So the entrepreneurial bug has bit and your thinking about buying or opening a liquor store. Who doesn’t love a good drink right? Here are 4 things to consider before buying a liquor store.
First a word of warning, this is not the easiest of business. Long hours, tight margins, and expensive inventory require a sound business acumen and plan. The good news is many make great living in a recession resistant industry. Alcohol purchases are also spontaneous and on demand. Brick and mortar stores have not seen the same disruption from online sales like traditional retailers have.
1. SOUND BUSINESS PLAN
Before jumping into anything you should have a sound business plan. If you are buying an existing liquor store, does it have a good reputation? It may be worthwhile to keep the name. Make sure to be very dillignet when it comes to proper licensing. To help limit liability incorporating your business is a must. Inventory is not cheap, make sure to have $50,000-$100,000 ready to cover a good selection.
People will pay more for convenience. Before buying, make sure you are looking at a location with good foot traffic and which it is legal to operate. Stock your shelves based on the demographic in which you are located. Don’t overstock expensive premium products in low income areas or vice versa. If there is already an established store in the immediate vicinity it might be better to find an area more unserviced. Although most marketing gurus frown on them, direct mailers with a coupon to the immediate local area can still drive traffic and awareness. Of course social media and online marketing are a basic necessity for any new business today.
3. BUSINESS OWNER OR OWNER OPERATOR?
It important to make this decision in the beginning. Primarily this type of business is best suited for an owner operator. Frequent cash payments and desired inventory for thiefs require a level of control and oversight that’s often best mitigated with the owner on hand. That is certainly not to say you can’t get the right staff and systems in place but since this post is for people thinking about ownership I would advise planning on being there. One last thing is to make sure you pay yourself a salary. It’s too easy to get caught up in the business operations thinking the profit will be there for you in the end only to have something come up and it disappears. Decide a salary and pay yourself from the start.
4. A POS SYSTEM THAT MINIMIZES COST WHILE PROVIDING VALUABLE DATA.
As we move into the data age, having a system that gives you the optics can make all the difference in the world. Knowing what products are best sellers, keeping an eye on inventory, and having the knowledge of what seasonal products your customers like that have the highest profit margins are critical to maximizing your income. Fortunately POS systems have came down dramatically in price and are more intelligent than ever. Although the hardware cost has dropped the payment processing often linked to them has not. With more customers than ever paying with expensive airline miles and reward cards, accepting credit cards can dramatically cut into your profits. New systems like PayLo can offset the majority of these fees and double your profit margin on certain transactions.