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How to Start a Liquor Store Business

Liquor Store Business

Do you want to start a liquor store business? If YES, here is a complete guide to starting a liquor store business with NO money and no experience plus a sample liquor store business plan template.

If you live in the united states of America, you will agree that a ton of people; male and female alike, consume liquor on a daily basis. This goes to show that there is a large market for liquor and as an aspiring entrepreneur looking for a business to start, you need not look too far because you can open a liquor store in your neighborhood.

If you intend opening a liquor store, then you must take out time to learn the art of buying and selling alongside other business skills such as customer service skills, accounting skills and bargaining skills.

It is important to state that starting a liquor store business requires that you obtain the required license to operate such business in most states in the United States of America and you can only be allowed to sell liquor to people that are above 18 years.

That is the reason why you must be prepared to target this class of people if you truly want your liquor store business to succeed.

Before launching this type of business, you should carry out your market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your liquor store business, it will not take you long before you break even and start smiling to the bank.

So, if you have the desire to start your own liquor store business, all you need do is to read this article and you will be well equipped.

Steps to Starting a Liquor Store Business

1. Understand the Industry

One of the easy to enter and thriving business lines that an entrepreneur can easily start up is the retailing business. The retail business is indeed a wide business which the liquor store business falls under.  Simply put, a liquor store is a retail shop that is licensed to sell prepackaged alcoholic beverages usually in bottles to customers who take them home or elsewhere to consume.

In the United States of America, the liquor store business is a regulated business which is why The Twenty-First Amendment of the United States Constitution gives states the power to regulate the sale and consumption of liquor and other alcoholic beverages.

It is important to note that State regulations vary widely. Most states in the United States of America have laws that clearly define which alcoholic beverages must be sold in specialty liquor stores and which may be sold in other venues.

The Liquor, Beer and Wine industry is indeed a very large industry and pretty much thriving in all the parts of the world. Statistics has it that in the United States of America alone, there are about 41,285 licensed liquor stores responsible for employing about 170,399 employees, and the industry rakes in a whooping sum of $48bn annually.

Activities in the Liquor, Beer and Wine Stores industry has been on the increase in the last 5 years (i.e. from 2010 to 2015), even though the revenue generation have not shown remarkable growth within the stated period. Owing to the obvious increase in consumer confidence, more consumers have purchased high-margin products such as craft beer, there by boosting the industry profitability.

Additionally, the legislation on the liquor, beer and wine market in many states in the U.S has allowed more entrepreneurs to open their own liquor stores. Revenue in the Liquor, Beer and Wine Store industry is expected to grow over the next 5 years as stores generate greater sales especially of high-margin products.

The Liquor, Beer and Wine Store industry is known to be heavily concentrated in the most densely populated regions and cities, mainly in the Mid-Atlantic, which comprises 24.2 percent of total liquor stores. Statistics has it that within the region, New York accounts for 8.5 percent of total liquor stores and trails only California which has 11.6 percent with the largest percentage of industry liquor stores.

So also, the Southeast and Great Lakes regions are heavily concentrated with industry liquor stores and account for 17.9 percent and 15.4 percent of total liquor stores, respectively. Comparatively large liquor stores, in terms of employment and revenue, tend to be located in the Mid-Atlantic region.

Nevertheless, the industry is small business oriented, with 68.0 percent of liquor stores employing four or even fewer full-time employees per time.

The Liquor, Beer and Wine Stores industry will continue to blossom because people will not relent in consuming liquor and related products. Despite the fact that the industry seems over-saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own liquor stores.

Over and above, the liquor, beer and wine industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale in a street corner like the average mom and pop business or you can choose to start on a large scale with several outlets in key cities.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who consume liquor cut across all genders; male and female above 18 years with the financial means; hence the demographic composition of a liquor store business is all encompassing.

The truth is that, when it comes to selling liquor, wines, beers and locally brewed beer, there is indeed a wide range of available customers.

In essence, your target market can’t be restricted to just a group of people, but to all those who drink liquor, wines and beers and those who would want to try out liquor. One thing is certain, your liquor and other alcoholic drinks should not be sold to people who are under aged.

3. Decide Which Niche to Concentrate On

It is important to state that there is no known niche area when it comes to the liquor store business. Every player in this line of business usually sells assorted liquor, wine and beer from different brands both locally and internationally.

On the other hand, it is important to state that some liquor stores may decide to have a relaxation point for customers to purchase and consume their products, while most liquor stores only sell liquor to their customer but they are not allowed to consume it within the store facility.

So also, some liquor stores may decide to do home delivery of liquor purchase. This is applicable to those who have an online liquor store.

The Level of Competition in the Industry

The competition that exists in the liquor, wine and beer stores industry goes beyond competition between liquor stores; you will be expected to compete with nightclubs, bars and restaurants et al that also retail liquor. So, it will be right to say the competition in the liquor store business is tough.

The truth is that, no matter the level of competition in an industry, if you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you stock your store with the liquors, wines and beers that are in demand in your business location and you know how to attract and reach out to your target market.

4. Know Your Major Competitors in the Industry

In every industry, there are always brands who perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long while and so they became popular along the line.

These are some of the leading liquor stores/brands in the United States of America and in the globe;

  • NH Liquor & Wine Outlet
  • ABC State Liquor Store
  • US Liquor Store
  • Family Beer & Liquor Store
  • Legion Liquors
  • Frontier Spirits
  • Twisted Vine – Twisted Vine ® is a Registered Trademark of Twisted Vine LLC.
  • The Daiquiri Shoppe
  • Drink Skinny Margarita Mix
  • The Wine Club, Fresno
  • A&G liquor
  • RHYTHM Liqueur
  • WB Liquors & Wine
  • Cramp’s Liquor Store
  • Tex’s Liquor Store
  • Mr T’s Liquor Store
  • Party Liquor Store
  • Waldport Liquor Store
  • Joe Canal’s
  • Westside Liquor Store
Economic Analysis

If you are looking towards successfully launching a business and maximizing profit, then you need to ensure that you get your economic analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.

Liquor retail store business is not a Green business, as a matter of fact, you may come across several liquor stores when you go shopping for liquors, beers and wines et al.

So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of what is required to rent a store and the amount needed to stock your store with the needed liquors, beers and wines that are in demand in your location and also the running cost of the business.

Over and above, if you are considering starting a liquor store business, then your concern should not be limited to the cost of renting a store and stocking your store with assorted liquors, wines and beers, but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.

5. Decide Whether to Buy a Franchise or Start from Scratch

If you are looking towards starting a liquor store business, you would have to start from the very scratch simply because you can hardly get a franchise of liquor store business to buy. It is a business that is open to all and sundry.

Besides starting a liquor store business from the scratch is less stressful when compared to other small scale businesses which usually requires detailed groundwork before launching the business. With liquor store business, you should just try as much as possible to secure a shop that is close to a major road and then leverage on every marketing tool within your disposal especially the internet to market your products.

Please note that most of the big and successful liquor stores around started from the scratch and they were able to build a solid business brand over the years.

6. Know the Possible Threats and Challenges You Will Face

If you decide to start your own liquor store business today, one of the major challenges you are likely going to face is the presence of well-established liquor stores, bars, night clubs and restaurants et al that retail liquors, beers and wines. The only way to avoid this challenge is to create your own market.

Some other challenges and threats that you may face are; economic downturn; if the economy is in bad shape, businesses such as liquor stores and the likes usually struggle to maintain their old customers or even welcome new ones. unfavorable government policies can also hamper the growth of your liquor store.

There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

Generally, you have the option of either choosing a general partnership, limited liability Company which is commonly called an LLC, or a sole proprietorship for a business such as liquor store. Ordinarily, sole proprietorship should have been the ideal business structure for a small scale liquor store especially if you are just starting out with a moderate startup capital in a small neighborhood.

But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and have chains of liquor stores across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your liquor store business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.

You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

8. Choose a Catchy Business Name

When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents.

Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business. If you are considering starting your own liquor store business, here are some catchy names that you can choose from;

  • Pappy J & Sons Liquor Store, Inc.
  • Santa Fe Community Liquor Store, LLC
  • Classic Liquor Store, Inc.
  • Beta Things Liquor Store
  • Matthias Kings Liquor Store, Inc.
  • Timberlake Liquor Store, Inc.
  • The Kings Liquor Stores, Inc.
  • George Paulite Liquor Store, LLC
  • Camp David Liquor Stores, Inc.
  • Good Days Liquor Store, Inc.

9. Discuss with an Agent to Know the Best Insurance Policies for You

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your liquor store business.

Here are some of the basic insurance covers that you should consider purchasing if you want to start your own liquor store business in the United States of America;

  • General insurance
  • Health insurance
  • Liability insurance
  • Workers Compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Payment protection insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own liquor store business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

11. Get the Necessary Professional Certification

When it comes to the liquor store business, you do not need to have any formal training or special certification before you are allowed to start a liquor store business. All you need is informal training that will expose you to the in and out of liquor buying and selling business.

But on the other hand, if you come across any form of certification that can aid you to conduct your liquor store business profitably, then by all mean try and pursue such certification.

12. Get the Necessary Legal Documents You Need to Operate

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own liquor store business in the United States of America;

  • Certificate of Incorporation
  • Business License
  • Tax Payer’s ID/Tax Identification Number
  • Business Plan
  • Non – disclosure Agreement
  • Foods and drinks handler certificate
  • Health inspection Certificate
  • Proof of district-issued food and drinks manager identification card
  • Copy of license for the service support facility and/or a recent inspection report
  • Employee Handbook
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use (if you also operate online liquor store)
  • Online Privacy Policy Document (basically for online payment portal)
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Building License
  • Liquor License
  • Cabaret License
  • Franchise or Trademark License (optional)

13. Raise the Needed Startup Capital

Starting a liquor store business can be cost effective especially if you choose to start on a small scale by running a small store in a street corner.

Securing a standard and well-positioned store facility and stocking your store with assorted liquors, wines and beer from different brands are part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale, you would need to go source for fund to finance the business because it is expensive to start a standard large scale liquor store business.

No doubt when it comes to financing a business, one of the major factors that you should consider is to write a good business plan.

If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business. Here are some of the options you can explore when sourcing for start-up capital for your liquor store business;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Source for soft loans from your family members and your friends.

14. Choose a Suitable Location for your Business

When it comes to choosing a location for your liquor store, the rule of thumb is that, you should be guided by the demand for such products and easy access to wholesale purchasing of assorted liquors, wines and beers. Of course, if you are able to secure a central location for your liquor store, it will give people easy access to locate your store.

It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget.

If you are new to the dynamics of choosing a location for a business such as liquor store, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your liquor store.

These are some of the key factors that you should consider before choosing a location for your liquor store;

  • The demography of the location
  • The demand for liquors, beers and wines et al in the location
  • The purchasing power of the residents of the location
  • Accessibility of the location
  • The number of liquor stores in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al

15. Hire Employees for your Technical and Manpower Needs

On the average, there are no special technologies or equipment needed to run this type of business except for Point of Sales (POS) Machines, shelves, and software applications. So also, you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.

As regard leasing or outright purchase of a store facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short term rent/lease while test running the business in the location.

If things work out as planned, then you go on a long term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.

When it comes to hiring employees for a standard liquor store business, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Store Manager, Sales and Marketing Officer/Sales Girls and Sales Boys, Accounting Clerk and Cleaners.

These are some of the key employees that you can work with. On the average, you will need a minimum of 3 to 6 key staff to run a small scale but standard liquor store business.

The Service Delivery Process of the Business

When it comes to buying and selling stuffs, there are no hard and fast rule about it. Basically, it is the duty of the merchandize manager to help the organization/store stock goods (assorted liquors, beers, wines and other alcoholic drinks from different manufacturers).

They go out there to source for good purchasing deals and they also ensure that they do not only purchase at the right prices that will guarantee them good profits, but also, ensure that they purchase products that are in demand in their business location.

Once the liquors, beers and wines are bought, they are properly arranged in the store for customers to see and purchase. On the other hand, they are also expected to deliver liquor orders made by clients if such services are available in their store.

Stocks are taken at the close of business every day and accounts are balanced. This will enable them place demand for more products, or bring them over from the warehouse to the store. 

16. Write a Marketing Plan Packed with ideas & Strategies

Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a liquor store business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well-known brands determining the market direction for the liquor, beer and wine stores industry.

These are some of the marketing ideas and strategies that you can adopt for your liquor store business;

  • Introduce your liquor store by sending introductory letters alongside your brochure to corporate organizations, households, socialites, celebrities and other key stakeholders throughout the city where your liquor store is located.
  • Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
  • Create a basic website for your business, so as to give your business an online presence
  • Directly market your products.
  • Engage in road show in targeted communities from time to time to sell your products
  • Join local liquor store associations for industry trends and tips
  • Provide discount days for your customers
  • Advertise your business in community based newspapers, local TV and radio stations
  • List your business on yellow pages ads (local directories)
  • Encourage the use of Word of mouth marketing (referrals)

17. Work Out a Reasonable Pricing for your Services & Products

One key factor that will help you sell your liquors, beers and wines at rock bottom prices is to purchase your items directly from the manufacturers in pretty large quantities. The truth is the higher the quantity of items you purchase directly from the manufacturers, the cheaper you tend to get them.

Another strategy that will help you retail your products at the right price is to ensure that you cut operational cost to the barest minimum, and  channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.

18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If your intention of starting a liquor store business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of liquor store and franchising, then you must be ready to spend money on promotion and advertisement of your brand.

No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a business that is profitable.

Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your liquor store;

  • Place adverts on both print (newspapers and magazines) and electronic media platforms
  • Sponsor relevant community based events/programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
  • Install your billboards in strategic locations all around your city or state
  • Engage in roadshows from time to time in targeted neighborhoods to create awareness of your liquor store.
  • Distribute your fliers and handbills in target areas
  • Contact corporate organizations, households, socialites, celebrities and other key stakeholders throughout the city where your liquor store is located informing them about your business and the products you retail
  • List your liquor store in local directories/yellow pages
  • Advertise your liquor store in your official website and employ strategies that will help you pull traffic to the site.
  • Position your Flexi Banners at strategic positions in the location where your liquor retail store is located.
  • Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.