You need a minimum of $143,000 to open a smoke shop business in any city in the United States of America.
The Cigar Lounges (Smoke Shop) industry comprises businesses known as smoke shops, cigar bars, or lounges, where patrons can purchase and smoke freely without fear of breaking the law. Businesses in this industry usually provide limited food and alcohol services as a means of increasing their revenue generation.
Any entrepreneur who wants to start a smoke shop business in the US would definitely be confronted with the tough competition out there.
The truth is that you will not only compete with smoke shops/cigar lounges in your location or city, but you will be competing with every other entertainment option such as wine bars, nightclubs, restaurants, casinos et al where cigars are retailed and can be freely smoked.
Estimated Cost Breakdown for Opening a Smoke Shop
One of the major areas you should be mindful of when considering starting a smoke shop is the total cost of setting up the business. Starting up a smoke shop not only requires pretty huge startup capital, but it also needs significant investment capital, solid planning, and attention to detail in order to keep your business profitable.
From our market survey and feasibility studies, we have been able to come up with a detailed budget for opening a standard stop smoke shop in the united states of America, and here are the key areas where you are expected to spend your startup capital on;
- The total fee for registering a business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services – $1,200.
- Marketing promotion expenses for the grand opening of the smoke shop in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring a business consultant – $2,500.
- Insurance (general liability, workers’ compensation, and property casualty) coverage at a total premium – $2,400.
- The cost of accounting software, CRM software, and Payroll Software – $1,500
- The cost for payment of rent for 12 months at $1.76 per square foot in the total amount of – $35,600.
- The cost for shop/facility remodeling – $25,000.
- Other start-up expenses including stationery – $500
- Phone and utility deposits – ($2,500)
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
- The cost for start-up inventory (a wide range of cigars, tobacco-related accessories, tobacco products, food and drink, cigars and cigarillos, premium cigars, assorted red and white wines, beer and liquor, distilled spirits, and martinis et al) – $12,500
- Storage hardware (bins, utensil rack, ashtrays, shelves, glasses case) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $6,000
- The cost for serving area equipment (glasses, flatware) – $3,000
- The cost for store equipment (cash register, security, ventilation, signage) – $3,150
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound systems, tables and chairs et al) – $8,000.
- The cost of launching a website – $600
- The cost for our grand opening party – $3,000
- Miscellaneous – $2,500
From the rough estimate listed above, you would need a minimum of one hundred and forty – three thousand USD ($143,000) to establish a medium–scale but standard smoke shop business in any city in the United States of America.
Having said that, before you consider opening a smoke shop, you must be sure of what you are up against. You must be ready to figure out the factors that influence the cost of opening such a business before you venture into it. In this article, we will look at the 10 key factors that can influence the overall cost of opening a smoke shop.
Factors That Influence the Cost of Opening a Smoke Shop
Your Choice of Location
If you want to open a smoke shop, one of the first hurdles you should plan to scale through is to choose a location for the smoke shop.
Interestingly, in the United States, you cannot just open a smoke shop in any location or facility. This is so because smoke shops are restricted to certain areas. In view of that, if you are able to settle for a location to open your smoke shop, then you must be ready to pay a premium.
The Size of the Smoke Shop
Another factor that will no doubt affect the cost of opening a smoke is of course the size of the smoke shop. If you want to open your smoke shop in a small shop facility, then you should budget far less than someone who wants to open a smoke shop in a large facility.
Business consultants usually advise entrepreneurs who are just starting their first business to start small and grow big. With that, you will able to bring down your costs and reduce your risk to the barest minimum. The only reason why you should plan to open a smoke shop in a big facility is if you have successfully run such a business and you are planning to expand and grow the business.
The Cost of Rent or Lease
The cost of rent or lease is yet another factor that will influence the cost of opening a smoke shop. Good enough, the combination of location and size of the shop is a major factor that can influence the amount you are expected to budget for rent or lease of your smoke shop.
In essence, it is advisable to have an estimate of what it will take to rent a smoke shop. If not, you will be shocked at what you will get. Please note that the cost of renting or leasing a smoke shop may vary across the board even in the same city.
The Cost of Renovating the Facility
Another factor that will likely influence the overall cost of starting your smoke shop business is the cost of renovating the shop facility.
This cost could include the cost of painting, changing the water closet, changing the locks and keys, changing the nets, and even changing the flooring and chimney et al. Most often than not, when you lease or rent a new facility, there is always a need for you to renovate the facility.
Even if the landlord renovated the facility before leasing or renting it out to you, it might still not be to your taste. Hence, you are expected to make the place look good and appealing to potential customers and this doesn’t come cheap especially if you want to attract celebrities and public figures.
The Cost of Furnishing and Equipping
The cost of furnishing and equipping the smoke shop is yet another factor that will influence the cost of opening a smoke shop.
The price of furnishing and equipping a smoke shop facility doesn’t come cheap, you should be prepared to dole out some cash in this regard especially if you want your smoke shop to be a place where people would want to spend their time and money.
Generally, you are expected to budget for display cases, humidors, tobacco grinders, lighters, ashtrays et ala. You are also expected to budget for chairs, sofas, shelves and tables, computers, flat-screen televisions, sound systems, payment systems (POS), and security gadgets (CCTV et al). No doubt, the cost of all these items will be significant in your overall budget.
The Cost of Hiring and Training Your Staff
Another factor that will influence the cost of opening a smoke shop is the cost of hiring and training your staff. Although, you may be able to operate a smoke shop as a sole proprietor, especially if you are starting out on a very small scale.
But, if you want to open a standard smoke shop, then you must be prepared to have key employees occupy key aspects of the business.
In essence, if you are planning to open a standard smoke shop, then you must have a robust budget for hiring and training your staff members. The budget should also cover their salaries, their health, and other benefits amongst others.
The Cost of Applying for and Obtaining Licenses and Permits
Another factor that will also influence the cost of opening your smoke shop is the amount required to obtain the needed licenses and permits to be able to legally operate your business in the United States.
With that in mind, you should budget for the cost of obtaining your business license, the cost of obtaining your building and zoning permit, fire department permit, the cost of obtaining sales tax permit, music license, tobacco retailer license and permit, and lastly signage permit among others.
The Cost of Marketing, Branding, and Advertising the Business
The cost of marketing, branding, and advertising the smoke shop business is yet another key cost that will influence the cost of starting a smoke shop business. Marketing, branding, and advertising are no doubt a business strategy that should not be wished away especially if you are going to be competing against other smoke shops in your locality.
With a good marketing, branding, and advertising strategy in place, you will be able to successfully announce your presence in your community and you will be able to win a reasonable market share.
Of course, you should know that a good and workable marketing, branding, and advertising strategy will cost you money to execute hence you should have a budget for it which ultimately will influence the cost of opening your smoke shop.
The Cost of Insurance
The cost of purchasing the required insurance policy covers is yet another major factor that will influence the cost of opening a smoke shop. Come to think of it, in the United States, it is illegal to run a business without having the required insurance policy covers in place.
You are expected to have at least general liability insurance, property insurance, and workers’ compensation insurance in place.
The amount you are expected to spend on insurance policies will be determined by the risk involved in the business and for a smoke shop, the risk might not be on the low end. Please note that insurance policy covers cost money and they will increase the money you are expected to spend when opening your smoke shop.
The Cost of Inventory and Ongoing Expenditures
Finally, the cost you are expected to spend in acquiring your inventories and your ongoing expenditure are major factors that will influence the overall cost of opening your smoke shop. Before you can successfully open a smoke shop, you are expected to have a budget for inventories such as cigarettes, tobacco, lighters, cleaning supplies, toiletries, drinks, and snacks.
You can also make provisions for ongoing expenditures such as payment of utilities, salaries of your staff, maintenance, and repairs, and payment of tax and insurance.
Please note that this is a rough estimate and we usually advise our readers who are interested in opening a smoke 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.