Monday, June 08, 2009

Retailing 101, The business plan

A few years back I had a series of columns about comic book retailing called "Counter Intelligence" published on a comic book commentary called Sadly that site is no longer operational and hasn't been for at least a year now. Not to brag, but I always thought these were useful columns for people who were considering going into comic book retailing, especially since so few such resources ever become published in this industry. I used to have many people contact me for more information on these columns, so I know they were informational for at least a handful. Since the former host site is no longer functioning I am going to republish these columns as they appeared at the time of publishing, posting one each week for the next few weeks. I will label them as Retailing 101 so that once they are all posted it will be a bit easier to find them all, should someone decide that they are interesting enough to read.

Formerly published on

In my earlier columns, I explained what I think are the basics of business ownership: taking some basic business/entrepreneurship classes, understanding ethical business practices, and understanding the personal and financial demands. Then I discussed what one needs to research as they prepare to open up a comic book store. This column’s information will largely come from what we did to open Neptune Comics, as well as a few things that we did not do that we later wished we had. This is your chance to find out from a young store how to get started. You can learn from my experiences and mistakes, so that if you should decide to do this for yourself, you can get off to a strong start. If this is the first column of mine you are reading and want to know more about opening your own comic book store, be sure to go back and read the columns prior to this one.

Let me once again include my disclaimer: Neptune Comics is not quite three years old yet, so it is difficult to measure whether or not we have established ourselves to be successful for the long term. These columns are only based on experiences I have had in my one small store in a Milwaukee, Wisconsin suburb. Before opening your own comic book store, I encourage you to consult with other professionals.

In my last column, I gave you a list of things to research: fixture prices, retail store rent rates, inventory types and prices, and the demographics of the area where you think you want your store to be. Now you have all kinds of information that can be used for a business plan.

“What’s a business plan?” you ask. I recommend you take a business class to learn more about what a business plan is and how to properly write one, but in the meantime, I’ll give you some information. A business plan is a written explanation of the business. It is used as a tool for the business owner and managers so they have a model to follow in order to keep the business on track. It is also a tool for you as a future business owner, laying down the foundation of how you plan to start this little venture and how you intend to keep it going in the future.

“Do I need a business plan?” you might be wondering. If you need to borrow money to start your business, you will need to show this business plan to banks in order to help convince them that they should help you out. Showing a business plan to a landlord can demonstrate that you know what you are doing, have a plan to make money to pay the rent, and intend on staying in that location for a while. If this is your first retail business, this plan can help guide you in setting goals and budgets for your business. So, I’d say yes, you should have a business plan.

“How do I write a business plan?” you say. There are a wide variety of options here. When we did ours, we used a computer program purchased at an office supply chain and just modified it and added our data. The program gave us the format to follow, and we could just put our information into it. If you look in the telephone book, there are probably people in your area who offer business services like writing a business plan, and you could give them your information and pay them to write a professional business plan for you. Just be prepared to pay them, and know that when you need to modify it in the future as your comic book store opens and runs, you might have to go back to them for changes rather than being able to tweak it yourself. Mel Thompson, who I’ve mentioned in previous columns, can also be hired to write a business plan for you. His rates and details are on his web site (, and if you scroll down through that page, he also has a link to a bad business plan example that you can look at for reference and see what not to do. Finally, you could do the whole thing from scratch, on your own. This will be the most work, and you should still have a business professional look it over, however it is the least expensive method.

You’re wondering, “What do I talk about in this business plan thing?”

I recommend that you first give a brief introduction of yourself and your business, as well as a short discussion about what the “direct market” is. Remember that if you are using this business plan to get a loan or establish credibility with distributors, landlords, investors and your in-laws, you will need to discuss these things with them because they might not understand what in the heck a comic book store does.

Next, you should give a numeric discussion of the comic book/pop culture market. Here, you can explain the growth in comic book sales over the last few years and discuss how factors like the increasing number of comic book based movies continues to help spur growth in this market. But don’t just discuss it with words, be prepared to have some graphs or charts showing at least five years of sales for comics and graphic novels and any other items you are considering selling in your store. The more detail you can show here, the easier it will be to convince a lender or investor that your market has room for growth. Be sure your numbers are realistic—don’t just make them up, and cite your references in the business plan.

The next thing to discuss is the specific details of your market in the area where you want your store. You have already looked at competing stores, and should know the proximity of them to you, what they carry, what their hours are, etc. Discuss your competitors’ strengths and weaknesses. Include stores that might not be “direct” competition too, like baseball card stores, book stores and game stores in your discussion and analysis, and discuss why they are or are not competing with you for business. Then go on to analyze the demographics of the area, describing the age and income level as well as overall population size of the area where you want your store. Also explain what the demographics of your typical comic book customer are, and show what portion of the population of your area could potentially become a customer of yours. Using a map to show where the competing stores are and where yours will be is a great idea here. Including other things like schools and freeway access ramps is also a good idea. This section helps paint a complete demographic picture of your store location, so using a picture is a smart idea. Once again, use real information that is as current as you can get, and cite the sources for the data.

Once you have given an overview of the area where you want to have your store, you can discuss the specific benefits of your location. Refer readers to the map that has freeway access ramps and schools on it, if your store is near those, and discuss how this will help bring consumers into your store. If you have a mass transit stop near your store, talk about that and the benefits of it. Are you putting your store in a mall or other high-traffic retail shopping areas? If so, discuss that and how it will be a benefit to your business. Try to get traffic counts for the street(s) that pass your location, and include those in your plan. How much parking will your customers have access to? Who are your neighbors? What kind of signage will you have? Is the population within a three-mile radius growing or decreasing? Are the residences within a three-mile radius young families or retirees? Will the street(s) that pass your store be under construction in the next few years? What is the crime rate in the area? What is the retail vacancy rate within a three-mile radius of your future store? Try to answer all of these questions in this section of your business plan.

Now, move on to what you’ll have on the inside of the store. Here you can discuss not only merchandise, but décor and employees. Again, the more specific and detailed you can be the better, and pie charts and/or bar graphs are always a good idea. Explain what you plan to sell and why, and the potential profit of these items. Discuss percentages: 60% of the store merchandised with new comic books @ 50% profit margin, 10% back issue comic books @ 80% profit margin, 10% action figures @ 25% profit margin and 20% graphic novels @ 50% profit margin—for example. Also, discuss the longevity of the products including how well they sell the first few weeks out and how long into the future they will be displayed in your store. Do the items get “stale?” How often will you restock on the items? How much money will you spend every week/month/year on these items? If you are offering discounts, what are they? Who will get them? How will they affect your profit? This is also a good place to include your potential store floor plan, showing what you want to put where and how much of the store the items take up. Talk about color schemes, traffic patterns, point of purchase displays, non-sale décor items, where your checkout counter will be, etc. Next, you can discuss your employees, if you plan to have them. Make sure you mention how often you will pay them, what their hourly wage will be, and how many hours they might work, and any additional costs to you for having them work there: Unemployment Insurance, social security, employee discounts, etc. You should show your estimated total expense per employee and how many employees you plan to have, as well as discussing how this wage compares to the wage paid to other people working in similar businesses. If you are your only employee at first, do the same thing but just for yourself, and then discuss when you might hire employees down the road.

The previous section and this next one are the places where you are really selling your store and your ideas to readers of the plan. You want to really show that you have planned things out and that you know what you are getting into, as well as showing that you have plans to make the business thrive and even surpass any competition you might have. Marketing is the next thing to discuss. Unfortunately, the saying from the movie Field of Dreams, “If you build it, they will come,” is not true. You have to let people know that you built it and why they should come. Here again, the more specific numeric information you can show, the better. Most sales people who want you to buy advertising from them will gladly provide you with all kinds of price breakdowns, demographic information, etc. Use this information in your business plan to show how much you plan to spend, where you plan to spend it, how many people will see it, what percentage of them are your demographic, and what kind of return on investment you think you can expect. Include here ALL types of marketing – if you plan to hire a neighbor kid to hand out flyers or walk up and down the sidewalk dressed like Superman, include that and all costs involved with it. Bring up your competitors and the types of marketing they do, if any. Also discuss your plans for making first-time customers repeat shoppers. Will you offer a customer loyalty program? If so, what is it and who will get it? What is the cost to implement it? Will you offer any kind of subscription or holding services? Can your customers pre-order items? One advantage comic book stores have is the frequency in which we receive new merchandise and the commitment of most fans to come in and buy it every week. Discuss this – new comics come in weekly, people who buy mainly graphic novels might come in monthly, people who buy toys might only stop in every few months.

Now, it’s time for the grand finale of your business plan: a summary of all of these numbers. Use spreadsheets, and refer back to charts and numbers used earlier in the plan. You should be prepared to provide a complete financial detail of all of your start up costs, including: build-out and repairs, fixtures, merchandise, any rent you pay before you open, initial marketing, etc. Also include a three, or preferably a five-year cost analysis where you discuss your projected expenses and profits. As with any financial analysis, do your research to make sure your costs are current, and be SURE your math is correct. All of these numbers should have been discussed and explained in the earlier parts of your business plan, these are just summaries used to show how it all adds up.

Once you finish your plan, be sure to have several people proofread it. You might also consider having your accountant look it over to be sure all of the numbers make sense. Even if you have someone else do your business plan, this is a good idea. Ultimately, you want your final product to be error-free and accurate. Once you have a final edition, I suggest that you put a date on the front cover, as well as a line that reads: “given to: _________,” and fill the blank line out every time you submit a plan to someone. This helps you keep track of who has a copy and lets the person you gave it to know you’re keeping track so the information doesn’t get shared.

Getting a loan is probably the biggest reason most entrepreneurs do a business plan, although not the only reason. In a future column, I will give some advice and warnings on acquiring the money to start your new comic book store. I also plan on discussing some tips on choosing a location, stocking your store and other important details for anyone considering opening a comic book store, so stay tuned.

Again, feel free to post any questions you have on comic book retailing here, or send me an email: I might not have all the answers, but I will do my best to give you ways to find out the answers I don’t have. And check back in a couple of weeks to learn more about starting your own comic book store.


Business Plan Example said...

Hi Dude,

Business planning is a vital component of starting and growing a successful enterprise. Many different templates and variations of business plans exist, so you must choose the right one for your purpose and your enterprise. Thanks a lot...

Anonymous said...

this is awesome. thank u!