Have you ever dreamt about opening your own bookstore? Perhaps you’re passionate about books and can think of nothing more fulfilling than sharing your passion through a bookstore. Or maybe you’d like to create a cosy space for people to sip coffee and peruse the classics. If you’re keen to turn your bookstore dream into reality, here are some steps that can help you get started.
1. Franchisee or Independent Bookstore?
Dymocks is one of the most established bookstore in Australia and is instantly recognisable by its distinctive red logo. Certainly, there are some key advantages to becoming a franchisee of a reputable bookstore franchise. However, you won’t have the freedom to make your bookstore uniquely your own. Here are some pros and cons of being a franchisee or an independent bookstore owner.
Franchisee bookstore
Pros:
- Reputation and brand loyalty: you’ll already start off with a good reputation as well as customers loyal to the Dymocks brand, which is particularly important in the short-term for building a customer base and making sufficient sales.
- Large scale marketing: you’ll have the benefit of any marketing materials that the head office’s marketing team deploys, whether they are emails with the latest catalogue or television advertisements.
- Resources: you can receive training and guidance from the head office regarding effective sales and marketing strategies. For example, Dymocks offers extensive training in store design and visual merchandising for its franchisees.
- Template: you won’t have to think about every aspect of your business from scratch. By joining a franchise, there will be conventions you can follow regarding operating systems, layout of the store, furnishing and staff uniform.
- Negotiating power: as established franchisors have strong buying power, they may negotiate with suppliers to allow you to access stock at competitive prices.
Cons:
- Lack of flexibility: aspects such as your shop fittings may need to be approved by the head office before you can proceed. There may be other terms you need to abide by in accordance with the franchisee agreement, which may restrict your freedom to run and decorate your store in the way that you’d like.
- Scrutiny: your key performance indicators may be regularly reviewed by the head office with certain penalties or rewards given in accordance with your performance. The pressure to meet expectations may be stressful.
- Fees: franchise agreements usually require the franchisee to pay an initial franchise fee to establish the branch, as well as regular, ongoing franchise fees. These could be fixed monthly fees or a percentage of your business’ turnover. This adds another financial burden to running your business, in addition to rent and hiring costs.
Independent bookstore
Pros:
- Personal value: you will have a business that is uniquely your own, where you can reflect your personal character, values and tastes through its brand and operation.
- Complete control: you won’t have to answer to anyone but yourself. You can make your own decisions about business strategy and have your own goals for your business without as much external pressure.
Cons:
- Time and effort: Are you willing to commit the time and effort to operate an independent bookstore? You will need to find and negotiate with book suppliers, design your layout and market your business on your own. Make sure you understand the amount of effort you need to invest.
- Costs: you won’t have as much buying power as a large franchise, so it may be difficult for you to acquire stock at competitive prices.
Online or brick and mortar?
If you’re going to open an independent store, you should also consider whether you want to make it an online or a brick and mortar store. If you’ve always dreamt of having your own physical bookstore with shelves filled with paperbacks, you can decide to buy or rent a premise for your bookstore. Alternatively, you may opt to make your bookstore fully online to save rental costs.
2. Business plan
You should develop a solid business plan for yourself as well as for banks and other investors if you need to take out a loan. This will help you to think through whether your dream of setting up a bookstore is actually financially viable in your current circumstances. Additionally, you should consider whether and how it will continue to be financially viable in the short and long run. Some aspects you may consider include:
- What is the level of demand and competition for your type of store? If you want to open a brick and mortar store, you should consider the impact of ebooks and online bookstores on demand.
- Do you have enough funds to sustain you in the short term? It may take up to six months before you turnover a profit. So make sure you have enough capital to last you the first few tough months.
- What are your milestones? Where do you see your business in six months, a year and three years? Do you want to expand it and hire more employees? Do you want it to diversify, to include a café or a gift store?
3. Business essentials
Once you’ve done all the analysis and planning, it’s time to establish the essential structures and documentation for your business. Some steps you should take are:
- Business structure – which business structure is most suitable for your business? If you’re planning to open a small, independent bookstore, you may consider operating as sole trader as opposed to a corporation.
- Register a trademark – if you’ve thought of a brand name and logo for your independent bookstore, you should protect it by registering it as a trademark.
- Register an Australian Business Number for your business
- Open a business bank account – you should separate your business funds from your personal funds
- Obtain essential legal documents – this can include the business constitution, employment contracts and supply agreements.
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4. Get Insurance
Make sure you purchase a good insurance policy to protect yourself if anything goes wrong. If an employer breaks an arm in your store, insurance can cover the legal costs you may need to pay. Insurance policies you may consider include Public Liability and Workers Compensation
5. Get Permits
There are a number of permits and licences that you may need for your bookstore. This is particularly so if it’s going to be a physical store. Examples include a retail permit and a music licence for playing background music. Visit the Australian Business Licence and Information Service to find out which permits you may need.
6. Market your bookstore
Marketing will be crucial for attracting customers to your bookstore, especially if you’re competing with online bookstores and ebooks. Online marketing is a particularly effective way to reach a large number of people with little cost. For example, you may create a Facebook page and an Instagram account to promote your business.
7. Set up shop
With all your documentations and preparations done, it’s time to set up shop. If you’re going to establish a brick and mortar store, you should find a suitable location for your bookstore, having regard to the demographics and accessibility of the location. Make sure you find a place that has enough foot traffic. Once you’ve signed the commercial lease, you can begin renovating and furnishing the space.
For an online store, you should create a high quality and secure website through which customers can buy your books.
Before you open, make sure you have a good inventory of books for customers to choose from by ordering books and reviewing your collection in advance.
Conclusion
The thought of starting your own bookstore can be exciting but also daunting. These steps can help you think through some key decisions about your bookstore and get you started.
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