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How to Open a Bookstore

Written by:

Edited by:

Reviewed by: Daniel Javor

Published on December 7, 2021

Updated on September 20, 2022

How to Open a Bookstore

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Fast Facts

Investment range

$18,150 – $44,100

Revenue potential

$365,000 - $1.8 million p.a.

Time to build

3-6 months

Profit potential

$15,000 - $73,000 p.a.

Industry trend

Declining

Commitment

Full-time

How to Open a Bookstore

In the age of Amazon, it’s easy to believe brick-and-mortar bookstores are coming to an end. But many people still love nothing more than browsing the aisles of an independent bookstore, finding unexpected treasures or a little nook for reading. While the bookstore industry has suffered, independent shops have been making a comeback in recent years thanks to an outpouring of local support. If you’ve always dreamed of running your own bookstore, don’t despair! The opportunity is still there for the taking.

Of course, you’ll need to work hard and have a great plan. The key to success is starting with the right knowledge and information, and this step-by-step guide will prepare you with all you need to know to start turning the pages of your entrepreneurial story.

Let’s begin your next chapter!

Step 1: Decide if the Business Is Right for You

Pros and cons

Opening a bookstore has its pros and cons, as any business does. You should carefully weigh these to decide if opening a bookstore is the right path for you.

Pros

  • Passion – share your enthusiasm with fellow booklovers
  • Inventory – publishers usually absorb the cost of any unsold books
  • Creativity – imagine and build your own bookstore concept
  • Control – choose your hours, niche, product offerings

Cons

  • Competition – hard to beat Amazon’s rock-bottom prices
  • Startup costs – finding and renting a space, plus inventory
  • Profit – bookstore margins tend to be low

Bookstore industry trends

Print book sales remain strong at over 650 million annually, according to data firm Statista. In 2021 more than 60% of Americans reported reading a printed book in the past year.((https://www.statista.com/topics/1177/book-market/#dossierKeyfigures))

Countless shops suffered during the pandemic, but bookstores have been rebounding for years, benefiting from “buy local” trends and adding literary-related products to their stores to boost revenue. In fact, the number of independent US bookstores has increased almost 50% in recent years, to nearly 2,500, according to Harvard Business School.((https://www.hbs.edu/ris/Publication%20Files/20-068_c19963e7-506c-479a-beb4-bb339cd293ee.pdf))

Turning the bookstore into a community gathering place is helping draw customers, and as a result, the rebound is expected to continue post-pandemic.

Industry size and growth

bookstore industry size and growth

Trends and challenges

Bookstore trends include:

  • Many bookstores now have cafes or wine bars
  • Renewed interest in reading as a leisure activity
  • Bookstores serve as venues for community gatherings

Challenges in the bookstore industry include:

  • Growing preference for ebooks and audiobooks
  • High prices of textbooks and other print books
  • Low profit margin
bookstore industry Trends and Challenges

Popular formats

Paperback is the most popular format, according to the Association of American Publishers((https://publishers.org/news/aap-april-2022-statshot-report-publishing-industry-down-2-3-year-to-date-and-12-6-for-april/)): 

  1. Paperback (37%)
  2. Hardback (34%)
  3. Ebook (12%)
  4. Download audio (10%)
  5. Mass market (2%)
popular book formats

What kind of people work in bookstores?

bookstore industry demographics

How much does it cost to start a bookstore?

Startup costs for a bookstore range from $18,000 to more than $50,000, with an average cost of just over $30,000. The largest costs are for renting a space, store preparation, and building out inventory.

You’ll need a handful of items to successfully launch your bookstore. Here’s a list to help you get started:

  • Bookshelves
  • POS system
  • Inventory management tools
Startup CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Licenses and permits$200 - $300$250
Insurance $100 - $300$200
Business cards and brochures$200 - $300$250
Website setup $1,000 - $3,000$2,000
Location security deposit$1,500 - $5,000$3,250
Site preparation$5,000 - $10,000$7,500
Initial inventory$10,000 - $25,000$17,500
Total$18,150 - $44,100$31,125

How much can you earn from a bookstore?

Books are generally sold for 35% to 40% more than cost, but after overhead and payroll, the profit margin of a bookstore tends to be just 0-4%.((https://www.publishersweekly.com/pw/by-topic/columns-and-blogs/soapbox/article/78048-why-are-book-margins-stuck-in-the-1990s.html))

At the start, if you’re able to take in $1,000 in daily sales that would mean $365,000 in annual revenue. This would result in about $15,000 in profit assuming a 4% margin. As your brand gains recognition, sales could climb to $5,000 per day, which would bring in $1.8 million in revenue and $73,000 in profit.

This low margin is one reason bookstores often add another element, such as a café or wine bar, to boost profit. If you also sell books online, you can increase your revenues even more.

bookstore business earnings forecast

What barriers to entry are there?

There are a few barriers to entry for a bookstore. Your biggest challenges will be:

  • Startup costs – Prepare space, stock inventory
  • Location – Finding a central, high-traffic spot is key
  • Competition – Online bookshops are so convenient

Step 2: Hone Your Idea

Now that you know what’s involved in starting a bookstore, it’s a good idea to hone your idea in preparation to enter a competitive market.

Why? Identify an opportunity

Research the market to see what other bookstores are operating in your area, and what they offer. You’ll want to find a location where you don’t have competition and then come up with a unique concept for your store that will bring people in.

Having a café or wine bar in your store, or regular events to create a gathering place, might increase your costs but it can tremendously boost your revenue.

What? Determine your products or services

First, you need to determine what genres to sell. Again, look at other bookstores in your area to see what they’re selling and what does well. You might also ask around, see what people are reading in your town. Romance and thrillers are almost always among the top genres in terms of popularity, but maybe there’s a local niche you could fill.

Next, choose some additional products to offer, such as:

  • Store- or literary-themed shirts and tchotchkes
  • Stationery, mugs, pens, trinkets, mints

Then, if you are going to have a café or wine bar, determine which food and beverage items you’ll offer.

How much should you charge for books?

The industry norm is to mark up your books 35–40% from the publisher’s price. You should try to keep your prices at the 40% markup to maximize your margins, though discounted online booksellers like Amazon may make this difficult. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the concept you’ve chosen. If you want to create a community gathering place in a trendy area, your target market will probably be younger professionals aged 25-40. You can most likely find those people on Facebook or LinkedIn rather than a youth-skewing platform like TikTok.

Where? Choose your business premises

Your location is critical. You should try to find a location with high foot traffic and retail nearby. A place where community interaction is popular would be a good choice.

You’ll need to rent out a store to sell your books and other products. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
bookstore business idea rating

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better
  • The name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “books” or “bookstore”, boosts SEO
  • Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your bookstore products in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

what to include in a business plan

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states offer real advantages when it comes to bookstores.((https://www.zippia.com/bookstore-assistant-jobs/best-states/))

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your bookstore will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your Articles of Organization, and answer any questions you might have. 

types of business structures

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a bookstore. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Licenses/Permits

Starting a bookstore requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your bookstore as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use book industry-specific software like Basil, Anthology, and korona to manage inventory and bookkeeping.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

  • Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as the first customer of the day getting a signed book!
  • Signage – Put up eye-catching signage at your store and website.
  • Flyering – Distribute flyers in your neighborhood and at industry events.
  • In-Person Sales – Offer your products/services at local markets and trade shows.
  • Post a video – Post a video about your bookstore. Use humor and maybe it will go viral!
  • Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
  • Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
  • Press releases – Do press releases about new books.
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Pay-per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
  • Make a podcast – This allows you to make a personal connection with your customers.
  • Offer a free download – Offer something of value to download from your website to capture emails.
  • Create infographics – Post infographics and include them in your content.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your bookstore meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your bookstore could be:

  • Local books by local authors
  • Literature and spirits
  • Hot java and hot reads
unique selling proposition

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a bookstore, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in bookstores for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in books. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

With a bookstore, you can’t really start out small from a home office. You’ll need to have a shop, which means you’ll also need workers to fill various roles. Potential positions for a bookstore include:

  • Clerks – make sales, organize shelves
  • Manager – manage inventory and staff
  • Marketing Lead – SEO, social media strategies, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn or Facebook. You can also use free classified sites like Jobs and AngelList. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Start Making Money!

Rather than a dying breed, bookstores have quietly been making a comeback, becoming as much about community as much as they are about reading. People still love to read printed books – 60% of Americans do it regularly! More and more people are also embracing the buy local concept, so a bookstore with the right concept and strategy can still be successful. 

Now that you know what you need to do to start a business, it’s time to scope out the local market and look for an ideal location for your bookstore. Here’s to your entrepreneurial bestseller!

Bookstore Business FAQs

Is owning a bookstore profitable?

Profit margins for bookstores are thin, but if you have a unique concept such as a café with events, you can boost margins and make good money. You can also sell other related products to increase revenue.

How much does it cost to start a bookstore?

To start a bookstore you need to rent a location, prepare it, and stock up on inventory, which you can do for under $20,000. If your space is larger and you need to fill it with more inventory your startup costs could be north of $40,000.

If I open a bookstore should I still sell online?

Online book sales increase your revenue and add to your bottom line. It’s hard to compete online, however, with the likes of Amazon, which offers deep discounts. If you have a bookstore, you should focus more of your efforts on building a great concept that will draw people in, but sell online as well.

Are bookstores going to be a thing of the past?

Not likely. The US bookstore industry is worth about $10 billion and independent bookstores have been on the rebound, with their numbers in the US increasing nearly half from 2009 to 2018. Customers like to “buy local” and help build their community.