Wondering how to start an off sale liquor business? We take you step-by-step from start to success.
Fundamental Requirements for Off Sale Liquor Startups
Off sale liquor establishments sell alcohol for consumption off-premises. (On sale liquor stores may have a small bar to serve consumers on-site.) Consequently, off sale liquor is a straightforward retail enterprise that has to deal with the same inventory management and profit maximization issues as any other retailers.
But there are a couple of things that set off sale liquor stores apart from other retailers. The first is licensing. On a national level, alcohol is regulated by the Bureau of Alcohol, Tobacco and Firearms (ATF). But licensing requirements vary by state -- count on the fact that you will need to undergo a rigorous process to receive authorization to sell off sale liquor in your area.
Another unique issue off sale liquor stores need to address is supply and inventory. There are so many different brands of hard liquor, wine and beer on the market that it is difficult to stock all of your customers' preferences. But since liquor store patrons tend to be repeat customers, you need to implement a system to reliably stock customer requests, and to monitor the industry's ever-changing array of sales and discounts.
Pricing Guidelines for Off Sale Liquor Stores
The business mechanics of an off sale liquor store call for expertise in the area of ordering, purchasing and pricing. Your inventory target should be to have a two or three week supply of all products with larger inventory levels for alcoholic products that are advertised discounts (e.g. 1-2 month supply).
In the area of pricing, plan on a 40% markup on wine, a 20% markup on beer and a 25% markup on hard alcohol. However, these markups are only guidelines. If a local competitor is offering a specific product at a heavy discount, you may need to match their pricing to remain competitive.
Off Sale Liquor POS (Point of Sale)
It's not easy keeping track of profit margins, inventory levels, sales tax and other variables in an active liquor store operation. Instead of trying to piece together several, disconnected systems and processes, we strongly recommend implementing a robust POS solution from the outset of your off sale liquor startup.
Point of Sale solutions integrate your store's cash register activities with inventory management, accounting and other functions. The benefits of POS are improved efficiency, more accurate ordering and reduced shrinkage -- all of which your off sale liquor store will need to become a stable and profitable business.
Characteristics of a Good Off Sale Liquor Company Business Plan
Your off sale liquor company's business plan should be tailored to your business's unique traits and goals. However, the most effective business plans do address specific sound business plan elements:
- Mission Statement – A concise declaration of values, strategy and identity.
- Goals & Objectives – A list of mile markers on your off sale liquor business's road to success.
- Financial, Marketing & Action Plans – Specific plans that describe your business environment, demographic targets and quantitative estimates.
Well in advance of opening an off sale liquor business within your community, it's a smart move to determine what the competition looks like. Try our link below to find competitors near you. After clicking on the link, type in your city, state and zip code to get a list of off sale liquor businesses near you.
If there's too much competition, it may be wise to consider starting the business in a less competitive marketplace.
Finding a Non-Competitive Business Mentor
If you are seriously contemplating launching an off sale liquor business, you really ought to speak with somebody who is already in the business. If you think your local competitors will give you advice, you're being overoptimistic. It'd be crazy for them to teach you the business.
But, a person who owns an off sale liquor business outside of your community can be a great learning resource for you, as long as they don't view you as a competitive threat. Many business owners are happy to give advice to new entrepreneurs. Our estimate is that you may have to contact many business owners to find one who is willing to share his wisdom with you.
What's the process for finding an off sale liquor business founder in another community?
It's easy. Here's a link you can use to find a mentor outside of your area.
Three Arguments for Buying an Off Sale Liquor Business
It's almost always preferable to buy an off sale liquor business than to pursue an off sale liquor business startup.
You'll want to conduct a comprehensive due diligence process, but here are three arguments why you should think about buying instead of a startup.
- Initial Revenue. With a business purchase, you'll have the ability to buy a company that is already operating in the black.
- Established Operations & Processes. When you're shopping for an off sale liquor business, be sure to look for ones that have all of the necessary processes and systems to ensure seamless operations from your first day of ownership.
- Capital Acquisition. In general, it's easier to finance an existing business than it is to fund a startup. While a startup only exists on paper (initially), established businesses have the benefit of historical earnings statements and tangible assets.
Don't Rule Out Franchising
The four-year survival rate for business startups is less than fifty-percent. To increase the likelihood of success, it's worth considering the possibility of buying a franchised off sale liquor business opportunity. Franchises eliminate many of the risks that are typically associated with a business startup and offer growth opportunities for ambitious entrepreneurs.
At a minimum, click the link below to explore the possibility of pursuing a franchised approach to your off sale liquor business startup.
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