Thinking of selling your bookshop?
Well, independent bookstores are enjoying something of a renaissance – especially in Australia – as ebook sales stagnate and people return to paperbacks, while savvy proprietors diversify into events, stationery and greetings cards.
With this in mind, it should be somewhat easier to find buyers, and achieve a higher sale price, for your bookstore than it would have been 5-10 years ago.
Below we look at the steps you need to take to get your business ready for a smooth sale.
Once you’ve decided to sell, your first job is to prepare the business for sale – and that means making it as attractive as possible to prospective buyers.
Upgrade your business model
Unless you want a quick sale, you could lay the groundwork for a more lucrative deal by finessing your business model. John Arrup, senior advisor for Viking Mergers & Acquisitions, suggests the following ways to maximise the value of your bookstore before putting it on the market:
• Community involvement: Support your local community to build your brand. For example, you could hold book fairs at schools and host book signings, book clubs, kids’ book events and special release events.
• Online sales. With a large proportion of book purchases done online, incorporating an ecommerce function into your website, supported by Google AdWords campaigns and social media activity, can boost revenue and potential for further sales growth.
• Fresh revenue streams. If you haven’t already, branch out into journals, stationery, gift-cards, e-readers, electronics accessories and other items. Bookstore revenues tend to dip post-Christmas, which you can offset, evening out cash flow, by diversifying beyond books.
• Inventory management. Arrup says that your inventory management technology needn’t be as sophisticated as that used by large bookstore chains, but while it “can be expensive, most buyers will not consider purchasing a bookstore without it and in the end, you will get a return on your investment since it will be considered goodwill.”
Once you’ve made any substantial changes – if they weren’t already in place and you had time to spare – then it’s time to focus on the basics.
First and foremost, tidy up and update all paperwork. From accounts and tax records to staff contracts and inventory logs, an interested buyer will request documentation at various junctures in the process.
Delay unreasonably in furnishing such documents and you run the risk of the buyer walking away. Orderly, up to date records provided promptly will suggest that your business is generally well-organised.
Make sure that your bookstore is a well-oiled machine that can operate successfully without you at the helm. You can reassure the buyer in this regard by documenting all processes involved in running the business day to day – from ordering stock to using the cash register and locking up the premises at the end of the shift.
First impressions and minor details count for potential buyers. Tidy, clean premises – in the store and in your back office – will reassure them that the business is well run and that they can hit the ground running.
Cast a critical eye over your store: what fixtures and fittings need reorganising, replacing, fixing or repainting? A good clean-up and paint job will cost you little in both time and cash but can make a meaningful difference to piquing a buyer’s interest.
When it comes to valuing, marketing and negotiating the sale of your business, it’s wise to engage a lawyer, accountant and possibly a business broker.
Valuing your business
Conventional “formulas or ratios” for valuing a business, “when used alone, will actually minimise a bookstore’s true worth,” says an article by Paz & Associates. “Retail bookselling is nuanced. And a bookstore is valuable to the quality of life in a community.
“When we do bookstore valuations, we use only ratios appropriate for retail businesses, identify all of the intangibles that would take a new owner years and years to develop on their own, and identify any investments a new owner would need to make.”
Putting your bookstore on the market
Do some thinking about potential buyers for a bookshop in your price range and locality. What might they be looking for in an independent bookshop?
For example, might they want to know about the viability and cost of renovating the premises or installing a coffee shop? Knowing what your buyer is looking for can help you modify your sales pitch to suit them.
Put gentle feelers out for buyers, but it’s not always a good idea to shout it from the rooftops. Take into consideration your staff and regular customers – people generally don’t like change, particularly in something in which they feel emotionally invested. If you’re the face of your business, be careful how public you go with the sale initially.
That said, when you consider that a love of books is so important in this sector – it’s rarely a path to great wealth, after all – it’s hardly surprising that buyers are often found from among the bookshop’s customers.
That’s according to Donna Paz Kaufman and Mark Kaufman of Paz & Associates, a Florida-based organisation that provides training and advice to booksellers. The pair recommend that sellers send a personal letter to their top 100 customers notifying them of the business opportunity.
A more realistic route to finding a buyer, however, is to put it up for sale on BusinessesForSale.com. Every month we help more than 1,500 owners sell their business.
Looking to buy another bookstore? Read our guide to buying a bookshop and browse our book shops for sale now.