Despite industry sales slowly declining over the last five years, owning a bookstore can still be a personally rewarding business that pays the bills. Finding the right shop largely depends on your personal preferences and budget.
What to look for in a business
You should make a list of your criteria based on the type of bookstore you plan to operate. Is the space and size of the building more important to you than the sum of passing foot traffic? Do you want to buy a brand, or do you plan to create your own?
Once you establish what aspects are most important to you, your search will be a lot easier. You should be realistic about your business plans; most entrepreneurs go into the book business as it fulfils their passion, as opposed to making a lot of money.
There are certain aspects of the business that you won’t be able to change; the location is the main one. You need to make sure the area can support and needs a bookshop; do your research and consider the store's footfall figures and frontage.
You can, however, extend the business reach through the online space. Letting customers order online and using the website and social media to promote the business will extend its reach.
Check the businesses reputation within the local community, with their suppliers and online. If the business is rundown you will be able to negotiate a better deal but be prepared to spend money the time rebranding and changing the store's image.
Potential to diversify
With retail giants such as Amazon and eBay dominating the industry, it can be hard to compete by selling books alone. When you’re looking for the ideal business, consider buying a bookshop that has the potential to include another service.
Consider setting up a café within your bookshop so you can offer customers coffee and cakes and a quiet reading space. Including a seating area within your store gives you the opportunity to host events and clubs to encourage new customers.
Alternatively, you could apply for a liquor licence and set up a bar in your bookstore. There are several types of licences that are available to apply for within each state, each province will have a government-run website detailing the license conditions.
You can also boost your sales by retailing branded stationery and gift products within your store. If the bookshop you’re keen to buy has a strong reputation, make sure the company branding is included in the sale, as well as any trademarks and logos.
You must perform due diligence on a business before making an offer. Seek professional help from a broker and/or solicitor to assess the company’s financial statements, legalities and assets such as stock, equipment and accounts receivable.
Find out what percentage of sales are made up of regular large customers and what proportion is one-time buyers. If the former is the majority, you should confirm these companies intend to continue doing business once you have acquired the bookstore.
If the business has a good reputation and shows annual growth and high-profit margins, then expect the sale price to be higher. You should find out whether the current team of employees and management team will be staying on after the sale.
Find out if there are any competitors in the area and if so, how popular are they? You should consider the risks involved when operating near a large store, such as an Indigo store. Chain retailers are hard to beat on price, so having a USP is essential.
Is it right for me?
If you have a passion for reading and writing, discovering new authors and enjoy socialising with people, then owning a bookshop can be a great lifestyle business. You need to have the knowledge and confidence to compete with online competition.
Be eager to create a community, whether you decide to run a book club or set up author readings, you should try to create a space where your customer can meet. Being social and offering a personalised, informed service will be hugely beneficial.