Business Proposal

Rajeet Guha
Feasibility Analysis

1. The Proposal

Used Book, Record, DVD and CD Store in North Bergen, NJ

The Concept: A used book store in the city I live, i.e. North Bergen, NJ. A small space of 1500 square feet will be rented on Bergenline Avenue, which is a major shopping street and furnished with bookshelves and display tables so that at least 15,000 books can be on sale at any point of time. I love reading and collecting books and to start with, my personal collection of books on fiction, on economics, on literature, on history, on politics, on philosophy etc. numbering over 1000 will be put on display and sale. Books will also be received as donations from a number of close friends, relatives and neighbours and these will easy number another 500. Books will be purchased from flea markets and pavement sales in New York City, especially in the Village where books often sell for as low 25 to 50 cents. Books will be bought from Amazon.com, eBay etc. It will also have old records, CDs, DVDs etc. Most of these will be from my family collection. The store will be kept open on all days from 0900 to 2000 hours except Sundays and major holidays. To start with the store will have a staff of two. The criteria for selection of such staff will include in particular them being book lovers like me. I will supervise and visit the store on vacations. My mother will keep day-to-day oversight. Flyers will be distributed widely through newspaper vendors.

Personal preference for this line of business is driven for a number of reasons: love of books, a desire to build a profession around the business of books, and knowledge about books with knowledge of what people like to read in a small city like North Bergen through a study of the North Bergen Free Public Library and reading/lending patterns therein.

2. Product Feasibility
The target market for this is the average resident of North Bergen, of all ages. Over a period of time, a tea/coffee corner will be rented out to an interested party/group. According to the 2000 census, North Bergen has a population of 58,092 out of whom 11,500 are school graduates, 14,000 college graduates and associate degree holders and 2,500 master’s degree holders. The existing Barnes and Noble bookstore at the Edgewater Commons Mall, about two miles away from Bergenline Avenue, caters to the high-end book market. The North Bergen Public Library, which is on Bergenline Avenue, North Bergen, while meeting a major need, is small for North Bergen’s needs and does not meet the demand of local population. This book store will through the availability of books at inexpensive prices, in a relaxed ambience create its own reading demand just as supply sometimes creates its own demand. Over a period of time it would promote the North Bergen reading experience. In order to cater to the demand the break up of stock of books will be as follows:
50% General fiction
15% Romance
5% Literature & Classics
5% Cooking & Crafts
5% Religion
5% History & True Stories
5% Family & Relationships
5% Non Fiction, Education, Science etc.
5% Kids Books and Magazine Mix
The presence of a few records, CDs and DVDs will add to the attraction of the place.

3. Organizational Feasibility:
The organization will be kept small and limited to two staff members only. Supervision will be from my family for the next few years. Love and knowledge of books is a family trait. Given that a large number of books etc. are owned by me and my family and friends, they will form part of the inventory. There is a fairly large and easy supply source of old books in the New York area. Thus, no supply bottlenecks are expected.

4. Market Feasibility:
The used book market is a rapidly expanding sector. According to a study by the Book Industry Study Group, a nonprofit research organization, the market for used books is quite large, at $1.6 billion, or more than 25 percent of the $5.3 billion spent by consumers on educational and professional books. Over all, used-book purchases accounted for $2.2 billion, or 8 percent, of the $26.3 billion that American consumers spent in 2004 on books of all types. That total was up 11 percent from the previous year, the study found. "The growth reflects how easy it has become to sell used books and to create inventory in this business," Jeff Abraham, the executive director of the study group, said in an interview. (http://www.nytimes.com/2005/09/29/books/29book.html). The only problem is that the internet trade in used books is becoming more important than brick and mortar stores. However, it will still remain quite a robust business activity and will continue to do so for some more years.
5. Financial Feasibility
The initial investment will be$48,000, including the start-up investment and the operating capital. Out of this amount $30,000 will be a loan from the bank at 6% payable in 60 months and the balance $18,000 will be my own capital i.e. loan from father.
Initial start-up costsInventory/Cost of books: (15,000 books)/records/CDs/DVDs $25,000Advance Rent $2,000
Utility & Phone Deposits 300
Insurance 200
Licenses & Permits 250
Shelves etc. 3,000
Misc (Decor, Cash Register, Supplies) 1,500
Legal & Accounting 1,200
Advertising & Signs 3,500
Total $36,950Suggested Operating Capital $12,000
Monthly Operating Costs
Payroll $4,000
Owner/Operator Salary 2,000
Rent/Lease 1,000
Advertising 1,000
Depreciation 150
Utilities & Phone 300
Printing & Stationery 200
Shipping Costs 150
Insurance and loan repayment** 693
Maintenance 100
Miscellaneous 150
Total Operating Costs $9,743
Anticipated Sales(monthly)## $10,500
Net Profit Before Taxes, Monthly $757
Net Profit Before Taxes, Annually $9,084
** Loan of $30,000 at 6% payable in 60 months: EMI calculated at $593 per month.## Sales area calculated as follows: 60 books per day at an average price of $7 per bookTherefore the rate of return on investment is: about 9,084/48,950=. 189 or 18.9%At this rate the initial investment would have been paid off in five years and followed by a profit of about $9,000 per year in addition to the owner’s salary.





















References:
1. http://www.nytimes.com/2005/09/29/books/29book.html
2. http://www.jbv.com/lessons/lesson11.htm
3. http://www.bookstore101.com/page3.html