How To Open a Liquor Store in 8 Steps

Opening a business in a highly regulated industry like liquor sales can be challenging and stressful. Do you know how to finance your liquor store's launch and what profit margins you need to succeed?

Liquor Store Business Plan Questions

Drafting a business plan helps you answer these questions. 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 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.

When drafting your business plan contents, you'll want to address these critical issues:

• Have you decided on a business name that is unique and can be trademarked?
• Are you buying into an already-existing successful liquor store, or are you starting a startup?
• Do you plan on leasing or purchasing commercial real estate?
• What is your business structure? Sole proprietorship, partnership, limited liability company (LLC), or corporation?
• How are you financing the venture? Are you applying for a business loan locally or with the Small Business Administration (SBA)?
• What are the short-term and long-term financial goals of your business? How will you set these goals?
• What is the demand for a liquor store in your area (target market)?
• What do your area's market research and demographics say about your potential customers?
• How do you plan on getting liquor? Wholesale distributors, brewing it yourself, or a partnership?
• How do you plan to market your liquor store?
• Can you afford liability insurance and worker's compensation insurance?
• Do you know what point of sale (POS) system you want to use?

For a highly regulated industry like liquor sales, it's best to have a detailed business plan. If you hit a roadblock later, you'll have other options to refer to and pivot in your retail business plan.

Get Help With Your Business Plan

Moving forward, you'll find that many steps in forging your liquor store business will tie back to your business plan. If you're struggling with the business plan, feel free to contact a small business lawyer in your area. They're experienced in your market and have likely helped other business owners address these issues.

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. So long as you are not a sole proprietor, this limits the risk to your personal assets if your liquor store builds up debt or faces a lawsuit.

Get an Employer Identification Number (EIN)

Registering your business also allows you to obtain an employer identification number (EIN) from the Internal Revenue Service (IRS). This is essential—EINs enable you to open a business bank account.

Open a Business Bank Account

Once you have that nine-digit EIN, you can open a business bank account. Now, your business is a separate legal entity, and you can make transactions without using your personal accounts.

Here, it's important to do some research to choose the best bank for your business. Do any banks in your area have experience working with other liquor retailers? The main thing to consider is whether you feel comfortable entrusting your business finances to this bank.

Location is often everything in a highly regulated, competitive business like liquor sales. You will have decided whether you plan on leasing or purchasing your space in your business plan.

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.
• Are there any zoning restrictions? Will you need a zoning variance that requires public notice and hearings before a city council?
• Pay attention to local ordinances regulating liquor sales during set days or hours. Remember, some counties are “dry counties" on certain days or hours.
• Research local laws to see if grocery stores sell liquor in your city or county.
• Does the location you like need any renovations? If so, you'll need building permits, plumbing permits, electrical permits, and contractor permits. Here is an example from Alabama.

Some states have laws and regulations regarding where and how to establish your physical location. So, you'll also want to ensure you're up-to-speed on all necessary building codes and zoning laws applicable in your state and county.

Every alcohol retailer must obtain a liquor license. The cost of getting these licenses varies from state to state. The licenses typically cost several thousand dollars. Check with your state's governmental business authority for specific cost information.

Alcohol Control Board Liquor License

In the United States, the United States Department of Treasury Alcohol and Tobacco Tax and Trade Bureau (TTTB) allows each state to have its own Alcohol Beverage Control (ABC) Board. These boards issue liquor licenses and permits for the following:

• Bonded winery
• Bonded wine cellar
• Brewery
• Distilled spirits plant
• Importer (alcohol)
• Wholesaler (alcohol)
• Alcohol fuel plant
• Specially denatured spirits
• Tax-free alcohol

Some states require additional business permits for liquor stores. Again, it's always best to consult your state's SBA. If you need clarification on something, seek out a skilled small business attorney operating in your chosen market.

Local Licensing Requirements

Each state's ABC Board will determine exactly what license you need. They can direct you to your local county or city permit office. Some states can only issue a set number of liquor licenses yearly. Others require a resident to apply for the liquor license application.

Be aware that failing to secure a temporary permit, even for taste-testing or special events, can cause your existing liquor retail business to be revoked. Selling to underage individuals and failing to ask for an identification card can also revoke your license and result in a fine.

Any business with on-site customers must protect itself and its interests with insurance. Accidents can happen, especially when alcohol is involved. 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. This includes the business's location, the value of the company, and whether or not you hire employees.

• Business interruption insurance
• General liability insurance
• Liquor liability insurance
• Worker's compensation insurance

Don't skip this purchase. If you're accused of over-serving a patron or someone falls at your store, you will be glad you purchased this insurance policy. The policy will cover a valid claim so that you don't have to pay out of pocket.

You may want to build a website or purchase a television, social media, or print advertisement. Your marketing strategy should align with your budget and consider your competitors' reach.

Alcohol Advertising Regulations

The TTTB regulates alcohol advertising. Keep state laws and your local ABC board regulations in mind when creating ads.

• Your ad cannot have anyone in it that looks like they are underage
• Advertised product labels must match your actual product label
• Liquor and other distilled spirit ads must include the alcohol content percentage
• Your company name and contact information have to be on the ad

You should also know the distance you can have an ad from a school or daycare center.

Ads can be online posts, billboards, magazines, radio ads, or flyers, just to name a few. You don't need to get pre-approval for your ads, but you should ask for clarity if you're unsure.

Liquor stores contract with suppliers called "distributors" to build their inventory. Research market trends, local restaurants, and breweries to determine what's trendy in your area. A good liquor store will carry what's popular and have eclectic options to suit customers' needs.

Once you're stocked up on inventory, hire employees to help you arrange the store and sell it. As you might've guessed, hiring is subject to its rules and regulations. Ensure 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 your brand-new liquor store.