“Quick Summary” Have you ever dreamt of owning a profitable branded liquor store business?
You can realize your dream if you take the right steps and consider a few aspects before opening your liquor store at a prime location. You must calculate how much profit margin a liquor business generates, the costs, and how do you figure out if you or your employees have the necessary skill set to establish your business as a brand?
The liquor store business has been one of the top retail businesses for quite some time. With all the recent amendments enacted to the liquor laws, it is most likely that alcohol consumption will increase in the coming days.
If all this inspires you, then read this guide as we discuss a few important aspects of opening up and running your very own successful wine and liquor store.
Writing a business plan helps formalize your idea and streamline your business-creation process. There are several factors to consider when starting your liquor store.
A business plan allows you to identify who would be your suppliers and which would be your target market. How many people will visit the store during the first year, and how much will be the cost to set up the store. The store setup cost should include your furniture fixture, attractive interiors, an integrated POS system, and branding accessories. You will have to mention the profit margins you expect from each sale.
If you plan to attract investors or banks to fund you, your business plan must highlight every aspect necessary to convince them. Always anticipate ground realities like transportation costs, market competition, employee retention, brand acceptance, and other recurring expenses like electricity, communication, shop rent, permit & license renewal, and local government taxes while drafting a plan for your liquor store business.
Your business premises is the most significant asset that you must never overlook. Will you buy a shop or go for a rented one. In either case, you will incur one-time costs and recurring costs. While buying a shop sounds lucrative, it might not be feasible for your pocket to invest such a huge amount. On the other hand, you might wish to try out a rented premise promising a decent number of footfalls to ensure that it is the best you can have for your business initially.
You must also consider that your business location offers easy access to your customers and your banners and signboards are visible from a distance. Also, invest in illuminated or backlit signages that indicate your presence at night.
The first step to recognizing your business as legitimate you’ll need a legal business entity for your liquor store. The most popular options include - S Corporation, Sole Proprietorship, LLC (Limited Liability Company), and C Corporation. Once you decide about the entity type, it’s time to make it official.
Consult your business attorney or tax consultant to determine your best fit. Complete your paperwork with the local government authorities. Depending on the kind of business entity you create, there are different tax obligations and special laws governing the operation of each entity. Your process will end once you register with the secretary of state or chamber of commerce in your city or state.
Choosing the right bank account type is important in the business planning process. Choose a bank nearer to your place of business to open a business account. This will save you time and effort. Choosing a bank with an ATM, online banking, and other smart services is important. Also, check with the bank if they offer any Cash-Credit or Overdraft facilities to business account holders. Such facilities come in handy in times of need for small business owners.
Bookkeeping and Accounting are the backbones of any business, but managing them right demands the skills of an accountant or a CPA. Taking exact entries of your purchases and booking every sale you make builds the foundation of accounting. Most entrepreneurs hire accountants or CPAs to manage their financials efficiently. This arrangement works best only if you, as the owner of a liquor shop business, oversee every stage, from creating accounts to their finalization to creating a certified Balance Sheet, Cash Flow statement, and Profit and Loss Statement. These statements are precious. They do not deliver value to the present financial status of your business but also offer great insights that are crucial to management decisions. They work as torch-bearers while you tread the path to business success.
Before you even think about setting up a liquor store, you’ll need to understand the liquor laws in your state or city. Such businesses require a liquor license, costing thousands of dollars depending on your city or state of business. The licensing process also varies based on your state’s regulations. You must check with your local government authorities before pursuing a liquor license.
Licenses to sell liquor vary from state to state in America, plus local governments play a substantial role. State liquor laws are developed by the “Alcoholic Beverage Control,” which controls the sales and distribution of liquor in the USA. The basic steps remain the same for every state, and following them will ensure a hassle-free and smooth process for obtaining a liquor license.
There are several factors affecting the cost of liquor licenses. The Alcoholic Beverage Control determines when and where you can sell liquor and to whom. Liquor licenses can cost anywhere between $400 to $15,000. Their prices depend on state and federal licensing requirements. As this is a government department, the processing time also varies. It might take 6-8 months to process your application.
Make sure you check whether your city or town has quotas. The state sets the license quotas based on the places and population in your state. Every liquor license holder must adhere to the quota guidelines.
Whether you decide to work with an established liquor brand or set up a store with your private branding, in either case, ensure that you have all the proper valid permits before starting the operations. You should keep your licenses available at your place of business and produce them as and when demanded by the visiting government officials.
Related Blog: How to Get a Liquor License in the USA?
Surviving in uncertain times is practically impossible without proper and adequate insurance. Being uninsured is equally risky as being underinsured. Talk to a genuine insurance consultant or an advisor to bring yourself out of this dilemma. He is the one who would assess the probable risk associated with your business and suggest solutions.
Buying business insurance for your liquor store is important. You must have insurance for your shop, the stock you carry, and your hired employees. You should include a liquor license as part of general liability coverage. Most business owners do not realize that liquor licensing requirements vary from state to state.
Your insurance cover must protect your business against theft, fire, earthquakes, or other perils. Always insure your liquor stock. Install a fire alarm and keep a well-charged fire extinguisher hooked in a corner where you can reach in times of emergencies. Your store must be well lit and have proper ventilation.
Always have infrared & night-vision CCTV cameras installed at all possible locations within your business location. Having CCTV cameras, fire extinguishers, and other necessary alarms installed on your premises will positively impact you while signing an insurance contract with the Insurance company.
People these days have become brand conscious. They assess each brand before making their purchase. Alcohol is no exception. Setting up a normal store won’t take you far, but establishing a branded liquor store will attract customers from a distance.
Your liquor store’s unique name and visual identity will enable your customers to remember you. Think of a theme that coincides with your brand name and implement that theme inside your store. You might avail the services of some professional interior designer who can help you set up the theme with a trendy touch.
You can’t stop just by setting up a physical store. You need to market your business digitally. A website for your wine & spirits business is the single most important piece of your marketing strategy necessary to make your business reach far and wide.
Therefore, start with buying a domain and hosting, then build a website that matches the brand theme of your store. Your primary goal in building your website must be to offer an experience where potential customers can view information that makes your store unique or stand out among competitors.
Your website will define how people perceive your business. An awesome design combined with a collection of eye-catching images, banners, and videos can go a long way in promoting your products to your customers online. You can strengthen your local presence by listing your business under Google My Business Page. People generally search for local businesses using their smartphones. Having an active social media presence for your liquor shop can also boost your business.
Now that you have a full-fledged website and social media presence, what next should you do? Switch to a proven marketing strategy.
Use your social media handles to market your business. You can create engaging posts on Instagram, Facebook, and Twitter. You can also notify your customers about new arrivals through WhatsApp. To build customers’ trust, you can share online ratings and reviews. Remember to publish content related to upcoming offers, discounts, and sales on your social media accounts. You can have a blog section on your website. Publish blogs regularly and promote them on your social media. When you share knowledge with the general public, they should be attracted.
Signages of various sizes, types, and shapes come in handy. Consult an expert to help you promote your business with the right signage.
You can send out mailers and handbills in your neighborhood to let them know that you will organize a wine tasting event in their localities. If you have the skills or resources, you can try offering them some great cocktail combinations in smaller quantities. Weekends or public holidays are the best days for such activities. If the people residing there love your products and the way you delight them with mesmerizing cocktails, you will soon see them flocking to your shop. On the other hand, you can convince your liquor distributors or distilleries to help you with free wine & spirit samples and other accessories to help you conduct such events successfully.
There are multiple modes of marketing. Any path that inspires a person to visit your store is the best marketing strategy.
Your inventory is that element of your business without which it cannot survive. Managing your inventory is equally important as purchasing it in bulk, stocking it, displaying it, and selling it for profits.
When you decide on starting a liquor store, you should estimate your average sales. Research which alcohol products are popular in your area and stock those well. The worst thing that can happen is running out of popular products. This will drive customers away, paralyze your business and lower your profits. Can your brand afford such a situation? Invest in a POS system with a perfect inventory management module for a liquor store to avoid such a nightmare. A POS system for a liquor store will not manage your inventory but also inform you when your stocks hit the low.
Research local breweries, wineries, and distilleries, and consider partnering with them so that your inventory always remains well-stocked. You would have usually observed that liquor stores offer low-priced items like tobacco products, ice cubes, aerated/soft drinks, and snacks. These are sold alongside the main alcohol products. These products don’t fetch much profit but give the customer a feeling that they are visiting a one-stop shop. There is a hidden benefit to keeping these small items in stock. They keep your customers longer in your store and encourage them to buy more alcohol. They could consider going in for some premium brand compared to their regular one. This happens once you develop that trust within your customers.
Running a liquor store may seem like a lucrative opportunity for a lifetime, but it takes teamwork to be successful. Once you start receiving a decent flow of customers, hiring employees becomes mandatory.
Remember: You can’t do everything yourself; you need employees to support you.
If you're opening a branded store, you must consider having employees onboard. The best way to hire employees is to advertise in the local dailies.
During their interviews, you should check their credentials and ID proofs and observe their body language to see if they are soft-spoken and presentable. Once you've hired the employees, you'll need to train them properly so they can run the show when you're not around. They should be able to address customers’ queries and offer a solution when you are busy.
At most retail stores, sales associates are responsible for greeting customers at the door. The primary role of your sales associate is to know the customer’s requirements, suggest products, and ensure he receives an excellent experience. You will have to ensure that your staff treats their customers professionally and courteously.
Your employees’ remuneration will also be a major expense for you. Hence, you also need to invest in some Payroll Software along with a POS System. Keep an eye on the reports generated. They will give you insights into who is a performer and who needs motivation.
After reading this blog, you would agree that launching a Liquor Store is truly a multi-tasking retail business with a difference. We have touched base with 10 different aspects of setting up a liquor store.
You will have to plan your things right and execute proven strategies that yield desired results. If you are determined to open a liquor store, now is the time to take your first strategic step toward building a profitable business. Please call our business expert at (346) 767-6884 or write to us at [email protected]