Thursday, November 19, 2015

Why You Need A Business Plan First

Opening a bookstore is a dream for many. To spend your days surrounded by books, to make reading a part of your job, what could be better for those who love prose?

Dreams are fine while they exist in your head, partially formed, nebulous. When you act on that dream, you had better get that head firmly wedged into reality because literature may be art but a store of any kind is a business and there's no room for reveries when expenses exceed income.

Kimberley and Rebeccah George wanted to open a bookstore in Chicago's Wicker Park neighborhood, a very trendy area that has gentrified itself into sky-high rents. People with money live there, educated people with money and an interest in books as entertainment. The sisters believed that there was room for another book seller in the area, and did not foresee a negative consequence to potential competition from the other four stores already doing business.

Their bookstore would set itself apart by providing comfy seating for book browsers, who could sip on coffee, nibble on pastries, or chug down a cold brew while selecting a few books.

Sounds like the sort of shop you'd like to patronize, doesn't it?

Except that the food end of the business required more infrastructure than the book selling end, and the would-be book vendors found themselves burning through their start-up funds. City inspectors brought the bad news about needing a second bathroom to meet food service requirements, and there the ladies were with their fancy signage all ready to go but not enough money to pay for the extra water line and plumbing.

They have started a funding campaign online, the sort of option that many residents of Wicker Park would understand. Those hipsters are aware of GoFundMe and Indigogo, aren't they? Surely they'll ride to the rescue and help a neighbor through a rough patch.

To date, there isn't much of a show of support for the bookstore.

Volumes Bookcafe needs $20,000 to meet requirements and get their shop opened. They've raised a little over $1800.00.

Where are the Wicker Park hipster book lovers?

Questioning the business acumen of the George sisters, possibly.

A sound business plan is the first step in launching a new venture. The budding entrepreneur has to estimate every single expense that is likely to crop up before the customers start patronizing the establishment. For the ladies George, that would include things like rent for the first few months, the cost to rehab the space, and a study of Chicago zoning ordinances that tell them what that rehab must entail.

If a business magnate doesn't perform due diligence in advance, can an investor trust that the business owner has enough of a clue about business to actually run the place and turn a profit? Investors want a return on their investment, even if they are contributing to a crowdsourced campaign. Maybe they'll get a free latte with every purchase, or a cookie to go with their tea. Maybe it's a discount on book purchases. But those discounts cost money and you'd want to have faith in the acumen of the person you're investing in.

Then again, book stores aren't exactly cranking out big profits. The hipsters are surely aware of online shopping and the discounts to be had by buying at Amazon after using the brick and mortar store as a free showcase.

Owning a bookstore is a dream. It takes some deep pockets to make that dream come true.

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