Eeking out a profit at brick-and-mortar bookstores
Here's a good follow-up to the recent post about opening brick-and-mortar bookstores. The San Francisco Chronicle points to Oakland's Diesel bookstore as an example of "what it takes to make a small bookstore succeed in today's era of chain megastores."Independent bookstores have been squeezed over the past 15 years by a combination of this new competition and rising rents. The number of independent booksellers nationwide has fallen from about 4,000 in 1990 to less than 2,000 today.Clearing $138,000 a year is "wildly successful"? And that's the entire take -- the bookstore owners don't draw a salary.
Local casualties have included large, prominent stores such as A Clean Well-Lighted Place for Books in San Francisco, the Telegraph Avenue location of Cody's Books in Berkeley, and Kepler's in Menlo Park, which closed in 2005 but reopened with help from its customers.
Diesel, meanwhile, managed to generate profit of $138,000 on sales of $1.8 million last year, a margin of 7.5 percent.
In the bookselling world -- where the average independent bookstore had a net loss of 1.15 percent in 2005 -- that is considered wildly successful.
Labels: bookstores
posted by Steve Weber at 6/18/2007
6 Comments:
If they don't draw a salary, how can they pay for their personal expenses (mortgage, groceries, etc)? It really doesn't sound "wildly sucessful" to me, but maybe there's a piece of the puzzle I'm missing.
I think the point is don't open an independent bookstore. All that work for what? It better be a hobby and you better be financially independent.
While I won't defend $138K as a kingly sum, there are a few things to consider:
1. It sounds like they primarily sell new books. This means that they don't really have product cost; since you can return unsold stock, it means that you are stocking the store with OPM (other people's money). Hence, I would tend to think of the real cash flow/profit as being $138K out of $700K realized income. A little less than 20%, which isn't too bad.
2. Most businesses don't wait until the end of the year to disburse profits, so they can pay their expenses with monthly (or quarterly) profit disbursements.
3. They admit to being thrifty; and this is magnified by doing what you love for a living. Combine this with a location they seem to be "into", and it means that they are spending less luxury money in order to live in their form of luxury. I've done a lot of jobs in the past, and always found that my life was less expensive when I was working on a passion (rather than in a job).
Still-and-all, a pretty scary outlook for a wildly successful business. The hours sound especially brutal.
Well it's me again and I'm still not convinced that a B&M is that bad an idea for me. I can rent a place for $25K a year. I'm selling about $1400 per month online and the owner of the property has a 3 year contract w/my lanscaping company for maintenance..so if I can't sell $800 a month just to break even...go figure..Heck I'll make it, yall come buy from me and we'll share a cup of coffee
man- it sure seems like booksellers are a bunch of whiners-- 138K a year???? not a kingly sum? you have to be kidding... 138k is a huge amount of money... i would love to make that... people nowadays seem to need so much--- they need a huge salary to maintain theri huge consumer/debt ridden lifestyle-- if people would step back and stop their crazy consumption obsessed lifestyles, maybe 138k would seem like alot... lets quit whining-- if you dont like selling books or think your not making enough-- quit doing it... it would make it alot easier for us people who think 138k is a lot of dough--
I don't think a B&M is totally a bad idea either - as long as you are in an area that can support it. One of the things a B&M can do is provide you with an outlet for books that can't/won't sell online - I do this through a shelf at a local coffee shop, but a B&M would allow you to push a lot more. Also, if it is a used store, you will have people bringing books to you. Just spend a Saturday morning at a Half-Price Books to see how that can work!
As for 138K not being "kingly"; I say this as a long-time business owner: good years need to be very good, since tough years can be very tough. Living in the Bay Area at 138K (for a couple) would be a tough sled, and having to move between two locations adds a fair amount of expense. I think it's good income myself, but I'm living on the cheap in the high Rocky Mountains...
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