said, "when you sell a man a book you don't sell him twelve ounces of paper and ink and glue - you sell him a whole new life...."" "Parnassus on Wheels" by Christopher Morley -- Sincerely, John Kuenzig, Bookseller Kuenzig Books PO Box 452, Topsfield, MA 01983 978-887-4053 9am-7pm Eastern Standard Time (orders or inquiries) Important Books in Science, Technology and Speculative Fiction Secure, direct ordering at http://www.kuenzigbooks.com Save time, money and earn other exclusive benefits. We are proud members of: MARIAB http://www.mariab.org IOBA http://www.ioba.org and graduates of the Book Seminars International Programs: http://www.bookseminarsinternational.com Buying 18th-21st century books, manuscripts, ephemera, scientific instruments, artifacts, and related material in our fields of interest |
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"John A. Stovall" wonders:
What questions should I be asking and considering when thinking about this possible purchase? 1: Why is the business being sold? 2: What is the purchase price vs the value of the stock? 3: What do the tax returns reveal? 4: Is it in a location where you are liable to get considerable walk-in traffic? 5: Are you willing to subsidize what will probably be, at best, a break-even proposition? -- Bob Finnan The Hardy Boys Unofficial Home Page http://users.arczip.com/fwdixon New & Out Of Print Books, Books-On-Tape, Videos, DVDs, CD-ROMs For Sale http://users.arczip.com/fwdixon/hbsale.htm To reply: replace nospam with fwdixon .................................................. .................... |
#5
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As Mr. Adams notes, Paghat's observations are excellent, and I'd add so
are Mr. Kuenzig's. However, based on what's contained in all the comments, one almost has to wonder that there are any used bookstores at all; it seems such a losing business proposition. Norm Clerman 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? ************************************************** ***** ""Lord!" he said, "when you sell a man a book you don't sell him twelve ounces of paper and ink and glue - you sell him a whole new life...."" "Parnassus on Wheels" by Christopher Morley |
#6
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Norm -
A book business is just like any other business, if you run it like one. Problem is the vast majority of booksellers are booklovers and have little or no business background. So they figure if they can buy a book for $7 and sell it for $10 they just "made" $3. No accounting for overhead, changes in market conditions, value of their own time, etc. They overstock what they love whether or not there is a local market for it. They buy based on price rather than on quality. And lots of other common "failure" modes. Many use this as a retirement business. If you run it like a business and study it you can make enough to pay the mortgage and some besides. But unless you're very well funded, expecting to net over 5 figures annually as a one person operation is unlikely - I can count on one hand the number of stores around here that can likely claim that. I do this business because I love it, and have fun with it. I was well funded when I started, but (due to economic climate changes etc) decided to run it like a business and not a hobby starting about 4 years ago. I've had to change what I did radically to survive. I did, and now that I've cut off the savings account, and am running it like a business, I look at each purchase much differently. But you don't want to know what I've done, just whether you should do it perhaps. So don't despair, it can be done and done well with lots of fun and excitement. If you love it, and approach it with some business common sense, you can have a great time of it. Join the crowd! There's always room for one more. If you're interested in starting a store, contact me offlist and I'll suggest some resources you can use to study the business and make a more informed decision. Best, John Kuenzig Bookseller Norm Clerman wrote: As Mr. Adams notes, Paghat's observations are excellent, and I'd add so are Mr. Kuenzig's. However, based on what's contained in all the comments, one almost has to wonder that there are any used bookstores at all; it seems such a losing business proposition. Norm Clerman 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? ************************************************** ***** ""Lord!" he said, "when you sell a man a book you don't sell him twelve ounces of paper and ink and glue - you sell him a whole new life...."" "Parnassus on Wheels" by Christopher Morley -- Sincerely, John Kuenzig, Bookseller Kuenzig Books PO Box 452, Topsfield, MA 01983 978-887-4053 9am-7pm Eastern Standard Time (orders or inquiries) Important Books in Science, Technology and Speculative Fiction Secure, direct ordering at http://www.kuenzigbooks.com Save time, money and earn other exclusive benefits. We are proud members of: MARIAB http://www.mariab.org IOBA http://www.ioba.org and graduates of the Book Seminars International Programs: http://www.bookseminarsinternational.com Buying 18th-21st century books, manuscripts, ephemera, scientific instruments, artifacts, and related material in our fields of interest |
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"John F. Kuenzig" wrote in message ... I've had to change what I did radically to survive. I did, and now that I've cut off the savings account, and am running it like a business, I look at each purchase much differently. But you don't want to know what I've done ..... I don't know about the original poster, but I would love to know what you've done. It's always been my dream to own a bookstore, or at least to be a seller of books. I don't know if I'll ever get there...it may eventually be what you characterize as a "retirement business"...., but I figure I will have a much better chance if I learn to run things more like a business. Some of my lessons learned so far: 1. Condition is everything, especially in fiction. I can't tell the number of fiction first editions I've got taking up space that will probably wind up being donated or combined into lots because they are less than fine, and there were just too many printed for them ever to be worth more than the dollar I paid at some rummage sale or thrift store. I felt that I had reached some sort of milestone the first time I discarded a book because of condition. 2. When describing condition, be hyper-critical, and use as many pictures as necessary so the buyer can make an informed decision. The buyer of a book that I had listed as Near Fine in a Very Good jacket gave me some of the most glowing feedback I've ever received for his "mint condition" book. He obviously didn't feel that the flaws I pointed out were significant. 3. Good book with a less than perfect jacket? Slap an archival Mylar jacket protector on the thing without delay. It improves the appearance of even a heavily tattered jacket substantially, and you will get more than your small investment out of it when you sell the book. 4. Think about what else you've got that would thrill existing customers. It was another milestone for me when I offered an eBay winner an extra book on the same subject, and she was delighted to snap it up. Yet another related but slightly different milestone was the time I bought a book "on spec" with an existing customer in mind, and he also was delighted to purchase it. I didn't charge enough in either case, but...one lesson at a time! 5. In non-fiction, snap up the weird titles. There will be a customer, no matter how esoteric the subject. Ideally, there will be two such customers who both find you the week you decide to list it on eBay. 6. When listing non-fiction, sometimes the best thing you can do is type the table of contents. It's a natural and perfectly acceptable way to include keywords your customers will use to search for books in their specialty. 7. Don't discard your descriptions. It's amazing how often you see the same book again and again, especially if you're developing a specialty. 8. Pack every book as if it were a treasure. It's possible that I don't know what I've got, and some buyer just made his buy of the year on my eBay auction. I don't want to ruin somebody's great "brag" with rotten packing just because he didn't pay much for the book. Karma, after all. As you can see, most of my experience is in selling on eBay. I've got a few titles on my website, but the site needs a lot more work before it's really a selling vehicle for me. So, the above are just things I've picked up from this group, or from experience, that I'm trying to incorporate into my way of doing business. I'm wondering about others' "rules of thumb" or sage advice. Alice |
#8
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my-wings wrote: .... 3. Good book with a less than perfect jacket? Slap an archival Mylar jacket protector on the thing without delay. It improves the appearance of even a heavily tattered jacket substantially, and you will get more than your small investment out of it when you sell the book. Also, it protects the jacket (and book) from shelfwear, handling damage, shipping scuffing, and even damage during unpacking by the customer. This is essential for a brick and morter shop and good policy for an e-shop. [I've seen customers rip dust jackets pulling the book off the shelf.] 5. In non-fiction, snap up the weird titles. There will be a customer, no matter how esoteric the subject. Ideally, there will be two such customers who both find you the week you decide to list it on eBay. For a shop with browsers, the weird titles give the shop character and makes browsing fun - even if the odd books take years to sell at a low price, they are worth having around. This is one of the things that a financial analysis will say not to do, but there is a benefit that cannot easily be represented on a balance sheet (except in that nebulous asset called "goodwill.") .... 8. Pack every book as if it were a treasure. It's possible that I don't know what I've got, and some buyer just made his buy of the year on my eBay auction. I don't want to ruin somebody's great "brag" with rotten packing just because he didn't pay much for the book. Karma, after all. Even if a customer paid two dollars for the book, they bought the book in the condition you described and you have an obligation to deliver it in the same condition. If you ship a book in poor packing and it arrives in lesser condition, you have cheated the customer. [Of course there is shipping mangling that will destroy anything, but you should make the package able to withstand the normal shipping abuse. The fact that it was a cheap book is not an excuse to ship it unprotected.] Brian |
#9
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"Brian" wrote in message ... my-wings wrote: ... 3. Good book with a less than perfect jacket? Slap an archival Mylar jacket protector on the thing without delay. It improves the appearance of even a heavily tattered jacket substantially, and you will get more than your small investment out of it when you sell the book. Also, it protects the jacket (and book) from shelfwear, handling damage, shipping scuffing, and even damage during unpacking by the customer. This is essential for a brick and morter shop and good policy for an e-shop. [I've seen customers rip dust jackets pulling the book off the shelf.] Heh. I never even thought about the hazards of having live customers handling stock in a B&M shop. Good point. 5. In non-fiction, snap up the weird titles. There will be a customer, no matter how esoteric the subject. Ideally, there will be two such customers who both find you the week you decide to list it on eBay. For a shop with browsers, the weird titles give the shop character and makes browsing fun - even if the odd books take years to sell at a low price, they are worth having around. This is one of the things that a financial analysis will say not to do, but there is a benefit that cannot easily be represented on a balance sheet (except in that nebulous asset called "goodwill.") Another good point. I remember this fabulous bookshop in (what was, at least 20 years ago) Milwaukee's east side arty district. It was just a small shop, next to a coffee shop, and it had entrances that connected to both the street and the coffee shop. This was before coffee lattes were even a twinkle in the B&N eye. The store was open until midnight, or some such fabulous hour, but the best thing about it was that it was filled with titles I'd never seen anywhere else. It was a new book store, but by far the best I'd ever been in. I was only able to go to it a few times, because I was a visitor in the city by the time I appeared, but I still remember it for the variety of its selection.. ... 8. Pack every book as if it were a treasure. It's possible that I don't know what I've got, and some buyer just made his buy of the year on my eBay auction. I don't want to ruin somebody's great "brag" with rotten packing just because he didn't pay much for the book. Karma, after all. Even if a customer paid two dollars for the book, they bought the book in the condition you described and you have an obligation to deliver it in the same condition. If you ship a book in poor packing and it arrives in lesser condition, you have cheated the customer. [Of course there is shipping mangling that will destroy anything, but you should make the package able to withstand the normal shipping abuse. The fact that it was a cheap book is not an excuse to ship it unprotected.] You're right of course, and the result is the same, but I still like the idea of someone making a great "find" in one of my auctions. I mean....theoretically I like the idea, leaving aside the fact that I would probably want to kick myself for not researching what I had better. Still, it's what keeps the game exciting, and all. Besides...I like all parts of selling (with the possible exception of standing in line at the post office), and that includes doing a professional wrapping job, even on a $2 item. Happy Holidays! Alice |
#10
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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? So, John, what was the verdict? I thought seriously 3-4 years ago about opening a store--or a book nook in a tea house. Glad I didn't do it, but a part of me regrets it. William M. Klimon http://www.gateofbliss.com |
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