Opening a Bookstore

1. Allow at least Six Months from Conception to Opening!

The most important lesson I learned in this process is that, if you are someone who has never started a business before, it will take MUCH, much longer than you might expect - even if you work at it as hard as you can.

I first started getting serious about opening the store in late September / early October of 2007, thinking foolishly that if I hurried, I might be able to open in early November (i.e. in about a month) and be running smoothly in plenty of time for the Christmas-shopping rush which starts around Thanksgiving. Well, instead of 1 month, it took 5 months - we weren't ready to open until early March 2008! Actually, in March, we were still not quite finished either - we still needed to do some minor renovations for a health & safety reinspection, as well as schedule and advertise our official grand opening event. All in all, I would say that realistically you should allow at least six months from the time you start to your grand opening date. This is if you plan on doing most of the high-level work yourself, as the sole full-time company officer. During most of this period, I even had two employees (about half-time each) helping with lower-level setup tasks such as doing renovations, assembling furniture, and taking inventory. But I (and the computerized inventory system) turned out to be the main bottlenecks, so having more low-level employees would not have helped trim the time much, unless I had had more inventory stations.

Possibly, you could cut the time required to less than six months if you have either: (a) several more full-time people, some of whom you can trust with high-level business tasks (such as finance, accounting, and major design / purchasing / marketing decisions), or possibly (b) a pre-packaged franchise kit from a major existing bookselling chain, i.e. a turnkey solution which you could implement without a lot of your own labor. Barring either of these, I'd say that anything less than 6 months is probably not realistic.

2. Make Sure That You Have Enough Money!

One implication of the six-month timeline above is that you should make sure that you have enough startup capital available to you to be able to pay, out-of-pocket, for six months worth of your personal living expenses as well as your business's fixed costs, during this period while you are setting up your store, even before you earn the first dime of revenue! Furthermore, you probably should also have half again that much, to allow at least another six months for your revenue to ramp up from zero to the point of profitability. Plus, you need enough additional capital to pay all of the one-time startup expenses (such as renovations, furniture, equipment, and initial inventory) as well!

As an example, in my case, my personal living expenses (including loan payments) during this period came to about $4,000 per month, while business operating expenses (employee labor, commercial lease, utilities, insurance, etc.) came to about $3,500 per month. Therefore my overall "burn rate" during the startup period (not even including the one-time startup costs!) came to about $7,500 a month. Multiplied by six months, it took about $45,000 just for me and the business to live through the startup phase. If we become profitable in another six months, surviving that period costs me about another $22,500 (assuming a linear ramp of sales, with the half of the expenses falling under the ramp covered by revenue). And finally, one-time startup costs came to roughly $10,000 for furniture (including commercial retail display fixtures), $10,000 for software and equipment, and $10,000 for starting inventory, or $30,000 total, for a grand total of about $100,000 of initial capital needed to start the business.

And note that this was just for a small bookstore, with less than 1,000 square feet of retail space! If you plan on opening a larger store, you should plan for the costs of rent, inventory, labor, furniture, and equipment to increase accordingly.

Fortunately, even before I started, I had already estimated the value of my personal investment of time/money in the business, over the first year from its conception, at $100,000; and so I did have that much capital available to me, but unfortunately, much of it has been in the form of various loans, so the loan payments and interest will continue to eat into our bottom line for some time. Also, unless I can get some more loans, or find ways to reduce my expenses, I may have to take some of the remaining startup costs out of my personal retirement accounts, which incurs a substantial tax penalty, so it should be considered a financial resource of last resort.

This module lists, for reference, major steps that were taken in the founding of Books & Bytes, in chronological order. This will give you some idea of how long various steps in the process took.