Tea in the Library (6 page)

The first lesson learnt from the books consulted, seminars attended and internet sites surfed, was that a new small business should have a Business Plan. All the authorities deemed this essential, and I agreed with the logic. With a good plan, I reasoned, all one then had to do was put it into practice.

So I began to read books on “How To Write The Perfect Business Plan”, and the learning curve began. During this time, I was also attending small business seminars and conferences, and meeting other would-be entrepreneurs. Swapping ideas and stories-so-far was great for learning and broadening the outlook. It was also a very supportive exercise — these too were people who thought they could
do
it. In fact, they
knew
they could do it.

I knew that I needed to gather information about locations, consider demographics, estimate expenses, and identify the elements of a financial plan. After a bit of persuasion, a friend with research experience agreed to do some of the leg work for me. Trish was a great help, not only in gathering information, but also in making contacts and — most importantly — believing in the project.

Trish's research revealed that the Australian book market is estimated to be worth more than $1 billion per year in retail sales, that in 1997-98 the average independent bookshop in a central business district sold almost $1.8 million worth of books, but that gross margins averaged only 34%. In 1997-98, 28% of independent bookshops experienced more than 10% growth. She concluded, on an upbeat note, that the entry of Borders into the Australian market supported the idea of an increasing book market in Australia.

She found an Access Economics survey from 2001 which commented that:

In the future shopping malls will have fewer sports stores and music outlets but more bookstores…while mature customers are likely to be more comfortable being served by mature aged workers.

In a 1995 study The Australia Council found that 65% of book purchases are by those aged over 40. Access economics claimed that “mature consumers (read ‘baby boomers') are the largest retail growth market in the nation”. Trish's sources showed predictions that from 1991 to 2009 the number of those aged between 55 and 64 will rise by an astounding 47%. However the real explosion is still to come. Over the twenty year period between 1999 and 2019, the number of persons aged 65 to 74 will increase by 73% and the 55 to 64 year olds by much the same (71%).

We seemed to have hit upon our demographic. People like me! Access economics went on to predict:

… the wealth of Australia's mature consumer has the potential to introduce a spending bonanza of proportions unseen before … Baby boomers will retire with large financial assets. They have more time and money
 
on their hands than at any other stage of their life. They will take advantage of that, spending an above-average share of their income on holidays,
books, magazines and the telephone . .

Trish's initial research also indicated that we should focus on marketing from day one, and allocate a significant budget for this. She also recommended hiring mature age workers, as matching the proposed customer base, being more reliable and staying longer in the job.

Then I hit upon a useful resource. At a day-long conference for businesswomen, a session was given on writing a business plan. The ideas presented brought together much of the material I had been reading and distilled it into a simple-to-follow format. The speaker was succinct, lucid and inspiring. I scribbled notes furiously. The gist was as follows:

1. Mission (define what it is you plan to do) 
   
2. Vision (describe what it will look like)
   
3. Definition of targets (who will you be selling to?)
   
4. SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
   
5. Marketing Plan
   
6. Operations Plan
   
7. Financial Plan
   
8. Cash Flow Projections
   

This wasn't too hard. In a few weeks, I had pulled together much of the information that Trish had collected, distilled my early ideas, and produced “The Plan”! Granted, there were a few gaps — most noticeably in the detail of marketing and organisational strategy, and the financial predictions, but at least I had defined what I needed to discover, and the skeleton was there. I was very proud of this achievement. The Plan went through numerous drafts on my computer, as I tweaked and added, revised and refined.

It just so happened that at the business-plan-writing presentation at the conference, a friend who was with me won the “lucky door prize”. This was a free consultation with the presenter's company, to discuss one's business plan. My friend, not being a fledgling entrepreneur like me, kindly passed on this gift, and I set up a meeting for a few weeks later.

This introduced me to someone who was to be instrumental in getting the project off the ground. Dale ran his own small franchise business, providing advice not only to startup businesses, but also reviewing existing businesses to help them grow, or get back on the rails if they were wobbling. His particular interest was marketing, and his partner and wife Dorothy had an accounting background. At our first meeting, I shyly handed over a copy of The Plan. Dale looked through it carefully, and remarked with surprise that this was an excellently structured plan. That, of course, was because I had written it strictly in accordance with the presentation given by his franchise. However, there were some important gaps to be filled, and Dale and I set out to fill them over the next few months.

Our market research was done on a shoestring. We hired a few university students to stand outside bookshops in the Sydney CBD and count how many people went in, and how many came out carrying purchases — crude, but an interesting exercise. We chose Abbeys, Ariel, Dymocks, and also a city café, and conducted our little survey over a five day period, at different times of the day. Overall, 72%, or almost 3 out of 4 customers who walked into a shop purchased a book. Customer numbers were down by 30% when it rained. Males and females were about even. The café averaged 30 customers per hour between 10 am and 2 pm.

Now, as you may have gathered, the process of researching, developing the business plan — and all the subsequent steps — took quite some time. Let me make it clear that I didn't follow through on all of this continuously. Although any new business will inevitably take some time to set up, in my case The Vision was more like a hobby — something I could come back to now and then, when I felt inspired or creative, or a new resource presented itself. Indeed, I thought of many excuses not to actually commit to real action — chiefly financial, and also related to confidence and knowledge. That is, lack of all three. So the planning stages were really quite fun in many ways, and undemanding, because I hadn't committed to doing anything. As Goethe said, “Until one is committed, there is hesitancy. The chance to draw back, always ineffectiveness”.

He also went on to say, “The moment one definitely commits oneself, then providence moves too”. But more of that later.

While playing around with the planning and preparation, my life was jogging along pretty much as usual. I continued to travel whenever I could, and became interested in trying adventure holidays, trekking among wonderful mountain scenery. But that was another thing I found excuses to avoid — I was too unfit, no one would go with me, you know the sort of thing. My job hadn't changed much, but I didn't seem to have moved forward in it either, and was feeling unfulfilled and a bit frustrated. Am I describing a fairly average mid-life?

So there I was, with a few modest ambitions and many excuses not to pursue them. Planning a bookshop café was a welcome diversion, and felt creative and exciting.

The theory in the texts I had read told me that I would not — as I had imagined — be selling books, tea and coffee. Rather, I needed to identify why my customers would
really
be coming into my shop.

This is an exercise in focusing on what will make the new business different from those already on offer, or to put it in jargon, finding the “USP” — Unique Selling Point. I decided that Tea In The Library would be selling relaxation, self-discovery, inspiration and community involvement. Just for starters.

Our difference would also be the thorough integration of the café service with the bookshop, where the café is in no sense an “add on” but is an integral part of the retail experience. Wow! We were going to create “a retail experience”!

Ever since primary school — possibly since birth — I have
not
been a numbers person. Even sitting down to write this chapter is inducing massive resistance. Thinking back to the “numbers struggle” invokes memories of so many seemingly unanswerable questions.

How many books does a small to average bookshop actually carry? (I tried counting in shops I visited). How many square metres of floor space would be needed? How many staff would be needed to cover the proposed opening hours? What would I have to pay for a good manager? What would electricity/gas/telephone cost? What would the shop fit cost? (The original guesstimate for this one was $25,000. It ended up costing $350,000). What does it cost to lease retail space in the city? How many seats would be needed in the café? How many wait staff per table? And the biggie — how many books (and cups of coffee) could we expect to sell in an average day/week/month? What would be the “break even point”?

And this was before I got into the intricacies — and significance — of things like stock turn rates, and other esoteric retail concepts. I'm exhausted just thinking of it.

However, guesses were made, a financial plan was drawn up, cash flow charts — based almost entirely on guess work (more or less intelligent!) — were compiled. What I didn't know about Excel spreadsheets, I learnt by trial and error. And I hadn't even started to consider GST collection, BAS preparation, wages and employee tax calculation, superannuation and Workers' Compensation Insurance calculations …