Start-Up Costs for a Bookstore Business

  Reviewed by: Jayne Thompson, LLB, LLM
  Written by: Stephanie Faris      Updated October 25, 2018
Close-Up Of Hand Holding Book

Things were looking dire for the book business once it became clear Amazon was taking over the book-buying space. But as Borders and Waldenbooks rapidly shuttered their locations, an interesting thing began to happen. Independent bookstores seemed to become more beloved than ever. When readers visit a brick-and-mortar bookstore, they’re buying into an experience, which may include sipping coffee in the café while reading a few pages of a book they’re interested in purchasing. It also means meeting up with friends in that same café and spending some time in the children’s section, teaching their children a love for reading. For entrepreneurs, this resurgence in bookstore popularity makes it a great business to invest in, especially if you’re in a community that doesn’t already have a bookstore.

Tips

  • Combining rent, insurance, payroll and inventory, you're looking at first-month expenses of around $60,000 minimum to open a small independent bookstore.

Research and Preparation

Before getting started, put some serious time into investigating what’s involved in operating a bookstore. It may not be the best fit for you. The American Booksellers Association is an invaluable resource, offering the opportunity to network and learn from experienced booksellers. You can join as a provisional member for $350 per year for up to three years to get access to the information you need. Once you open your store, you’ll need to join as a full-fledged member for $199 a year.

Inventory Costs

Although the bookstore itself will come with plenty of expenses, first be aware of the cost of the inventory you’ll need to fill the shelves of your bookstore. Keep in mind that only 41 percent of a book's cover price goes to the store. The rest goes to the publisher and author, as well as the distributor that gets the book to you. To manage the operating costs of your store, you’ll need to sell hundreds of books per day. Also keep in mind that you’ll likely face long periods of inactivity during the week, with more customers coming your way after work and on weekends. This can differ if your bookstore is located in a college town or touristy area. But to get started, you’ll have to purchase a large number of books in the hopes of selling at least enough to begin to recoup the upfront investment. Calculate $30,000 for startup inventory as a base estimate.

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Location and Startup Costs

Once you have the inventory costs on paper, you’ll need to price commercial space in the area you’re targeting. Rentals can vary dramatically from one location to another, but plan for around $6,000 a month. Also anticipate monthly payroll and health insurance costs of about $15,000. Nonrecurring costs like a website, signage and promotional mailings can cost another $5,000. You’ll also need furnishings and décor, so put aside another $5,000 for that. Combined with your inventory costs, the first-month expenses are looking to be around $60,000, with about $21,000 of that coming back each month in sales. You also need to figure in whatever it will cost to keep the store's inventory up-to-date.

About the Author

Stephanie Faris is a novelist and business writer whose work has appeared on numerous small business blogs, including Zappos, GoDaddy, 99Designs, and the Intuit Small Business Blog. She worked for the State of Tennessee for 19 years, the latter six of which were spent as a supervisor. She has written about business for entrepreneurs and marketing firms since 2011.

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