Do you want to start Bookstore?

Are you thinking of how to open a bookstore? Even though the digital era has popularized the use of electronic and audio books, there is a considerable size of population that still prefers to read printed books. With the right plan and strategy in place, it is possible to open a bookstore that will transform into a profitable venture with good returns. There are different approaches of starting a bookstore considering you can either open an all-inclusive bookshop or concentrate on a specific niche. The book reading culture is still alive and becoming a bookstore entrepreneur is definitely a smart idea.

Executive Summary

2.1 The Business

The bookstore will be registered as ZemBook Store in downtown Santa Monica, California. ZemBook Store will be owned and managed by Christine Jenns who is an accomplished author. The bookstore will offer a variety of exciting books cutting across various genres and categories. Christine has written several fiction and non-fiction books with some having won awards in various competitions.

2.2 Management Team

ZemBook is managed by Christine Jenns who has worked in the book industry for more than thirty years. Given her experience in the industry, Christine has always wanted to open her own bookstore and her in-depth knowledge of the book business including operations makers her qualified to run the business. Given her experience, Jenns understands how to start a bookstore and keep high standards of professionalism and offer quality books.

2.3 Customer Focus

ZemBook will primarily serve Santa Monica book lovers who live within the city. Customer demographics will be vast and cut across a wide age gap as both children and adults will find ZemBook a favorite place to grab their favorite books.

2.4 Business Target

ZemBook aims to sell various types of books that will appeal to readers of different age groups. The bookstore intends to offer a wide range of fresh and exciting books that meet customer expectations.
Bookstore Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Christine Jenns is an expert author who has written many books in areas of psychology, marriage and other key society niches. Jenns has previously worked for major magazine and publication companies across the United States. During her thirty year career, Christine has written numerous award winning books, participated and recognized in various global events.

3.2 Aim of Starting the Business

Due to her immense passion for books, Christine was keen on becoming an entrepreneur and continue her passion in a highly dynamic business environment. The bookstore will be a perfect platform to continue developing her writing career as she intends to sell her own books, as well as sell feature books from other authors. Her bookshop business plan is aimed at starting an enterprise that will help boost a reading culture and equip her customers with useful knowledge.

3.3 How the Business will be started

To ensure the bookstore achieves its targets, Christine with the help of experts has formulated a comprehensive business plan that will attend all aspects of financing and forecast sales. The plan captures key aspects such as expenses, investment, assets and loans. Below is a breakdown of key financial aspects which include; capital and liabilities, total planned investment, start-up funding, total assets, capital required, start-up expenses and total liabilities.

Bookstore Business Plan - Startup Cost

Start-up Expenses 
Legal$1,200
Consultants$2,000
Insurance$20,000
Rent$10,000
Research and Development$12,000
Expensed Equipment$10,000
Signs$2,000
TOTAL START-UP EXPENSES$57,200
Start-up Assets$0
Cash Required$100,000
Start-up Inventory$40,000
Other Current Assets$20,000
Long-term Assets$6,000
TOTAL ASSETS$20,000
Total Requirements$22,000
START-UP FUNDING$0
START-UP FUNDING$80,000
Start-up Expenses to Fund$35,000
Start-up Assets to Fund$25,000
TOTAL FUNDING REQUIRED$0
Assets$15,000
Non-cash Assets from Start-up$10,000
Cash Requirements from Start-up$0
Additional Cash Raised$40,000
Cash Balance on Starting Date$15,000
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$12,000
Investor 2$16,000
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$100,000
Loss at Start-up (Start-up Expenses)$45,000
TOTAL CAPITAL$50,000
TOTAL CAPITAL AND LIABILITIES$35,000
Total Funding$80,000

Services for Customers

ZemBook bookstore will offer different types of books for its customers. The main products and services offered will include;

  • Vast selection of books i.e. fiction, non-fiction, children’s books, cookbooks, artbooks and foreign language titles among others.
  • Stationery items such as binders, paper notebooks, file folders, staplers and report covers among others.
  • Art Supplies such as brushes, canvas, kits, art papers and paints.
  • Electronics i.e. flash drives, headphones and calculators.
  • Gift wrapping service for customers buying books as gifts for their loved ones.

When planning how to start a bookstore business, it is important to know products and services that shall be offered by the bookstore.

Marketing Analysis of a Bookstore

To ensure the business starts and remains profitable throughout, ZemBook has carried out a comprehensive market analysis. This detailed bookstore business plan template is aimed at implementing a working strategy that will be rolled into action after the bookstore has been opened. The marketing analysis is meant to elaborate the plans ZemBook has in order to successfully operate in a highly competitive environment. Christine has been assisted by experts to draft a performance-oriented marketing plan that will support her bookstore operations.

Even though technology has largely influenced reading patterns, there are many people who still prefer to read traditional printed books. The management of the bookstore has done extensive analysis of the market especially to know the target audience. With information in this example of a business plan for bookstore, ZemBook knows what it should do to attain high levels of success.

5.1 Market Segmentation

After doing market research, ZemBook Bookstore has identified the following groups of people as target audiences, and therefore potential bookstore clients.

Bookstore Business Plan - Market Segmentation

5.1.1 Parents / Adults

The bookstore has a wide variety of books written for mature audiences and therefore, any adult is a potential target customer. Adults including parents find joy in reading their favorite books especially while relaxing. This category includes any adult who is an avid book reader constantly looking for exciting books to add to their collection. Book lovers in Santa Monica and the surrounding areas will have a bookstore located in a prime central location to serve their needs. Customers are expected to be drawn from various cultural, religious and social backgrounds who love to read. Given that they earn a steady income, their purchasing powers are high and therefore, are a key market segment for the bookstore. There is need to adequately cater for this group by offering a wide range of quality and interesting book collections.

5.1.2 Children

Children are a special group of customers for ZemBook because kids naturally love books i.e. story books. Despite the new technology trends that have introduced electronic books, children love printed books and get attached to them. There are numerous categories of children books and offering a wide variety is the best way to appeal to this target audience. Kids love to have a large collection of books and the bookstore plans to have children books starting from kids learning to rid to older children. Since they don’t have an income, children rely on their parents and guardians to buy them books. For this reason, this group has a close association with adults/parents discussed in section above.

5.1.3 Students

ZemBook sells different kinds of stationery which is required by both students. Since the store stocks items such as books, staples and files among others, there is need to attract customers who are in need of these items. Even though they might not contribute as much revenue as the first two discussed customer groups, they are an important target group to consider.

5.1.4 Office Workers

Office workers will be an important customer for Zembook. The business plans to sell stationery required frequently by office workers. Since there isn’t a bookstore in the neighborhood, Zembook bookstore is exactly what office workers need, so there is enough market without any competition.

5.1.5 Seniors / Grandparents

Seniors spend a lot of their time reading as most of them have retired from active career lives and are looking for a way to unwind and pass time. Because of their age, technology doesn’t really fascinate them and so, they still prefer to read traditional printed books as opposed to electronic books. They’re an important target group as those who love reading are likely to spend a good amount of money buying books.

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Adults25%15,00018,00021,00024,00027,0008.00%
Children15%23,00026,00029,00032,00035,0007.00%
Seniors20%10,00013,00016,00019,00022,00010.00%
Students17%12,00015,00018,00021,00024,00012.00%
Office Workers23%20,00023,00026,00029,00032,0009.00%
Total100%80,00095,000              110,000125,000140,00012.00%

5.2 Business Target

ZemBook targets to be the most popular bookstore in downtown Santa Monica. According to the financial forecast, the bookstore anticipates to recover the entire initial capital within the first three years after launching operations. It is also projected there will be an average of 15 -20% annual sales growth. For the business to meet its sales targets, the bookstore hopes to provide a wide variety of books as well as ensure top professionalism and exemplary customer service. How to open a bookstore business plan emphasizes the need to learn how to employ smart strategies to remain in business. ZemBook will capitalize on building sustainable long relationships with its customers.

5.3 Product Pricing

Product pricing is important for the survival of the bookstore. After doing an extensive market research, ZemBook has purposed to offer attractive but competitive prices for all its products in order to attract and retain customers. In this bookstore business plan sample, the business has shared how it intends to price some of its major products.

Strategy

After carefully surveying the market, Christine Jenns has turned her focus on implementing a smart and tactical sales strategy that will woo customers to her bookstore. With support from marketing professionals, the following sales strategy has been proven to work well when opening a bookstore.

The sales strategy intends to cover the following areas:

6.1. Competitive Analysis

ZemBook is expected to face stiff competition as there are other bookstores spread across different locations in the city. The bookstore is capitalizing on its strategic and busy downtown location that is directly accessible both for pedestrians and motorists. The bookstore is located close to other major shopping amenities that are frequently visited by visitors and residents thus guaranteeing better visibility of the premises. ZemBook hopes to tactfully organize its product pricing structures to woo customers but at the same time, ensure projected profits are realized.

6.2 Sales Strategy

In order to know how to start a bookshop and run it successfully, ZenBook has put in place these ambitious and smart sales strategies to ensure the bookstore outshine its competitors.

  • Focus on book lovers, a key market segment that is growing on a daily basis. These are customers who’re willing to do anything to have their favorite book.
  • Understanding what the customer needs and responding to those needs in the best way possible. Do market research to see what sells and innovate solutions that support the bookstore’s growth strategy.
  • Ensure shoppers enjoy their time while at the bookstore by offering friendly and professional customer service.
  • Establish the bookstore in a central location that is visible and easily accessible for customers.
  • Vigorously market the bookstore on various media platforms i.e. local television, radio and on the digital space i.e. social media. Utilize exhibitions and events to market the bookstore.

6.3 Sales Forecast

ZemBook believes it’s well-laid out strategies are a perfect demonstration of how to run a bookstore business and attain profits within the shortest time possible. The bookstore has forecasted an impressive boost and growth in annual sales. Based on the sales strategies, the bookstore hopes to meet the following sales targets on an annual basis. The following table and charts show information regarding the bookstore’s sales forecasts.

Bookstore Business Plan - Unit Sales

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Books300,000400,000500,000
Books Subscriptions200,000300,000400,000
Arts and Crafts250,000350,000450,000
Comic Books400,000500,000620,000
TOTAL UNIT SALES1,150,0001,550,0001,970,000
Unit PricesYear 1Year 2Year 3
Books$250.00$280.00$300.00
Books Subscriptions$100.00$200.00$300.00
Arts and Crafts$200.00$300.00$400.00
Comic Books$300.00$450.00$650.00
Sales
Books$200,000$250,000$300,000
Books Subscriptions$150,000$200,000$250,000
Arts and Crafts$80,000$120,000$140,000
Comic Books$250,000$320,000$400,000
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Books$1.20$2.20$3.20
Books Subscriptions$1.00$2.00$3.00
Arts and Crafts$0.60$1.60$2.00
Comic Books$3.00$4.00$5.00
Direct Cost of Sales
Books$100,000$120,000$140,000
Books Subscriptions$50,000$80,000$110,000
Arts and Crafts$25,000$35,000$50,000
Comic Books$40,000$50,000$65,000
Subtotal Direct Cost of Sales$215,000$285,000$365,000

Personnel Plan

ZemBook aims to be the best bookstore by offering superb products as well as exemplary customer service. In order to achieve this, the business has put together a winning team that will be tasked with running the business on a day-to-day business. If you’re unsure of how to start your own bookstore with a lean and effective staff, see how ZemBook has proposed its personnel plan.

7.1 Personnel Plan

ZemBook bookstore is owned and managed by Christine Jenns who is an accomplished author. She will be assisted by Joe, the Assistant Manager who is conversant with book store operations and will be in-charge of administration and staff welfare. In addition, there will be two floor staff to assist customers coming to the bookstore, one store cashier, one sales and marketing executive, an admin and one cleaner. To ensure the bookstore only admits professional staff, the business will conduct intensive interviews, and offer on-job training for successful applicants one month before starting the job.

7.2 Average Staff Salaries

The bookstore intends to pay staff the following average salaries in the first three years of operation.

 Personnel Plan   
Year 1Year 2Year 3
Manager$60,000$80,000$100,000
Cashier$30,000$40,000$45,000
Administrator$25,000$35,000$40,000
1 Sales and Marketing Executive$30,000$50,000$70,000
Floor Assistant$25,000$30,000$35,000
Floor Assistant$25,000$30,000$35,000
Cleaner$20,000$25,000$30,000
Assitant Manager$50,000$60,000$70,000
Total Salaries$265,000$350,000$425,000

Financial Plan

ZemBook has formulated a comprehensive financial plan that will be instrumental in helping the business achieve its goals. The bookstore will be financed by the owner, Christine Jenns and two investors. The funding available is enough to cater for initial business set-up so no external loan will be borrowed. The following is a detailed breakdown that can also help you learn how to open your own bookstore and effectively forecast and manage its finances.

8.1 Important Assumptions

The bookstore’s has indicated its financial projection on the basis of these assumptions.

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate12.00%14.00%16.00%
Long-term Interest Rate4.00%4.00%4.00%
Tax Rate10.00%12.00%14.00%
Other000

8.2 Brake-even Analysis

The graph below explains the bookstore’s Brake-even Analysis.

Bookstore Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even6000
Monthly Revenue Break-even$120,000
Assumptions:
Average Per-Unit Revenue$300.10
Average Per-Unit Variable Cost$0.60
Estimated Monthly Fixed Cost$220,000

8.3 Projected Profit and Loss

ZemBook has shared the following anticipated Profit and Loss information that will be calculated on a monthly and annual basis.

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$800,000$900,000$1,000,000
Direct Cost of Sales$60,000$80,000$100,000
Other$0$0$0
TOTAL COST OF SALES$60,000 $80,000 $100,000
Gross Margin$400,000$450,000$500,000
Gross Margin %70.00%74.00%80.00%
Expenses
Payroll$265,000$350,000$425,000
Sales and Marketing and Other Expenses$4,000$6,000$8,000
Depreciation$2,000$3,000$4,000
Leased Equipment$0$0$0
Utilities$5,000$7,000$9,000
Insurance$1,200$1,400$1,600
Rent$10,000$12,000$14,000
Payroll Taxes$30,000$35,000$42,000
Other$0$0$0
Total Operating Expenses$220,000$250,000$300,000
Profit Before Interest and Taxes$50,000$90,000$100,000
EBITDA$20,000$30,000$50,000
Interest Expense$0$0$0
Taxes Incurred$20,000$23,000$26,000
Net Profit$100,000$115,000$130,000
Net Profit/Sales30.00%40.00%50.00%

8.3.1 Monthly Profit

Bookstore Business Plan - PROFIT MONTHLY

8.3.2 Yearly Profit

Bookstore Business Plan - PROFIT YEARLY

8.3.3 Monthly Gross Margin

Bookstore Business Plan - GROSS MARGIN MONTHLY

8.3.4 Yearly Gross Margin

Profit and loss information has been illustrated in the table below.

Bookstore Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

The projected cash flow for ZenBook is explained in the following column diagram.

Bookstore Business Plan - Projected Cash Flow

The table below has key financial information such as pro forma cash flow, subtotal cash spent, subtotal cash received, subtotal cash from operations and sub-total cash spent on operations.

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$50,000$55,000$60,000
Cash from Receivables$8,000$10,000$12,000
SUBTOTAL CASH FROM OPERATIONS$58,000 $65,000 $72,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$58,000 $65,000 $72,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$20,000$22,000$24,000
Bill Payments$15,000$20,000$25,000
SUBTOTAL SPENT ON OPERATIONS$35,000 $42,000 $49,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,000 $45,000 $55,000
Net Cash Flow$12,000$15,000$18,000
Cash Balance$23,000$28,000$33,000

8.5 Projected Balance Sheet

The projected balance sheet captures the total amounts for the bookstore’s capital, assets, liabilities, current assets, long-term assets and current liabilities.

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$180,000$220,000$260,000
Accounts Receivable$10,000$12,000$15,000
Inventory$3,000$4,500$6,000
Other Current Assets$3,000$3,000$3,000
TOTAL CURRENT ASSETS$196,000 $239,500 $284,000
Long-term Assets
Long-term Assets$10,000$12,000$14,000
Accumulated Depreciation$13,000$15,000$17,000
TOTAL LONG-TERM ASSETS$2,000 $1,000 $500
TOTAL ASSETS$200,000 $250,000 $300,000
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$15,000$18,000$21,000
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$15,000 $18,000 $21,000
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$12,000 $14,000 $17,000
Paid-in Capital$25,000$25,000$25,000
Retained Earnings$25,000$50,000$75,000
Earnings$100,000$120,000$140,000
TOTAL CAPITAL$200,000 $230,000 $260,000
TOTAL LIABILITIES AND CAPITAL$180,000 $210,000 $240,000
Net Worth$220,000$250,000$280,000

8.6 Business Ratios

This table contains business ratios, total assets, ratio analysis and net worth.

 Ratio Analysis    
Year 1Year 2Year 3INDUSTRY PROFILE
Sales Growth6.00%30.00%50.00%4.00%
Percent of Total Assets
Accounts Receivable6.00%5.00%4.00%10.00%
Inventory3.00%2.80. %2.60%11.00%
Other Current Assets2.00%3.00%2.95%30.00%
Total Current Assets110.20%130.10%140.30%54.00%
Long-term Assets-4.00%-18.00%-25.00%40.50%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities5.00%4.00%3.50%24.50%
Long-term Liabilities0.00%0.00%0.00%22.50%
Total Liabilities5.10%1.00%0.50%42.10%
NET WORTH90.20%80.00%100.00%36.00%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin70.00%72.00%74.00%0.00%
Selling, General & Administrative Expenses60.00%75.00%62.00%65.00%
Advertising Expenses3.00%2.00%0.50%2.20%
Profit Before Interest and Taxes22.00%25.00%28.40%1.50%
Main Ratios
Current1014180.7
Quick252732.30,5
Total Debt to Total Assets3.05%2.00%1.65%55.00%
Pre-tax Return on Net Worth80.00%90.00%92.60%2.20%
Pre-tax Return on Assets64.30%58.00%66.00%7.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin16.00%19.20%23.00%N.A.
Return on Equity50.00%54.00%58.00%N.A.
Activity Ratios
Accounts Receivable Turnover457N.A.
Collection Days9297110N.A.
Inventory Turnover151820N.A.
Accounts Payable Turnover11.114.417N.A.
Payment Days222222N.A.
Total Asset Turnover2.62.42.2N.A.
Debt Ratios
Debt to Net Worth0-0.04-0.02N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$200,000$220,000$240,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.32N.A.
Current Debt/Total Assets5%3%2%N.A.
Acid Test242832N.A.
Sales/Net Worth2.320.7N.A.
Dividend Payout000N.A.