Wi12 Education: Booksellers Make the Business Case for ABACUS

The three booksellers on the panel “The Business Case for Reporting to ABACUS” at Winter Institute 12 shared insights on how data provided by the American Booksellers Association’s ABACUS survey helped them improve management of their bookstore finances.

Booksellers who took part in the Saturday, January 28, session offered tips for first-timers on collecting and submitting information to ABACUS, a yearly survey exclusively for ABA members that gathers and formulates key information on stores’ financial operations. Participating booksellers can use this information to create benchmarking goals, analyze their store’s performance within a larger business context, and take actionable steps to improve their business.

The panel, moderated by ABA Senior Strategy Officer Dan Cullen, featured Andy Perham, director of operations for Books Inc., which has 11 stores in and around San Francisco; Melissa DeMotte, owner of The Well-Read Moose in Coeur d’Alene, Idaho; and Laura DeLaney, co-owner of Rediscovered Books in Boise, Idaho.

“I really believe that this comprehensive annual financial survey of independent bookstores is one of the most important things ABA does, and it can’t happen without the participation of member bookstores,” said Cullen. By putting your store’s finances in a larger industry framework, he said, ABACUS helps bookstores in markets of all sizes with everything from strategic business planning to gaining access to capital and negotiating with landlords.

The reporting process begins in the spring once ABA’s ABACUS task force, which consists of 10 to 15 independent booksellers, meets to offer ABA feedback to improve the process for the upcoming year, he said. Then, in late May, participating booksellers use a fully secure and confidential online form to submit their proprietary store information to the survey, said Cullen.

After the first year, it should take booksellers no more than an hour to fill out the form, which focuses on six criteria found within stores’ profit and loss statements: annual sales, profitability, store size, sales per square foot, region/regionality, and years in business. ABACUS is produced in conjunction with On Campus Research, the research arm of the National Association of College Stores, which uses numbers from the big data set it receives to create an executive summary as well as customized PDF reports for every store that submits data.

Books Inc. has 11 stores, said Perham, so the survey is very useful internally to see how each Books Inc. branch compares to its fellow branches. The ABACUS executive summary also shows how Books Inc. compares to stores across the country in categories like sales volume by square footage.

“It’s also been a really useful tool to show to landlords when we’re negotiating leases, to help them understand our business and why we can’t pay the rent they want us to pay,” he said. “It’s useful with politicians as well. They assume we are making a lot of money and to be able to show them, without being specific, the reality of our business has helped us have a more nuanced and full conversation.”

ABACUS survey results also allow him to determine which areas of Books Inc. operations merit a closer look, Perham said.

“I think that’s what ABACUS is really good at,” said Perham. “It’s not just going to tell you your percentage was way off the average, but it will show you that you need to look deeper.” Looking at the data, if your numbers aren’t matching up with bookstores across the country that are successful, he said, you will know that it’s time to do some work and investigation to find out why that is.

DeMotte, who opened The Well-Read Moose in 2014 and reported to ABACUS for the first time using data from 2015, said she thought the process was absolutely worthwhile.

“As a new store owner, I just felt it was super valuable to have an industry resource that, for a minimal amount of time, you get an incredible amount of information that you can choose to dig as deep into [as you want],” she said.

For DeMotte, it was very helpful, as a new store still ramping up its sales, to be able to report to ABACUS and then use the resulting financial data, presented in a year-over-year format and a five-year spread, to figure out what goals she needs to set for her store size, by looking at, for example, the sales per square foot metric for profitable stores.

“I can also use ABACUS to work with my management team to help them understand some of the financial metrics and the challenges we have and the importance of our profit margin and why we have to be strategic,” DeMotte said.

Delaney, who co-owns Rediscovered Books with her husband, Bruce, said they began using ABACUS before even opening their doors to customers.

“My husband was at the first Winter Institute in Long Beach and got to see some of the executive summaries, and that very much informed our decision on how big of a store to open and what we should set as our budget just to get things going,” she said. “That gave us a starting point, and every year we’ve looked at the data. Then, when we decided to do an expansion in 2015, we were able to ask ourselves what the likely return on investment would be.”

The figures provided by ABACUS also lent the store credibility in negotiations with their landlord when they wanted to add extra square footage to their existing space, she said. Most recently, Delaney used ABACUS to compare the store’s personnel costs and determine what she could afford to pay if she added a full-time events coordinator.

“ABACUS lets me highlight the places that I need to really evaluate, and if you were to decide to go against the trend, it lets you do so in an informed way,” she said.

Both Perham and Delaney said the P&L line they are most interested in is cost of goods sold, or the cost of all merchandise sold and reported in net sales, incorporating freight, shrinkage, co-op dollars, and disbursements. Most of the information required to report to ABACUS can be found in a store’s P&L statements or their year-end financial statements, said Perham, but some of the extra work in the first year of reporting could involve “recategoriz[ing] things from how you think of it internally versus how ABACUS wants you to think about it, so that everyone is reporting in the same way.”

In 2016, ABACUS had 215 reporting bookstores, and in 2015, 235 stores reported to ABACUS, said Cullen. The more stores that report, the more representative the survey will be and the more helpful it will prove to the independent bookselling community.

The ABACUS survey opens in late May or early June. Look for more news on this year’s ABACUS survey in upcoming issues of Bookselling This Week.