ABACUS: Benefiting From the Wisdom of Crowds

On its own, a financial statement is a fairly straightforward tool that allows a business owner to determine net profit or loss. But when it's read in a vacuum, comprehending the reasons behind the profit or loss can be daunting. When an owner gains insight into the average industry spending-per-store across multiple categories -- from cost of goods, to rent, to staffing -- he or she has a much better chance of making sound financial decisions that can help increase the bottom line.

According to booksellers who recently spoke to BTW, this is a key reason why the ABACUS survey is useful -- it provides that all-important context. "We all tend to work in such isolation," said Allison Hill of Vroman's Bookstore in Pasadena, California. "We need benchmarks. ABACUS gives us context and comparisons to guide you."

Tony Allen of Barrington Books in Barrington, Rhode Island, echoed Hill. "I use it to highlight areas where our expenses are somewhat higher than the bookstore group that we're compared to," he explained, adding, "If you find you are spending less in a category, you can tell yourself that, Yeah, I'm doing that right."

"I am a big fan," said Brian Sweet of Trail's End Bookstore in Winthrop, Washington, a participant in four studies thus far. "ABACUS is helpful in providing you with the big picture. We have 'The 2% Solution,' but to look at [the ABACUS report] and say, What are the profitable stores doing? We're not working in a bubble."

Sweet told BTW that ABACUS was instrumental in his recent decision to purchase a building that doubled the store's square footage. Prior to the move, "we used ABACUS to make sure our expansion made sense," he explained. "[We knew] the occupancy [costs] would quadruple -- but [the ABACUS report showed that] it is still very much in line with what a good store does. It still makes financial sense." Since the move, sales are up 65 percent, he reported. "And inventory is up by only 20 percent, so we're exponentially growing."

Hill noted that Vroman's has been participating in the ABACUS survey for a couple of years, and she had previous experience with the study while working at Book Soup. "Since I've been [at Vroman's], I've put it to good use," she explained. For instance, the survey is helpful in providing an analysis of what criteria a bookstore needs to achieve profitability, such as average annual sales of profitable stores. This has been helpful in opening its branch stores, she noted.

"We report to shareholders," Hill said, "and [the ABACUS survey] provides us with a good way of communicating with them as to how we're doing. It also allows us to help establish goals that are realistic."

Overall, Sweet is a staunch advocate for ABACUS and stressed that he is "appalled" that more booksellers do not participate to take advantage of the vital information that the study provides each year. "Some booksellers sit there and complain about low discounts ... and here ABA offers a free tool with ABACUS, and we're only getting 150 to do it? I know businesses in other trade associations would kill for something like this."

All booksellers participating in the ABACUS survey receive a customized report comparing their store's performance with that of other stores based on multiple criteria (store size, sales volume, number of years in business, etc.) and a $50 rebate check.

A bookstore's financial information is kept strictly confidential.

To be part of this year's survey, ABA member booksellers must submit their 2006 financial data, via the easy-to-use online survey form, by August 15. Questions about ABACUS should be addressed to ABA CEO Avin Mark Domnitz at [email protected]. --David Grogan