Location scouting

As part of a plan for opening a bookstore (or any business), it's probably a good idea to estimate a budget for the space itself, since the biggest operating cost by far will be the rent.

As an overall goal, we want to test the following hypothesis:

An English bookstore for foreigners will be profitable by itself.

However, since we’re likely going to bootstrap the business at first, we should operate with the following assumption:

An English bookstore for foreigners will not be profitable by itself.

Therefore, we should have alternate ways of generating revenue in case the bookstore doesn't work out, which leads to the following principle:

The bookstore’s non-book revenue streams should allow it to at least break even.

Aside from selling somewhat related products such as stationery and 3D puzzles, I can think of two major revenue streams:

1. Selling drinks (a cafe)
2. Renting space (a co-working or self-study community)

Both of the above are proven business models that can be profitable in Shanghai if done well, especially the latter. There should be some synergy since many foreigners in Shanghai are freelancers and bookstores tend to be empty outside of weekends.

Let's say we can devote up to half of our space to tables that can be used for co-working during weekdays, and let's set the goal of having this co-working space at 100% occupancy cover the total cost of rent.

From personal experience and looking around at Dianping.com, an all-day pass at a self-study place is around 80RMB (a month pass is around 800-1000RMB), while the rent for a monthly hot desk at a WeWork is ~1800RMB. Let's be conservative and rent out our seats at an average price of 50RMB per day.

One person in a typical office takes up a minimum of 4sqm. Let's assume 5sqm and double that to 10sqm since we are using half of the space for co-working to cover the total rent.

The above numbers are very rough and only meant to illustrate an approximate workable scenario. However, if they are accurate, then the immediate conclusion is that we should look for spaces that cost 5RMB/sqm per day or less.

Additionally, if we are to attract a clientele of foreigners/freelancers, then I think the location must be accessible (in the city center) and the space itself should be architecturally interesting in some way.

The analysis so far gives us three requirements for any prospective space that we may want to rent:

1. It must be within 内环.
2. The space should be interesting (not just a regular office building).
3. The rent is ideally 5RMB/sqm per day or less.

This is certainly difficult to achieve, but not impossible. It rules out all shopping malls and storefronts on major streets in the French concession, but hidden lane houses and slightly off-center locations (perhaps with access to less popular metro stations) could be possible.

For example, something like this might work if we can successfully negotiate a discount on the rent.