How Much Would It Cost to Start a Bookstore and Where to Get Money to Start?
How much does it cost to open a bookstore? This question interests many aspiring entrepreneurs. A bookstore business plan is the most important part of preparing to open. It must be drawn up even before you start looking for premises for a store and think about the assortment. Your business plan may differ slightly or significantly from the one presented above. It depends on a large number of factors: the cost of rent, the population of your city, the remoteness of publishers and suppliers, the presence or absence of competition, etc.
Approximate costs for opening and maintaining a bookstore
Below are the main items of expenditure:
- First month’s rent and utilities – $2,000
- Fixtures – $4,000
- Inventory control system – $7,000
- External and internal signage and furnishings – $5,000
- Logo and business cards – $500
- Buildout – $500
- Grand opening promotion – $1,000
- One month’s operating expenses – $3,000
Combining all these items, you’re looking at first-month expenses of around $23,000 minimum to open a small independent bookstore.
How and where to get a loan for starting a bookstore
It’s cool if you have your own savings and can use them to start a business. But what if you do not have the required amount and can’t wait to open your independent bookstore? A way out for many starters is to take a loan. There are several options here.
Surely you have heard of such companies that offer fast and short-term payday loans for whatever purposes, so a small amount and for a short time can be borrowed from them.
There are even lenders that provide bad credit loans Delaware. This option is also suitable for people with no credit. In this case, the advantages are obvious: you will be able to get money quickly and without collateral, there is no paperwork involved, and you do not need to wait for the bank’s specialists to analyze your application and then make a decision.
For newcomers in the business, this way of getting money for starting a bookstore may be the only one. Banks, unfortunately, refuse to lend to startups.
In addition to private microfinance organizations, there are state ones that provide loans for businesses from the state budget. These are various funds for the support and development of small businesses, funds for lending to small businesses, microfinance centers.
You can typically get no more than $1,000 from a microfinance organization (however, some lenders are ready to lend up to $2,500) and usually a loan is issued for a period of no more than a month. The interest rate is individual for each applicant.
The services of microfinance organizations are convenient to use if you urgently need funds for a short period and there is no time to wait for the bank to approve the loan. But when a business needs a more significant amount for the implementation of a project, the purchase of expensive equipment or its own office, then you will have to consider lending programs for small and medium-sized businesses in banks.
Individual entrepreneurs may take an ordinary personal loan and use it for business purposes. However, you will have to prove that you are solvent and will be able to repay your loan. With this option, you must prepare to wait for some days or even weeks to get accepted and receive money.
Now almost all large banks offer loans to small and medium-sized businesses on favorable terms. The loan amount can be range between $1,000 and $500,000, depending on the lender, and the main advantage is a lower APR from 4 to 40%, depending on the bank. But it is not so easy to get a bank loan to develop your business.
Firstly, large sums are provided only to companies that have worked in the market for at least six months and are dealing with a profit. In addition, banks are actively studying credit history, so it should be perfect.
Secondly, to get a loan for starting a bookstore, you will definitely need collateral or a guarantor, and sometimes banks require the fulfillment of these two conditions at the same time. Various properties can act as collateral: real estate, car, goods, equipment, personal property of the entrepreneur. If your collateral is not enough to secure the loan, then the guarantee fund can also act as a guarantor.
Third, be prepared to provide the bank with all the necessary documents. The specific list needs to be clarified in each bank, it looks like this:
- constituent documents;
- tax dunting statements;
- perfect business plan.
Then you will need to wait while the bank analyzes your documents and decides on a loan. The process can take 3 to 14 days.
Loan through guarantee funds
If the bank denies you a loan due to insufficient collateral under the loan agreement, that is, your property is not enough for collateral, then a guarantee fund can act as a guarantor. Guarantee funds can also be funds to support small and medium-sized businesses.
Of course, foundations provide a guarantee for a fee. On average, the fund’s remuneration is up to 2.5% per annum of the surety amount. You will have to pay this amount to the fund immediately upon concluding the contract.
To get a loan, you can apply either directly to the guarantee fund or get a loan through a bank that cooperates with the fund under the surety program. The procedure for considering the application and the package of required documents are similar, only the loan agreement will be three-sided: with you, the bank and the guarantee fund.
Tags: books, bookstore, Business, finance, money