How to Start a Small Liquor Store

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Starting a small, single-location liquor store presents certain challenges that you don't get when running a regional chain. Competition is rampant, and you'll have limited access to volume discounts as a smaller retailer which might affect your pricing and ability to earn revenue. One solution is to focus on specialty products and quality service in which you are selling more than just liquor.

Decide Your Unique Selling Proposition

Small liquor stores typically do not have the volume sales that larger retailers enjoy and thus cannot order inventory at a quantity that gives them any significant discount. To counter this, you either have to charge more than the chain stores or offer a different selection of product. So, think about what you're going to sell. Will you offer specialty beers or world-class wines at affordable prices? Or will you sell a balanced product mix and build your reputation on great customer service and knowledgeable staff? If you can offer something that no one else is offering, you're more likely to become a destination shop.

Licensing is Crucial

You'll need a license to operate a liquor store, and each state, county and city has its own regulations. In some areas, you need only to meet the qualifying conditions for a license. In other areas, liquor stores are state-run, and store owners operate under tight rules as independent contractors. Virtually all licenses restrict the hours during which you can be open for business – this will affect how much you can sell. The Small Business Administration has some licensing resources and links on its website. Figure out where you stand before you get too deep into your business plan.

Location, Location, Location

Before you look for premises, check whether there are city laws and zoning restrictions that restrict how and where you do business. For example, many cities have laws that prevent liquor from being sold near schools, libraries, hospitals and churches. Consider how far people have to walk to your store and what other stores are nearby – if your shop is near places where people run errands, then customers are more likely to stop in.

Think About How Much Capital You'll Need

Theoretically, you can open a liquor store for as little as $20,000 depending on your location, rent, payroll, inventory, license cost and legal fees. In reality, you'll likely need far more capital. BevMax, the wine and liquor superstore, requires that retailers have a minimum of $150,000 in liquid capital to become part of the Bevmax franchise.

Create a Comprehensive Business Plan

Having a comprehensive business plan can help you secure financing so be sure to research your leasing, licensing and inventory costs before you begin. A business plan is basically a roadmap to opening your new business. It contains your business goals and details about what you plan to do in order to achieve them. A business plan is crucial when applying for a loan at banks and credit unions, as well as when creating relationships with suppliers.

Keep a Tight Rein on Inventory

Inventory is going to be your biggest expense, so don't go overboard. You don't want millions of dollars of inventory sitting on the shelves. The volume of inventory depends on your budget, projected sales costs and the type of customer you want to attract. Start by loading up on the items that will sell quickly. Once you have some cash flow, you can start to broaden your inventory. State laws often require that you buy inventory from a state-approved wholesaler. Be sure to get a list from your state's Liquor Control Board.

Spread the Word

Assuming there are no local restrictions on advertising the sale of alcohol – do check this! – start advertising your store in local newspapers, television and radio. If you're active in social media, use it to spread the word about your grand opening. Think about planning a taste-testing event or a "mixology" class that will lure customers. Offer discounts on the items you've featured to help you make your first sales, build loyalty and develop a repeat customer base.

References

About the Author

Jayne Thompson earned an LL.B. in Law and Business Administration from the University of Birmingham and an LL.M. in International Law from the University of East London. She practiced in various “Big Law” firms before launching a career as a business writer. Her articles have appeared on numerous business sites including Typefinder, Women in Business, Startwire and Indeed.com.