How to Open a Liquor Store — Ultimate guide
How to start a Liquor Store
Make a business plan for your liquor store
Start by setting up a clear business plan template that will include all the information necessary to calculate how much you can make on a liquor store in a month in the area where you are intending to open your shop.
First, decide whether you want to buy an already open liquor shop and rebrand it or just continue running it without major changes in concept or management.
The other option is to start up a liquor store from scratch, meaning that you will have to look for a new location, do all the marketing research, apply for permits and, eventually, hire staff.
Your marketing research should focus on possible competitors in the area of around 10 km that are targetting the same range of population as you, meaning you have similar prices.
Your goal would be to find out how much does it cost to open a liquor shop that will offer similar products and how you can improve your offer and services in order to gain a bigger share of the market, which will be included in your business plan.
Another important point to include in your business plan spreadsheet is your suppliers, because in the liquor business it can make all of a difference.
Many customers are drawn to the shops stocked with different kinds of the same product, because it generates a feeling of
abundance and gives them choice. The problem for you as a shop is that keeping and buying a lot of stock is financially exhausting.
The next, but not less important, step in your business plan is to know how much it will cost you to open a liquor store, which should be clearly stated in financial goals and profit provisions for at least six months, so you would be able to ask for loans or investments from local loan agencies or traditional banks.
Finally, include all the information on licencing and local or state fees in your business plan, as for liquor business is one of the weak points.
If you do not calculate properly how much you will pay in taxes or fees over the year for keeping your liquor store open, it might not get you the return you expected at the beginning.
Find a location for your Liquor Store
After you have decided how you are going to open a liquor store, whether building up a new store from zero or buying a current business, the next step is to look around for the right place to start up your business.
If your aim is to buy an existing business take time to review all the financial details the previous owner can get you.
You might also want to conduct an investigation on your own about what type of customers are visiting the store at the moment, what are surrounding shops and businesses are, and other relevant information that will help you to determine how much do you need to start a liquor shop right away.
Knowing how much is needed to start your liquor shop is also useful in case you will have to renovate the business you are buying, and need to ask for a loan from a bank.
The location and facilities size of the current business influence a lot on the average cost of starting your own liquor shop, as well as play a great role in credit evaluation.
If you choose to open your own liquor shop from scratch you main concern should be looking for a place where liquor licence can be easily obtained or maybe find a place that already has the permit for selling alcohol.
Additionally, when you consider what it takes to open a liquor shop do not forget that you need to implement high security measures, wide storage place and preferably a parking lot.
Finding funds to open a Liquor Shop
You do not only need funds to buy a place to open your liquor store, but also to keep it running, to buy stock, to pay to the staff or in order to invest in security measures.
The truth is that many small liquor shops barely make profit, because in order to succeed in the liquor business you need to have an ample stock to be able to compete with big stores.
But here is the catch, you need literally millions of dollars to equal or even get close to the big liquor stores capacity.
Buying stock is the main reason small liquor shops need funds almost on a permanent basis.
For that matter, you have to keep your credit line clean and try to show the benefits of investing in your store, which basically means how much you can make a month.
Either way, traditional banks and online moneylenders are significantly less inclined to get into business with liquor shops, so you will probably need to go to a private lender, specially at the beginning.
Of course, you can always ask your family or your friends for a loan or even organize a crowdfinding as an alternative loan source as it might be challenging to get a credit line for a liquor store from a bank to secure your location, to pay staff at the initial stage, to renovate the place and insure your marketing strategy.
Geting licence and permits for a Liquor Store
A big share of the start up cost for a liquor store includes obtaining a licence and all the necessary permits to sell alcohol.
Many entrepreneurs are even put off by it, because it entails a long way of research, application, fee paying and waiting. Besides, you cannot know exactly how much does it cost to run a liquor store at the beginning.
Alcohol licencing belongs to the state or province departments, so the cost of getting a licence may vary from hundreds to thousands of dollars, apart from the strict or additional regulations that a liquor store owner has to comply with.
It is the reason why you should consider getting a specialized agent or an attorney who can help through this ordeal of a procedure.
It might be very helpful to consult with state organizations that are responsible for observing laws and regulations regarding alcohol trade, control importation or the wholesale or retail alcohol business, as well as alcohol labelling and advertising, such as Alcohol and Tobacco Tax and Trade Bureau in the USA.
This might help you tie up every possible minor details on how much does it cost to open and run a liquor store.
How to overtake your competitors in Liquor Store
According to one of the Forbes researches liquor business is one of the 15 less profitable businesses, because it gives an average return of about 2% while being one of the most difficult to set up and expensive to maintain.
In order to get ahead of your competence you should think out of usual ways and not just about how much does your liquor store make a day.
Nowadays, customers are getting more sophisticated in their taste, they are looking for an experience more than for just abottle of buzz.
Make your own brand out of your store, you can offer alcohol testing on the premises to attract more potential customers.
It is also a good idea to offer some kind of classes that will educate your clients about different products and how they should be consumed.
All this can definitely add up to your income inflow at the end of the month and positively reflect on how much does it cost you to run a liquor store.
Another attractive activity to allure more different type of customers to your doors is organizing a weekend cocktail sample or even starting to run a beer or wine club, which will bring you a stable inflow of customers to help to lessen the cost of keeping your doors open on a daily basis.
Get your Liquor Store finances under control
The liquor store business needs a constant money inflow and takes up a lot of resources.
It is a business where you have to constantly look for an extra inventory upgrade, which makes it hard to make the ends meet.
The reason your accountability should be steady and clear is that in such a tough to get credit and low cash inflow business your income forecast on how much money your liquor shop makes a month should be quite precise.
Do not forget that a liquor shop lays in the realm of small business properties which means that it has to face typical day-to-day troubles such as security threats to the employees, insufficient cash to pay back to the customers on top of the others possible threats such as licence revocation or fines for not complying with general regulations.
Having all the expenses under control and understanding the margin of your liquor store will help you to understand whether it is profitable to take some action or not.
Knowing exactly how much your liquor store makes a day could be a great relief when taking certain decisions about your future investments or general shop management.