Are you considering opening a book store or perhaps buying one?
Quick Background: Three years ago my partner (also my Mom) and I purchased a small (10,000 books) used (brick & mortar and online) bookshop in a small “downtown” area in the Northeastern United States. Overall the experience has been wonderful. We love the shop but I wanted to write this article in the hopes that others can learn from our mistakes.
In summary: “don’t make assumptions”. This sounds like common sense, doesn’t it? The problem is if you are opening a book store or purchasing a book store (or any business) for the first time, you don’t know what you don’t know. Hopefully, this brief story about what we wish we would have known before buying a bookshop, now looking back, will save you from making the same two incorrect assumptions we made.
Lesson One – Inventory the Inventory
My Mom and I tend to usually err on the side of caution. We did our due diligence during the purchase of the bookshop by hiring a lawyer to draft a purchase agreement and to make sure all of our bases were covered. I vaguely remember the lawyer saying ‘something’ about doing an inventory on our inventory but at the time inventorying 10,000 books just did not seem realistic to us and we assumed the former owners (a husband and wife) were very trustworthy people and we had nothing to worry about in respect to the inventory.
About one or two weeks before we took ownership of the bookshop the owner who ran the daily operations showed us how to use her inventory system (Homebase) and she trained us on the day-to-day operations. She gave us the user-ids and passwords for the shop email and all of the online venues they sold through (ABE, AZ, Biblio and Ebay at the time). About a week before the shop changed hands, the former owner took all of her inventory offline to make the transition smoother. In turn, we used the ABE inventory search to print out every book in their inventory priced at $50.00 or higher as our ‘inventory list’.
The purchase of the bookshop proceeded, we got the keys, put the inventory back online and we were in business. One of the first things we did as we were getting settled in on the first day was to look for the HIGHEST PRICED BOOK IN THE INVENTORY. We wondered: What does a 150 year old $1400 Angler book look like? The book was nowhere to be found! We checked Homebase, it was still marked for sale. We called the former owners and asked – where was the book?? She told us it had been sold on ebay just a couple of days before the shop changed hands! In hindsight I wish I would have asked her to send proof of that to our attorney, but being the generally non-confrontational person I am I quietly accepted her explanation and hung up the phone. Looking back on it…we should have at least inventoried the 50-100 most expensive books they listed in their inventory before we allowed the shop to change hands. It still annoys me when I think about it three years later…but I keep telling myself — karma. We’ve had a lot of really good luck with the bookshop and we love it even without the Anglers book!
Lesson Two – Research all of your Options (ie the Credit Card Machine)
The second mistake we made was to assume the owners of this shop were astute business people who MUST have researched the best deal for their credit card processing set-up! We simply took over their contracts. We signed them without a second thought. Oh – hindsight – what a beautiful thing. It took us a few months to realize our mistake. We were paying to lease a credit card machine to the tune of over $100 per month! Our fees and rates were reasonable but taking over the lease on the credit card machine was a big mistake. We were stuck with it for another 17 months! After realizing our mistake we started researching with banks, other credit card companies and small local businesses we dealt with. In the end the solution we found was recommended by my Mom’s hairdresser (of 15 years). She recommended a local person who sold us a used credit card machine for $250 (which is working perfectly) and provided us with lower fees and rates than our former provider.
** Here is another article on Opening a Book Store
This is a great article and the underlying lessons apply to ANY business purchase. The inventory lesson is something everyone should pay attention to if the business involves a physical product. Do a full inventory and make sure there is a way to be compensated if the beer distributorship you just bought “sold out” of every case of beer the night before you took over.
I am surprised your lawyer did not insist on a complete inventory and also put in a clause to protect you from buying inventory that could be sold before you actually took possession.
Another thing that some people overlook is having a real estate agent look at the property. You can get one to do a walk through appraisal with comps for a flat fee if the seller did not hire one to sell the property. You’d be surprised at how helpful this can be. Sellers won’t try to snow a Realtor but they will act like some things are “little” to potential buyers when they know the problem is costly to fix.
Those are some really good tips. I am probably the same way, and I put too much trust in people when signing contracts and such. Probably something that I need to be more careful when doing. It would probably make me feel sick too to not have that 1400 dollar book. Good luck with the store though!
Nice article, i agree, that is a pretty good business model for taking over anything. I like the fact that if those were the 2 biggest mistakes you made then you’re probably doing pretty well. good luck in the future.
The good news is – you are in a great business and have somehow survived for three years!
There are always book stores for sale but a couple of points I would make is – each of us owners have our own pluses and minuses and both of them can easily work against the interests of a new buyer.
Our negatives have driven away a lot of customers – and they are unlikely to ever come back. Our positives have captured and enthralled our regular customer base – and many of them are not going to be easy to win over if you try to change the store or its procedures very much.
I would recommend starting from scratch after getting all the advice you can get from existing stores or paying careful attention while serving an apprenticeship with a successful operator.
Even then, it is an extremely difficult business to operate – not just because of how much there is to learn but because the work to be done is neverending – and it has to be done!
I have to say, I have made a lot bigger mistakes than those, like Matt said, if those were your two biggest, you are doing well.
I don’t own a book store, but there’s so many great points in this article that can be used for so many situations. I think the phrase “You Don’t Know What You Know” really stands out to me, because I think anyone in any business can think back to “if only I had known that 6 months ago” or “if i could start all over again, i would do xxx differently…”
I think the advice “never make assumptions” is a pretty good one to follow too!
You learned some valuable lessons very cheaply. One thing I would have recommended would have been a non-competition clause. You’d be surprised how many business owners “sell” a business then turn around and open a competing show just down the road. Having a real estate professional involved would have been a good idea also, just to make sure you were covered on the property end. All in all, it looks like it turn out well but now you’ll know when you buy your next business!
You have to be extra careful when dealing with people you don’t know. Bette be careful than sorry.
I understand how the 150 year old $1400 Angler book still stays with you. Yes, having it. Would be awesome. Selling it if you still chose to would be great. These things stay with us not because of the money, or ownership as much as knowing what those people did. Sometimes, it isn’t about dwelling as much as it is about the justice end of it. You know this since you mentioned the Karma thing.
Hopefully, these people are living with the fact; that they did something underhanded in a big and intentional way.
Even though you learned a lesson here, it still sounds like you have a lot of faith in people. I think that is a good thing. Because you most likely don’t conduct yourself in a way, that you have to be constantly paranoid about what others are up to. You can just live your life happy. Those people have to be in a habitual state of awareness because of their own actions. They are the ones who really were cheated. You are the the winner by your good and honest nature. Except now you are just a bit more savvy.
Best of Wishes
Thanks so much for this article I’m in the business and still trying to figure out the ins and outs.
wow what a blessing to own a book store. There is nothing like browsing and I hope your venture goes well for you. WE work awith a lot of authors and encourage them to increase all their distribution outlets including both online ( their website) and local book stores.
Best Wishes
Denise
Thanks for this post. I’m in process of opening a used book store here in India. I’d really appreciate if you can add your latest experiences to this post.
Best,
this is good effort in collecting used book again as a Bookstore will give valuable book. thanks
Thank you for the very helpful info, I’m re-opening my online store and will open a retail store soon, all used books nothing new. I’m in the credit card processing business, and I hope you got out of the lease. I use to lease equipment, but I did not believe in leasing credit card terminals for $40 a month when I can give a customer a terminal that I can pay $40 for used on ebay.
It dose not make sense, back in the old days, the 90’s late 90’s terminals were very expensive, andyou can justify the lease, especially wireless, kind of made sense. The advent of ebay, and many other places to go online you can get all types of equipment from $40 to $300 plus, no lease or renting. I’ve been in the business for 15 years and know what terminals to buy. This way I keeps the customer happy, they keep there monthly cost down, and they stay in business. My main goal for my merchants.
A lease is insane do the math 48 months $1920 at the end of a lease. If you can’t get a terminal with no contract from a processor, go to ebay get a Omni 3200se for $40 dollars plus shipping, or a little more bell and whistle, an Omni 3750 if you want to add gift cards lots of memory and user friendly gift card, and check processing prompts.
I currently have 10,000 plus used books in 3 storage sheds in inventory. When on the street signing merchants. I’m buying used books every day. The best of luck with your store, any more advice or helpful hints please share.