How to Open a Liquor Store

how to open a liquor store

Owning a liquor store can be a profitable business. As of January 2021 , sales for liquor, beer and wine in America totalled $5.32 billion. Following is a complete guide on how to open a liquor store. This post will include all the important steps. From why you should open this type of business to the costs and regulations. And everything in between.

Why You Should Open a Liquor Store Business

A liquor store doesn’t necessarily need to be a standalone business. As far as retail businesses go, they are flexible. Consider some of the names they go by. Like bottle shop, package store and wine shop. The liquor store can even be part grocery store.

Here’s some other reasons to open up a business like this:

  • They’re recession proof. Even when the economy dips, the demand for liquor spikes.
  • The inventory has a long shelf life. Some wines need to be stored in dark places. But most of the inventory in a liquor store is stable.
  • The demand isn’t seasonal. Liquor goes well with any event at any time of the year.
  • You can stock competing brands. You can be an outlet for Jameson, Johnny Walker or Jack Daniels. Best of all, they all look after their own marketing.

Of course as a liquor store owner, you get to be your own boss.

How Much Does it Cost to Open a Liquor Store?

If you want to start a liquor store, you can expect to spend between $50,000 to $100,000 minimum. The costs will range from items like inventory and equipment to staffing and legal requirements. Here’s a breakdown of a few of the items.

  • The money liquor store owners need to stock shelves can add up to $35,000. You’ll need a good selection of beer, wine and liquors.
  • Renovations like new racking and shelves can run up to $20,000. These can be an expensive purchase.
  • Insurance like Worker’s compensation and liability can set you back $2,400 in premiums.

There are other costs to opening a liquor store. But these give you a place to get started.

Starting a Liquor Store Business: 19 Important Steps

Liquor Stores all start out as ideas. One of the first challenges is making a notion a full fledged reality. The following steps will walk you through the process of owning a liquor store.

1. Research the Liquor Store Industry and Know it Well

Knowing this business means doing research. Basically, you want to gather data about your customers and the industry. The idea is to optimize your business strategy.

Good research doesn’t need to cost a lot.

  • Google Trends is a good tool. You can enter search terms to find out what’s going on in your area or nationally.
  • Check the list here of some other excellent market and industry research tools.

Other places to look for info include industry trade associations and local industrial development boards.

2. Create a Business Plan

If you Google the right keywords, you can find a business plan template online for a liquor store. But you’ll still need to make sure it’s professional and complete.

Here’s a few things to keep in mind.

  • Stressing the combination between demographics and location will help to convince lenders. Highlight how the ownership and day to day management work when outlining the business model.
  • The marketing plan for liquor stores are critical. Facebook and Google do not allow marketing for liquor. However, a new business can use directories and other online places like Yelp.
  • The business plan needs to have financial projections. These should involve cash flows and a projected balance sheet.

These are other areas new liquor stores need to cover in a business plan. Here’s a template to get you started. Remember you can refer back to these business plans once you’re open.

3. Know Your Target Market

Store owners need to know who their customers are. You need to know who your target market is when you are opening a liquor store. Here are a few boxes store owners need to check.

  • Understanding the benefits your business provides helps to define who you need to focus on. Find who will benefit the most from your liquor store. Consider the demographics like gender and income level. Who is most likely to make a purchase?
  • Location is important. The chances are your liquor sales will only be relevant to one area. Find your customers using geographic characteristics. This makes for personal customer service.
  • Take a look at the competition. The customers they have could be the ones you want. Getting information about your rivals’ strategies can help.

Running test ads can also help you to define your target market. Check out Google Ads.

4. Think of a Business Name for Your Package Store

A big part of a successful business entity is branding. And that means new liquor stores need to have a good name. Use these tips to get started.

Think About Your Inventory and Services

Think about what makes your inventory different than the competition. Maybe you’re focusing on spirits and wine or craft beers? One note of caution when you’re putting together this list. Watch out for any terms that might limit your liquor stores future growth. Like Beer-Barn.

Rhyming words are catchy. They make excellent business names. It’s best to stay away from acronyms and initials since these are hard to remember. You can use geographic terms to your advantage. Like states and regions, city nicknames and neighborhoods.

5. Choose the Perfect Location

The right location is important to a steady flow of customers. There are several factors to look at. Ample parking and accessibility are two. Sidewalk traffic and street traffic need to be considered. The possibility for curbside pickup should be added when searching for a business location.

There’s lots to look at before investing in any area.

6 . Secure Funding for Your Wine Shop

Your new business will need money to get started. There are a number of ways for entrepreneurs to get funding. You might even be able to get some investors interested.

Here are other options.

  • SBA Loans. These are guaranteed by the Small Business Administration. Get matched up with lenders here.
  • Bootstrapping is another way to get the money to start your business. This is all about using your own money. The majority of startups either use savings or reinvest profits after they start.
  • Small business grants come in different types. Look for federal, state or regional options.

Crowdfunding is another way to get the money you need for starting a liquor store. You can also go to accredited investors and raise money with SEC rules.

7. Form a Legal Entity

Registering startup liquor stores as business entities is an important step. You can choose from several different types including DBA, corporation or LLC.

  • A limited liability company is flexible in the type of management structure it has. They also provide pass-through taxes. That means the business itself doesn’t pay.
  • If you want your business to be publicly traded, a corporation is the right choice.
  • Partnerships are more informal. There are several versions that can affect the tax debts of each partner.

A sole proprietorship is the way to go to avoid double taxation. However this type of business entity leaves the owner exposed for liability. Contact a lawyer who will walk you through the process.

8. Create a Business Bank Account

Getting a business bank account that comes with a business credit card is next. Requirements are different in each state but here’s some general information.

  1. You’ll need to open the account by visiting the bank in person. Bring along official photo ID and some bank statements as well as your home address.
  2. Your business needs to be registered in America.You might need to work with an attorney first to establish your US business entity.
  3. Liquor stores also need a physical location in the United States. Some businesses can use an attorney’s office or other registered agents.

Finally, you will also need an Employer Identification Number (EIN) to get one of these accounts. Investing in one of these tools is a great business idea.

9. Know Your Taxes

Liquor stores get taxed like other businesses.

  • Your business will pay a state retail tax on alcohol sales.
  • There might be additional alcohol tax through counties and cities.

Here’s a breakdown of the taxes you can expect to pay in different states.

10. Acquire a Liquor License and Permits

A liquor license gives your business the authority to serve alcohol. Each state has individual rules for licenses. Some even have quotas on available permits.

Each state has an Alcohol Beverage Control Board (ABC)overseeing distribution, sale and production. Different state definitions include some of the following:

  • How much you can charge.
  • The amount that you can serve to a customer.
  • Who can be served.
  • Who can serve alcohol and in what kind of containers.
  • The times and places that you can serve alcohol.

The first step is contacting the right alcohol beverage control board.

11. Get Insurance

Owning this type of business can be profitable. But it comes with many risks to and that’s why you need liquor store insurance. Here’s a few types you will need.

  • Liability insurance. This covers any accidents with customers at your location.
  • Liquor Liability Coverage. This helps to settle third party claims against someone under the influence.
  • Workers Compensation. Covers loss of income and medical costs when employees are injured on the job.
  • Data Protection. This covers claims when data gets stolen or hacked.

Your liquor business might also want umbrella liability insurance. This covers any other expenses not taking care of by a general liability policy. Check your state’s regulations.

12. Design Your Brand

Your liquor business needs to have a good brand. Logos that are to the point and simple work best. Dont forget to implement the ‘all rights reserved’ copyright. Make sure the design works on mobile websites and online ads. Use layouts and fonts that can adapt to print and stay consistent.

Don’t be afraid to change things up as your business goes along. Some recommendations say you should rebrand every five years.

13. Set Your Prices

Setting the prices for your liquors means doing some research as a retailer. Here are a few good ideas to keep your customers happy and your expenses reasonable.

Pour Size

One of the common ways to price drinks is to use what is called the pour size. It’s simple. Just take the price it costs to make the drink. Then divide it by what you think you should sell it for. If those numbers don’t work, you can adjust the pour size . This is a good way to set a retail sale.

Four Classes

You can also divide the liquor up into four classes. Cheap house liquors should have the lowest price. Next up are the ones customers call by name like Bacardi.

Premium is the name given to a certain brands of the highest quality. The most expensive are super premium liquors like Johnny Walker.

14. Plan your Marketing

These stores are very competitive. That means you’ll need to carefully plan your marketing to appeal to your customer base.

  • A good website is essential. Make sure that it is mobile friendly. That means using product pictures and text that look good on smartphones and laptops.
  • Use social media for marketing but be selective. A Facebook Page allows you to target your audience and it costs nothing to get started.

Your business can also collaborate with local distributors. Don’t forget to get your name in business directories too.

15. Stock Your Inventory

Being able to stock your inventory and stay on top of it is important. A POS system can tackle many jobs when it comes to liquor store inventory management.

These can help you run this type of business through a central hub.You can manage and track your inventory in real time. Generate sales reports so you’ll know which liquors to stock. These systems even track sales in real time.

A good POS system can also track your case counts as you bring stock in. You can get started with a liquor inventory spreadsheet like this one.

16. Hire a Team

Great customer service is important for these businesses. Your team will need to include cashiers, clerks managers and supervisors. That’s a general overview and you might be able to do with less employees. Keep in mind there will be additional expenses. Like Workmen’s Compensation insurance, healthcare contributions and any paid time off.

17. Create Multiple Income Streams for Your Wine Store

There are many different things you can do to create multiple income streams. You can rival convenience stores by offering snacks and becoming a lottery retailer.

  • You can also offer swag and other promotional items.
  • A delivery service is another way that your liquor stores can make a little extra money.
  • Increase your profit margins by stressing the points available through purchases made with credit cards.

18. Hold a Grand Opening

Getting these types of businesses off the ground involves a grand opening. Start by defining how you will advertise. Social media campaigns and radio, television and newspapers can all work together.

Make sure that you have a budget for the event. Choosing a date isn’t arbitrary. You’ll need to choose the time and day based on your customers. Watch out you don’t conflict with other local events or big-box sales. Invite friends and as many influencers as possible.

19. Be a Successful Liquor Store Business Owner

Congratulations are in order once you’ve opened your store. But you need to remember any successful business requires a constant effort. Constantly training staff will increase your revenue and enhance the customer experience.

All of your marketing efforts need to be monitored.Online strategies can be watched using analytics. You can tweak social media campaigns as needed.

Having a good POS system means that you can stay on top of other important details like inventory.

Things Business Owners Should Think About Before You Start A Liquor Store

There are challenges and issues you need to look at before opening a liquor store. It’s a big venture. So you will need to check and consider the boxes below to make sure you are ready.

Costs of Owning a Liquor Store

Liquor store owners need to think about costs. Like legal and other requirements. No one wants to neglect these apsects.

  • local compliance certificates, liquor licenses and permits are what you’ll need to sort out as a startup. Licensing fees can add up.
  • You’ll also need insurance and an excellent POS system. Don’t forget it needs to take credit cards and other payment types.
  • A steady supply on the shelves is important too. These inventory costs can shift so you’ll need a good relationship with your distributor.
  • You’ll need a physical location in a specific state. And capital whether you want to lease,purchase or build. Make sure there’s adequate space and the right zoning.

Dont forget to establish your store as a legal entity. A business attorney is needed to get this part done.

Changing Laws

The laws around alcohol change quite often and state-by-state. Here’s a reference you can use to see what applies where you are. The most important law that governs all policies related to alcohol is the 21st amendment to the Constitution.

Your Specialty

Your new store might even have a specific focus. Here are a few different specialty liquor stores that do well.

  • Wine shops cater to a specific high-end clientele. They offer a variety of domestic and international wines and have events like tastings. They can be categorized under wine stores.
  • Others combine spirits as well as beer and wine.Their inventory is larger and might even have cigars and cigarettes. The classification here is liquor stores.
  • Beer stores is another specialty. Here’s a list of the top American beer stores.

There’s often a lot of crossover in the kind of alcohol you sell.

Alcohol Sales Age Regulations

In most states the legal age for serving alcohol is 21. That can change and dropped to 18 in some situations. Like where food is involved. There are other exceptions. Over half of the states allow minors to consume alcohol during a religious ceremony.

Serving alcohol to a minor in your bar is illegal. In states like Florida you can be held responsible for any damages or injuries caused. More penalties can be doled out to the person who holds the liquor license.

How do I start a small liquor store?

Starting your own liquor store is worthwhile and challenging. Start by researching the industry. That includes researching out your preferred clients before you create a business plan. There’s inventory and staffing and marketing to be done.

You need to look after all the legalities and liquor licenses and permits too.

Don’t forget any business, even a small one, takes a constant effort.

How much does it cost to stock a liquor store?

This cost will depend on the type of liquor your store sells. Stocking a smaller beer store my only cost a few thousand dollars. A case for a high end wine store could easily set you back a thousand dollars. If you are planning on stopping an entire liquor store, the cost could rise to $300,000.

What is the profit margin in a liquor store?

The profit margin here varies between 200 to 400%.

How do liquor stores increase sales?

There are several ways your store can increase sales, profits and cash flow.

  • Offer discounts for buying more than one product. This will help your cash flow.
  • Place impulse items in strategic locations.
  • Put loyalty programs in place.
  • Bundle products that make great gifts.
  • Put together advertising opportunities with your distributors and vendors.

Coupons are another excellent way to increase your sales.

How much does a liquor store owner make a year in the USA?

This depends on a few different factors. A liquor store in a less desirable location or state will make up to $70,000 annually. Other businesses can make between $100,000 to $150,000 on average.

Most owners make somewhere between $20,000 and $50,000 a year.

Image: Depositphotos

This article, “How to Open a Liquor Store” was first published on Small Business Trends