How to Open a Liquor Store
A toast to you and your new business venture!
Opening a liquor store is not as simple as stocking some libations on a shelf and putting a sign out front. Liquor is one of the most heavily regulated industries in the United States. There's a lot potential store owners should know to make informed decisions that keep them in good standing in the law.
While it may seem daunting, those with a passion for the business needn't be discouraged. As long as you proceed cautiously and resolve to stay informed, liquor sales can prove lucrative as a new business. These steps are here to help you get started on the right foot.
1. Thoughtfully Weigh Out the Pros and Cons
Opening a business in a highly regulated industry like liquor sales can be challenging, even stressful at times. Do you know how you're financing your liquor store's launch? This is the most crucial consideration in deciding whether to move forward.
Sit down with a partner, friend, or family member and weigh out the pros and cons. From the worst-case scenario to your wildest dreams, don't be afraid to consider all possibilities. You'll be glad you did.
Once you've considered the positives and negatives, you can decide whether now is the right time to open your liquor store. If it is, the next step is coming up with an informed business plan.
2. Draft an Informed, Detailed Business Plan
Drafting your business plan is of the utmost importance. Read as much as you can about the liquor retail industry. Get comfortable with the nuances of the business before you start writing. If you have questions, consult with an attorney experienced in the liquor industry. When your plan is complete, you'll have charted out a well-educated course for your new venture.
Finding the proper format for your business plan is easy. But for a highly regulated industry like liquor sales, it's best to have as detailed a business plan as possible. That way, if you hit a roadblock later, you'll have other options laid out in this plan to fall back on.
When drafting your business plan, you'll want to address these critical issues:
- Whether you are buying into an already-existing business or starting from scratch
- Whether you plan on leasing or purchasing commercial real estate
- Whether you have business partners to consider
- How you plan to structure your business (e.g., LLC, LLP, corporation)
- How you are financing the venture and the long-term financial goals of your business
- The demand for a liquor store under current market conditions in your area
- How you plan on securing products
- How you market your liquor store
- Your competitors and their share of the market
Moving forward, you'll find that many of the steps in forging your liquor store business will tie back to your business plan. If you're struggling with the business plan at all, don't hesitate to contact a small business lawyer in your area. They're experienced in your market and have likely helped other business owners address these very same issues.
3. Register Your Business With the State
Before you make any transactions, register your business with a state governmental business authority (typically a Secretary of State). Registering your business requires you to choose a business entity.
Once you're registered, your company will become a separate legal entity. This limits the risk to your personal assets if your liquor store builds up debt or faces a lawsuit. Additionally, registering your business allows you to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This is essential because EINs are what enable you to open a business bank account.
4. Open a Business Bank Account
Once you have that nine-digit EIN, you'll be able to walk into a bank of your choosing and open a business bank account. Now, not only is your business a separate legal entity, but it can also make transactions without having to use your personal accounts.
Here, it's important to do some research in choosing the best bank for your business. Are there any banks in your area that have experience working with other liquor retailers? That experience might come in handy for a new business owner like yourself. The main thing to consider is whether yours is a bank with whom you feel comfortable entrusting your business.
5. Finalize Branding Strategies and Secure a Trademark
It's never too early to start building your marketing and branding strategies. Once you've decided on a name for your liquor store, it's time to secure your brand by registering it as a trademark with the federal government. Applying for a trademark can be a lengthy process, so it's best to make these decisions as soon as possible, even as early as your business plan.
Registering for a trademark allows you to protect your creative assets. Suppose you have a logo for your business that another business then steals. Obtaining a registered trademark approved by the United States Patent and Trademark Office (USPTO) allows you to sue that business to enforce your rights to the trademark. Think of trademarks as your own creative property that only your business can use.
You'll want to search the USPTO's trademark database to ensure your trademark is not already in use. Once you've confirmed that you have a mark that's not in use, you can apply for your trademark on the USPTO's website.
Once the USPTO approves your trademark, you can finalize decisions on things like advertising or website design. Remember that it's always best to own your brand before telling the world about it!
6. Secure a Location for Your Liquor Store
In a highly regulated, competitive business such as liquor sales, location is often everything. In your business plan, you will have decided whether you plan on leasing or purchasing your space.
Next, you'll want to speak with a real estate agent or search online for commercial property available in your area. Pay close attention to factors like the neighborhood, foot traffic, upkeep and appearances, and safety. Are there competitors already in the area? If so, you must be wary of oversaturating the market. It's better to choose a location with few competitors. Find the market where your liquor store will be most in demand!
Some states have laws and regulations regarding where and how you can establish your physical location. So, you'll also want to make sure that you're up-to-speed on all necessary building codes and zoning laws applicable in your state and county.
7. Secure Any Necessary Permits and Licenses
Every alcohol retailer must obtain a liquor license. The cost of getting these licenses varies from state to state, but they typically cost several thousand dollars. Check with your state's governmental business authority for specific cost information.
Some states require additional business permits for liquor stores. Again, it's always best to consult your state's small business administration. If you're unclear on anything, seek out a skilled small business attorney operating in your chosen market.
8. Secure Business Insurance
Any business that has customers on-site needs to protect themselves and their interests with insurance. Accidents can happen, and it's best to cover these bases from the outset in this industry.
The kind of insurance plan your business requires will be affected by various factors, including the business's location, the value of the company, and whether or not you hire employees. Here, it's best to consult with your small business attorney or reach out to business insurance providers in your area.
9. Put Your Marketing Strategy into Action
Has the USPTO approved that trademark? If so, it is a great time to put your marketing strategy into effect. Perhaps you want to build a website or purchase an advertisement on television, social media, or in print. Your marketing strategy should comport with your budget and consider what your competitors are doing.
10. Purchase Inventory and Hire Employees
Liquor stores contract with suppliers called "distributors" to build their inventory. Research market trends and local restaurants and breweries to determine what's trendy in your area. A good liquor store will carry what's popular and have some eclectic options on hand to suit any customer's needs.
Once you're stocked up on inventory, it's time to hire employees to help you arrange the store and sell all that stock. As you might've guessed by now, hiring is subject to its own set of rules and regulations. Make sure you're up to speed on this area of law and keep diligent track of payroll.
Now that you have inventory and employees, it's time to open that brand new liquor store of yours. Cheers to your success!
- Registering a Trademark
- Employer Identification Number (EIN) FAQ
- How to Find Commercial Property to Rent
Launching a liquor store is a time-consuming, challenging endeavor. The ever-changing landscape of small businesses can make it difficult to know where to look for answers or which questions even to ask. Contacting an experienced small business lawyer is often a crucial first step on the path to having a fully operational liquor store.