During their school holidays, group members are dedicating themselves to progressing their business plan to set up a booth and sell three different types of showbags at the town's biggest annual event.

Team leader, 10-year-old James de Kort, said he came up with the idea with his mum and brother as a way to get more young people reading and involved with the festival.

"One side was [we wanted to] run a business but we also wanted to inspire people who are a similar age to us to read a lot and learn literature skills. We are a Booktown so this was a good way to do it," he said.

Clunes Neighbourhood House's Lana de Kort said the youngsters had worked through the idea just as any business would.

First, they advertised positions through a mimicked recruitment process before developing a business plan and obtaining sponsorship through a Hepburn Shire Youth Grant. They successfully obtained sponsorship through Scholastic Australia and Heroes HQ, who will provide books and comics for the showbags.

The youth will set up a booth, which they are painting themselves, to sell their showbags in the main street throughout the festival.

"They have drawn up a budget and are working out how many books go in each bag and then what other items they can source to go in," Ms de Kort said.

The youngsters are currently designing and creating badges to include in their showbags.

"They have a roster so they will all work during the festival and, like a real business, they will pay themselves to work.

"Based on the budget they've modelled, they will make a profit if they sell all of the showbags. Then they can use that money for similar projects," Ms de Kort said.

"They're really keen to do stuff with a business angle which means we can connect the kids to different mentors. It's been amazing that the businesses have been really responsive to their plan."

Booktown Festival, which sees Clunes transformed into a giant bookshop, will take place on May 4 and 5.