How can I tell if a used bookstore has too much stock that will never sell?

Ask which titles and sections sell fastest and which barely move. If the shop has sales records by category, compare them with the share of shelf space each takes. A large section producing few sales is a warning. If records are thin, spend time in the store and watch.

Look for signs of age: faded spines, dusty shelves, duplicate copies and boxes of unprocessed purchases in the back. Ask how long the owner leaves a book on the shelf before marking it down, moving it online or donating it. A clear policy suggests stock is being managed.

Next, look at buying habits. Does the owner buy whole collections without sorting them? Does the store turn people away? Ask your accountant how the inventory is shown in the statements and whether anything has been written down. Be cautious about any stock figure that has not been tested by a physical count. Also ask what happens to the leftovers. Some stores run a bargain bin, trade credit or donation system that keeps shelves fresh and customers returning. If none exists, a buyer may want to start one. Ask your accountant whether the books carry any stock the owner knows is unsaleable.

Key takeaways

• Compare shelf space by section against what sells.
• Look for old duplicates, unprocessed boxes and a clear markdown policy.
• Ask whether stock was physically counted and how it appears in the books.