How the Bronx’s Only Bookstore Does Money
Noëlle Santos discusses crowdfunding, both in terms of community support and dollar bills.
Noëlle Santos, the owner of the Bronx’s only (future) bookstore/wine bar, The Lit. Bar, describes the situation in the Bronx best in her Indiegogo campaign: in a borough with more than 1.4 million people, 10 colleges and 42.7 square miles, there is no bookstore. This has been true since Barnes & Noble shuttered its location in the Bronx last December and remains true as Santos searches for a location for her new business.
Not one to watch idly as the Bronx (hometown of J. Lo and Justice Sonia Sotomayor, as Santos also points out in her campaign) was left without a place to buy the latest bestseller, Santos set about working on a business plan, winning an award from the New York StartUp! Business Plan Competition in the process, started a crowdfunding campaign and reached out to mentors across the U.S. to create her own.
Below, she shares how the campaign came together and where the money will be going as The Lit. Bar comes to fruition — all with the help of her incredibly helpful and detailed spreadsheet.
When you see stores like Barnes & Noble closing, did it ever make you worry about starting your own bookstore? Did you ever have doubts?
No. … There’s this stigma, very much like with the Bronx, that indies are dying. Yes, many indies have gone out of business in the last 30 years, but we’re experiencing a renaissance. Indies, if you look at our statistics, our sales are completely different from Barnes & Noble’s sales. Our sales were up 10 percent last year and Barnes & Noble’s was anywhere from … 2 to 8 percent [depending on location]. … All the volatility that the indie bookstore has experienced, it left you with all of the strong stores that are able to adapt to change and who are able to withstand any future changes in the market. Those are the stores you have left and they’re not going anywhere. The American Booksellers Association [ABA] last year signed up 62 new member stores and old stores are being bought by new generations. This is a viable business.
I noticed on your crowdfunding campaign you mentioned going to conferences and meeting up with mentors. Did these conferences cost you anything? How much was the travel?
My travel cost me $493.95. Then, the actual workshop was … $1,046 and just the book for it was $160.
Do they offer any grants?
No. If you’re an ABA member, you get a couple hundred discount. … My prospective membership [with the ABA] was $375.
How do you go from a prospective member to an actual member?
So, the ABA gives you a couple of years with a prospective membership, so what you get access to is discounts, a free entry to ABA BookExpo, which happens in New York every year, and you get access to the materials and resources ABA provides. … Once you open your store, you convert to a regular membership, and that’s based upon your sales. So if you sell between ‘x’ and ‘x’ you pay this much, and if you make this much, you pay a little more.
How much did you pay for marketing when it came to your Indiegogo campaign?
I do everything on social media. I paid for my business cards, if that counts. I have very menial costs. I do blogs, I consider that marketing. … I pay $16 a month for my website. I pay $18 a year for my blog, just for the domain name. It could be free, but I choose to have my domain name. And that is it. I get my friends to take pictures of me and follow me around with cameras. [laughs] I paid $20.93 for business cards.
You mentioned on your campaign page that you think your main expense will be merchandising. Do you think that’ll still be the case?
My main expense is actually buildout. It’ll be the construction of the space. And my second highest expense is going to be inventory and the technology to manage all that inventory.
How much is rent going to cost you?
So this is based on estimates because I haven’t found a space yet. If I’m estimating 2,300 square feet, that’s based upon $65 a square foot of construction, so it could be up to $150,000. So the way I derived at that number is, I got the $65 a square foot from the workshop I went to on owning a bookstore, and I took the actual cost of BookBar in Denver [another combination bookstore and wine bar] and just averaged it — so I budgeted like 100k for it.
Will there be extra expenses because of the wine bar?
Oh, yeah. I did go on the higher end because of the wine bar, but you don’t know until you have the space. … As far as construction goes, it’s not a huge difference. It’s the equipment cost that’s the difference.
You won an award for your business plan — has it stayed the same? Or has it evolved?
My business plan … has absolutely changed. I did not know I was going to raise $130,000, which is closer to $150,000 because I had offline contributions. … Because I have this extra money now that I wasn’t anticipating, I feel like The Lit. Bar needs to step up for our younger readers in a way I wasn’t originally imagining. … I’d like to take some of this extra money and create a dedicated space. This also allows me to be my own bookstore manager. I’m working a full-time job right now and creating my exit strategy was a big deal when I was making my business. I have to be the bookstore manager of my store. So the crowd funding allows me to have more certainty and have more cash flow.
What’s the timeline for you leaving your full-time job?
I’m going to be leaving before my bookstore opens. When I have a lease and construction underway, that’s it. I need to be full-time, selecting my inventory, getting a handle on my vendors, hiring, designing the space, picking my titles, creating policies. It’s going to be at least three months of full-time work before my store opens.
Where do you typically source inventory from? And how much inventory do most bookstores stock?
The rule of thumb is to budget $10 to $15 a title. I base it on formulas I got out of the workshop, and that was $65 a square foot, which gives you about 15 titles per square foot. It can go up to like $115 per square foot when you’re calculating inventory for a bookstore, and that means your store is jam-packed from floor to ceiling with inventory. I thought $65 was a good number for me because I’m just starting out. I’d rather have a small selection to begin with until I learn my customers’ take and get their feedback. But for the opening order, you just kind of go by those estimates that areall based upon your square footage.
Do you have any projections for the payroll?
… Your payroll is about 15 percent of your sales. And if it’s more than 15 percent of your sales, you’re not going to make it. Initially, it’s going to be myself and probably four part-time people.
How did you originally decide to crowd fund?
I wasn’t going to do a crowdfund. I was totally against this idea. I thought it was tacky for a for-profit company to crowdfund and I had it in my head that I was going to … be an opportunity for crowdlending. And my initial plan was to follow in the footsteps of Greenlight Bookstore in Brooklyn where they have crowdlended two stores. So instead of getting a perk for a donation, you actually get interest on your contribution of $1,000 or more. And then I went and interviewed a few booksellers that went the crowdlending route and … at the very last minute I sat down and I was like, I am not going to be able to afford all of this debt. And while it was great in theory, the whole crowdlending thing, I had to look at how much cash the owners [for those other bookstores] had on their own, and I didn’t have that. They had partners, and I didn’t have any of that stuff. … So it took days, it took weeks. I was crying about it. … I was like, where am I going to get this money? I was just at a crossroads: either you’re going to reach out to the community, or no one is going to get a bookstore. …
It’s still hard for me to deal with mentally, because no everyone knows how much money you have. I have people who put in $5 into the campaign and they think they can dictate the way you run your business, because they put in $5. … But that’s not how this works. You invested in me and my dream and the way I am going to carry it out.
Has anyone approached you to be a partner in the bookstore?
Yes. And I turn them down all the time. I don’t even want to listen.
What’s been the response from the local community?
Incredible. I am crying every day at the letters that I get. … I am from the community, so people from the community are connecting to me on a level, on a very personal level, you would not normally see from an outsider or some corporation coming to build. And I’ve been very vocal about my journey. I’ve been blogging about it every step of the way, I’m very active on social media, I talk about the hard times. … People feel emotionally invested in me, before I even asked anyone to open their wallets, and that’s what I credit my crowdfund success to. I’ve been crowdfunding for two years before I asked anyone for a dollar. I’ve been crowdfunding support and emotional connection before I asked anyone for money.
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