During the 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."

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 during the festival.

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

"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.

"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.