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How Much Does It Cost to Start a Cigar Shop? (Sales Forecast and Breakeven Analysis Included)

Cigar Shop Business

You would need a minimum of $143,000 to open a medium-scale cigar shop business in any city in the United States of America.

A cigar lounge or cigar bar is a place where smokers go to buy their preferred cigar brand and smoke freely without the fear of being embarrassed, arrested or fined. You will agree that it is now illegal to smoke in public places.

The World Health Organization (WHO), in conjunction with Governments of various countries are clamping down on smoking in public places in a bid to protect non- smokers from the harmful effects of smoking.

The truth is that banning smoking in public places is actually a blessing in disguise for people with the intention of starting a cigar lounge.

Little wonder we have cigar lounges positioned in strategic places like airports, shopping malls, cinemas, et al. Although not all lounges are open to the general public. In some cigar lounges, you would be required to sign up as a member before you can have access.

One good thing about starting a cigar lounge business is that if you are diligent enough and if you have good business/marketing strategies, you can build the business from just one outlet to numerous outlets across different cities in the United States.

Estimated Cost Breakdown to Open a Cigar Shop Business

One of the major areas you should mindful of when considering starting a cigar shop is the total cost for setting up the business.

Starting up a cigar shop business may not require pretty huge startup capital, but it needs significant investment capital, solid planning, and attention to detail.

From our market survey and feasibility studies, we have been able to come up with a detailed budget on opening a standard cigar shop in the United States of America and here are the key areas where you are expected to spend your startup capital;

  1. The total fee for registering the business in the united states of America – $750
  2. Legal expenses for obtaining licenses and permits as well as the accounting services totaling – $1,200.
  3. Marketing promotion expenses (2,000 flyers at $0.04 per copy) for the total amount of $80.
  4. The cost for hiring business consultant (writing of business plans inclusive) – $2,500.
  5. Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  6. The cost of accounting software, CRM software and Payroll Software – $1,500
  7. The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of – $35,600.
  8. The cost for shop/facility remodeling – $25,000.
  9. Other start-up expenses including stationery – $500
  10. Phone and utility deposits will cost – ($2,500)
  11. Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
  12. The cost for start-up inventory (a wide range of cigars and other tobacco products, electronic cigarette products, E-liquid (mixture used in vapor products such as e-cigarettes and usually contain propylene glycol, glycerin, nicotine, flavorings, additives, and differing amounts of contaminants), vape pen, replacement coils and juice may cost you as little as $50 for the first month, while a full-featured box mod paired with an MTL tank, coils and juice may go up to $120. After that, you should expect an average of $30-60 per month for coils and juice, drinks and small chops et al) – $16,027
  13. Storage hardware (bins, utensil rack, shelves, glasses case) – $3,720
  14. The cost for counter area equipment (counter top, sink, ice machine, etc.) – $6,000
  15. The cost for serving area equipment (glasses, flatware) – $3,000
  16. The cost for store equipment (cash register, security, ventilation, signage) – $3,150
  17. The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $8,000.
  18. The cost of launching an official website – $600
  19. The cost for our grand opening party – $3,000
  20. Miscellaneous – $2,500

From the rough estimate as listed above, you would need a minimum of one hundred and forty – three thousand USD ($143,000) to establish a medium – scale but standard cigar shop business in any city in the United States of America.

3-Year Sales Forecast and Breakeven Analysis

Revenue Streams:

  • Cigar Sales: Selling various cigars, both domestic and imported.
  • Accessories: Lighters, cutters, humidors, etc.
  • Other Tobacco Products: Cigarettes, pipe tobacco, etc.

Average Pricing and Sales Volume:

  • Cigar Sales: Assume an average price of $10 per cigar and sales of 5,000 cigars in the first year.
  • Accessories: Assume an average price of $50 per accessory, selling 400 units.
  • Other Tobacco Products: Assume an average monthly revenue of $5,000.

Growth Rate: Anticipate 10% annual growth due to market expansion and increased awareness.

Operational Costs:

  • Fixed Cost: Rent, utilities, insurance, salaries, totaling $80,000 annually.
  • Variable Cost: Costs of goods sold, totaling 50% of annual revenue.

Year 1:


  • Cigar Sales: 5,000 cigars × $10 = $50,000
  • Accessories: 400 accessories × $50 = $20,000
  • Other Tobacco Products: $5,000 × 12 months = $60,000

Total Revenue: $50,000 + $20,000 + $60,000 = $130,000

  • Variable Costs: 50% of $130,000 = $65,000
  • Total Costs: $65,000 (variable) + $80,000 (fixed) = $145,000
  • Profit: $130,000 – $145,000 = -$15,000 (Loss)

Year 2:

  • Revenue: $130,000 + 10% = $143,000
  • Variable Costs: 50% of $143,000 = $71,500
  • Total Costs: $71,500 (variable) + $80,000 (fixed) = $151,500
  • Profit: $143,000 – $151,500 = -$8,500 (Loss)

Year 3:

  • Revenue: $143,000 + 10% = $157,300
  • Variable Costs: 50% of $157,300 = $78,650
  • Total Costs: $78,650 (variable) + $80,000 (fixed) = $158,650
  • Profit: $157,300 – $158,650 = -$1,350 (Loss)

Break-Even Point

Contribution Margin per Dollar of Revenue = 1 – Variable Cost Ratio

: 1 – 0.50 = 0.50 (50%).

Fixed Costs: $80,000 per year.

Break-Even Revenue = Fixed Cost ÷ Contribution Margin

: 80,000 ÷ 0.50

Break-Even Revenue​ = $160,000

What the figures above shows is that to breakeven, your cigar shop needs to generate $160,000 annually. Since this is higher than the projected revenue for the first three years, your cigar shop should consider adjusting its pricing strategy, increasing marketing efforts, or reducing costs to reach profitability sooner.

Factors That Influence the Cost of Opening a Cigar Shop

  1. Target Market

Some people think they already have a grip on who their target audience is until they commence business to find out to their surprise that they never really defined who they were in business to serve. One of the first factors to consider is who your target market is.

Determine the demography and status of the industry you want to cater to. Doing this helps you niche down to the right prospects.

  1. Choice Of Location

Your choice of location to a very large extent plays a pivotal role in forming the right foundation for your cigar shop business. This is because the location you start from could either make or mar your business.

When looking to choose a location, be sure to go for a site where there is high foot traffic so that you can attract a good number of prospects. Another thing to consider under the location aspect is if the area is an upscale one. Upscale areas tend to cost a lot in terms of lease and purchase costs.

  1. Space Size

In running a cigar shop you have to also consider the size of the shop. This is really important because the size of a space directly impacts its cost, and you don’t want to start with a space that could be too pricey to manage. Inventory, fixtures, and furnishings are some of the upfront expenses that come with the size of the space. As such, determine if you want to start out small or go big.

  1. Remodeling The Space

The interior and even exterior of your business space say a lot and can be the reason why you may attract some high-ticket clients in the first place, so you have to take the refurnishing of your space seriously. This may require you to invest in renovations in order to build an appealing and functional cigar shop.

Some of the expenses this could bring about include; flooring, interior design, humidification systems, lighting, ventilation, and other infrastructures.

  1. Permits and Licensing

You will need funds to acquire the necessary licenses and permits to operate a cigar shop. This would include business licenses, tobacco permits, health permits, and other local or state requirements. Failure to acquire the necessary documentation before you start could attract some legal consequences.

  1. Staff Strength

Your staffing is an important process of setting up your business. How many workers are you looking to start with? You may need to consider the cost of salaries, benefits, and potential training programs. Nonetheless, the number of employees required will depend on the size and scope of your shop.

  1. Inventory

From the word go, you need to figure out how much inventory you want to start with. Building an initial inventory of cigars can be quite expensive, as the quality and range of cigars you choose to start out with will affect the overall expense. You want to also consider humidors, cigar cutters, lighters, ashtrays, and more when starting the business.

  1. Marketing, Sales, and Advertising

Nothing beats getting a hang of all the marketing strategies and plans that you intend to adopt as you launch. In your quest to do this, do not leave out the cost of website development, print materials, social media marketing, signage, and other promotional strategies. Doing all these says a lot about how far your business will go in a short amount of time.

  1. Insurance Coverage

Insurance is a vital tool that helps every business thrive, and this should be handled seriously. Protecting your business with appropriate insurance coverage is essential and will give your business an edge from the very beginning.

The insurance costs may include general liability insurance, property insurance, workers’ compensation insurance, and others based on your specific needs. Be sure to talk with experts to know the right insurance packages that suit your cigar shop.

  1. Monthly Utilities Expenses

Determining how much you will be spending on utilities monthly will save you a lot of trouble as you progress. This helps you know what you are about to sign up for as a cigar shop owner and what unnecessary expenses to avoid in the day-to-day running of the business. Some utility expenses include; electricity, water, heating, air conditioning, and other utilities.

  1. Miscellaneous expenses

Every business should draft out contingencies expenses that should cater to their unforeseen expenses on a monthly basis.

Miscellaneous expenses can include accounting and legal services, point-of-sale systems, security systems, furnishings, display cases, cash registers, and other operational requirements. Putting this measure in place helps the business run smoothly without hitches.

  1. Training and Certifications

You can’t start a cigar shop business without the right knowledge, this is where getting trained and certified comes in. You may want to consider getting the right training and certifications in your industry so that you can start ahead of your competition. Acquiring the right certifications sets you apart from others.

  1. Funds At Hand

Every new business needs some funds that will help with the running cost of the business until the business picks up. This is true with the cigar shop business, you will need funds for paying salaries and running the business. As you look to launch out, be sure to have some funds allocated to the running of the business

  1. Consult Industry Professionals

It is also advised that you consult experts who will help you carry out ample research, as well as create a comprehensive business plan to estimate the costs involved in starting this business. These consultants could be accountants or business advisors who can help you analyze and forecast the financial aspects of opening a cigar shop.

In Conclusion,

Please note that this is a rough estimate and we usually advise our readers who are interested in opening a cigar shop to go to the market or directly contact sellers of the items they would need to get the real time prices of these items. The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.

The Cigar Shop business is one that is heavily saturated no doubt, however, this doesn’t mean that you can’t stand out when you do your background work and set up all that is needed to compete favorably with existing businesses. There are a ton of people who have cashed out in the business over time. You too can be a part of it when you take the points given in the article seriously and put them to practice.