How to Open a Liquor Store

Opening a liquor store is similar to starting any other business — but with more legal intricacies. The process involves writing a business plan, getting licenses and insurance, finding a space and securing the funding to get it all done. Once you’re up and running, you’ll also need to market your business and find creative ways to stay competitive.

1. Write a business plan

The first step to getting your business off the ground is writing a business plan. Most business plans include the following components:

• Executive summary: Include your company’s mission statement, leadership team, location, financial information and growth plans.
• Company description: Highlight your target customer base and what will make your liquor store unique.
• Market analysis: Discuss your market research, industry outlook and competitor information.
• Organization and management: Clarify your business structure and job descriptions, as well as how your products will be sourced and distributed.
• Service line or product: Provide an overview of your products and why they’re relevant to customers. Include pricing information.
• Marketing and sales: Outline your marketing, branding and sales strategies.
• Funding request: This is an important part of your business plan if you’re seeking funding from investors or lenders. Specify how much money your business needs and what you plan to do with the funds.
• Financial projections: Provide a financial outlook that includes projected balance sheets, income statements and budgets for your business.
• Appendix: This section is for additional supporting documents like reference letters and credit histories.

Target market

This information should be included in the marketing and sales section of your business plan — and it’s an important part of owning a liquor store. The goal is to identify your target demographic and their needs. Here are some key details to consider:

• What type of alcohol do people in the area frequently drink?
• Does it vary by season?
• Where will you be sourcing your supply from in order to meet these needs?

2. Find a location

Depending on your area, you may choose to buy a space or rent a location. Another option is purchasing an existing liquor store that’s for sale. The right option for you will depend on your budget and business vision. Do you envision a large liquor store that has a little bit of everything? Or a small, boutique shop? Either way, you’ll need sufficient storage space to hold inventory and the ability to accept deliveries.

Again, you’ll want to factor in your target market. A location that’s easy to access and, ideally, gets good foot traffic and offers parking and proximity to your target demographic should be top of mind as well. A less expensive location might not be worth it if it’s tucked away from potential customers.

3. Secure funding

Between startup expenses, licensing, insurance and inventory, the cost to open a liquor store can be steep. When looking for financing, you’ve got a few options. Be sure to have your business plan ready whenever you apply for funding or talk to investors. It can show them how you plan on using the money to grow your business. Some of your funding options may include:

• Bootstrapping: This is another word for self-funding, which you might do through a mix of personal savings or home equity. Bootstrapping allows you to retain full ownership of your company while avoiding debt, but it could deplete your net worth.
• Small business loans: That can include term loans, lines of credit and personal loans. It involves taking on debt, but you won’t sacrifice equity in your business.
• Investors: Friends, family and outside investors might be interested in funding your business in exchange for equity. That means they’ll own a portion of your liquor store. Your business plan’s funding request and financial projections are critical.

4. Choose your business structure

The business entity you choose will determine the structure of your business. That can affect ownership, liability and taxes in different ways. Common business entity types for liquor stores include:

• Limited liability company (LLC): This structure limits your personal liability. That means your personal assets would not be at risk if the company declares bankruptcy or is involved in a lawsuit.
• S corporation: This type of business entity provides protection from personal liability and allows owners to avoid the double taxation that comes with having a C-corp.
• C corporation: This is similar to an S-corp, but you’ll be responsible for paying corporate tax and personal tax on dividends.

No matter what structure you choose, opening business bank accounts can keep your personal money separate from your business. That’s an essential part of maintaining accurate financial records and preventing potential tax issues.

5. Get a liquor license

Start by learning how to get a liquor license in your state. You’ll need a license that allows you to sell alcohol in corked or sealed containers, as you’ll be selling alcohol for people to drink elsewhere. You’ll also need to get a permit from the Alcohol and Tobacco Tax and Trade Bureau.

In 17 states and certain jurisdictions, alcohol sales are controlled by state government agencies, sometimes referred to as alcohol beverage control (ABC). In addition, 13 ABC states regulate the sale of off-premises liquor, which means you’ll have to apply to the state ABC agency for a license to open a liquor store.

In non-ABC states, the government isn’t involved in wholesale alcohol sales. These states allow individuals to operate and sell liquor independent of the government, but you’ll still need to apply to a state agency for a liquor license.

6. Get insurance

Business insurance can help protect your investment and mitigate the risk that comes with owning a liquor store. You may opt for:

• General liability insurance protects against property damage and bodily injury claims, plus certain medical expenses. Legal costs may also be covered if your business is involved in a lawsuit.
• Commercial property insurance is important if your business owns or leases a building. This type of policy protects the property, inventory, equipment, furniture and tools.
• Business income insurance protects your assets if operations are impacted by a covered event like a fire or theft.
• Liquor liability insurance typically covers property damage and bodily injuries caused by an intoxicated person. If the person bought liquor from your store, this type of insurance can protect your business and even cover legal fees if you’re sued.

7. Prepare for opening

Once you’ve secured funding and have your legal ducks in a row, it’s time to prepare to open. Taking the following steps can help set the stage for a smooth launch:

• Choose your opening day.
• Purchase inventory, which may include glassware and alcohol accessories.
• Hire and train employees.
• Invest in accounting and tax software.
• Set up a point-of-sale (POS) system.
• Establish a customer loyalty program.
• Clarify your return policy.
• Advertise the opening and start spreading the word in your community.
• Fine-tune your website and Google Business Profile.

8. Open your liquor store

If things go well, your liquor store’s opening day will be busy — especially if you’ve effectively marketed the launch. That might involve running print and digital ads, posting on local social media groups, and partnering with other small businesses to cross-promote. Running opening-day promotions and discounts can also help bring people in and create a loyal customer base.

Make sure you’re fully staffed and ready to handle a potential influx in customers. If things are slower than you expected, you may have to rethink your marketing plan. Opening day can also highlight challenges you didn’t anticipate, like running low on in-demand alcohol or being undercut by competitors. Use the experience as an opportunity to retool.

9. Market your business

Marketing your business is important before you launch and after your liquor store is up and running. Below are some key elements of a strong marketing strategy:

• A clean, easy-to-navigate website that’s optimized for Google
• A blog that allows you to leverage content marketing
• A strong social media presence that showcases your brand and connects you to existing and potential customers
• Digital and print ads
• Advertising on podcasts
• Cross-promoting with local businesses
• Getting out in the community and attending local events
• Keeping your Google Business Profile updated
• Responding swiftly to customer questions and concerns
• Running regular deals and promotions
• Hosting in-store events like tastings and parties

What does it cost to own a liquor store?

Owning a liquor store can be costly. From upfront expenses, like licensing fees, to ongoing costs, like maintaining inventory and making rent or mortgage payments, you will consistently need capital to stay in business.

• License fees: The cost of an annual liquor license depends largely on where you’re opening your store. That can range anywhere from $14 in Florida to up to $25,000 in Indiana. That’s not including application fees, which can be as much as $40,000 in certain Indiana areas.
• Inventory: Buying in bulk can help keep costs down, but carrying too much could lead to a surplus in inventory. Customer buying trends and surveys can help you better understand your store’s needs.
• Payroll: Employee payroll is an ongoing expense when owning a liquor store. Finding the right payroll software can help keep these costs in check.
• Location costs: Factor in monthly rent or mortgage payments as part of your ongoing expenses. Depending on the location you select for your liquor store, you may also have upfront renovation costs for the store.

Regular monthly expenses like inventory, payroll and storefront costs can make it hard to turn a profit initially, so it’s a good idea to have either a backup income stream or enough money saved to survive on while your business gains steam. Your net profit margin is the amount of money you’re making after you subtract the costs of actually running the business. By knowing your profit margin, you can identify where you can make improvements to help increase your revenue.

Pros and cons of owning a liquor store

Potential benefits and drawbacks include: