BusinessHABWine Shop/Business :Our guide on starting a wine shop covers all the essential information to help you decide if this business is a good match for you.
Learn about the day-to-day activities of a wine shop owner,
the typical target market, growth potential, startup costs, legal considerations, and more!
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Wine Shop/Business
BUSINESS OVERVIEW
Wine shops are usually run as physical retail stores,
though some shops operate online.
While it’s not impossible to operate a wine shop exclusively online,
it can be more difficult due to inconsistent state liquor laws.
For example, some states ban the importation of wine,
and liquor unless it’s done through approved vendors,
and distribution channels (most of which are not direct to consumers).
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Wine Shop/Business
1. Who Is This Business Right For?
This business is perfect for individuals who are wine, craft beer,
and liquor enthusiasts and aficionados.
Store hours may be dictated by state law and are generally not very flexible.
However, store owners generally have flexible hours if they employ a staff.
Wine Shop/Business
2. What Happens During A Typical Day At A Wine Shop?
Store owners are responsible for managing employees,
ordering supplies, and managing day-to-day activities.
Depending on the size of the store, this might include servicing customers.
Many wine stores offer wine flights (where a selection of wines are offered for sampling purposes),
during select days of the week or month, which store owners typically host.
Wine Shop/Business
3. What Is The Target Market?
Every state requires wine and liquor stores to ID customers for age verification.
Since it is illegal to sell alcohol to anyone under the age of 21,
wine stores must target adults as their ideal customers.
Wine Shop/Business
4. How Does A Wine Shop Make Money?
Wine stores make money by buying wine and over alcoholic beverages at wholesale,
or discount pricing and marking them up to sell to customers.
Customers are charged a price per bottle and sometimes offered discounts based on volume purchases.
For example, a wine store might sell a case of wine (12 bottles) at a discount.
Wine stores also sell alcohol-related paraphernalia, like wine stoppers,
bottle openers wine glasses, shot glasses, mixers, and other related items.
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Wine Shop/Business
5. What Is The Growth Potential For A Wine Shop?
Clients and customers for wine stores are usually in the local community.
Wine stores typically run local advertising if they don’t have an Internet presence.
Otherwise, they may run online ads to attract business.
Coupons and flyers are still common practice in the industry.
6. What Are Some Skills And Experiences
That Will Help You Build A Successful Wine Shop?
This type of business can be run as a small or large-scale operation.
Most chain stores, like Total Wine, operate by buying,
a high volume of inventory that they believe has mass market appeal.
Smaller wine shops typically cater to connoisseurs,
who may be looking for specialty wines or particular vineyards.
It’s not unusual, for example,
for small wineries and wine stores to be family owned and operated.
These small wine stores and wineries are usually located next to,
or on vineyards and the wine is made in-house and sold in their store.
For example, Lakewood Vineyards is a family-run winery in upstate,
New York which also runs a wine store where they make, bottle, and sell their own wine.
To run this type of wine store,
a business owner would have to purchase a vineyard and learn how to run it.
Wine resellers, on the other hand, don’t need to be quite so involved.
They may contract with wineries to sell their wine.
Under this arrangement, the winery will usually sell the wine store their varietals,
and blended wines at special wholesale pricing for volume purchases.
The reseller then marks up the bottles and sells them to the general public.
Resellers can also buy from larger distributors.
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Wine Shop/Business
7. What Are The Costs Involved In Opening A Wine Shop?
To be successful in the wine business, an entrepreneur will find,
a background in accounting helpful because of the thin margins in the industry.
In many states, alcohol is tightly regulated, licensing is strict,
and paperwork is plentiful. Some states, like North Carolina,
do not allow private ownership of liquor stores,
so wine stores are restricted to selling wine and beer.
So, business owners entering this industry.
Need to be willing to deal with regulators and bureaucrats constantly.
They also need good business sense and organizational skills to manage what can be,
at times, a complex ordering and distribution process.
States also require stores to hold a liquor or alcohol license before they can sell or distribute alcohol.
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Wine Shop/Business
8. What Are The Steps To Start A Wine Shop?
Once you’re ready to start your wine shop,
follow these steps to ensure that your business is legally compliant,
and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your wine shop is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your wine shop keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
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Wine Shop/Business
9. Should You Consider Joining A Franchise?
Joining a wine shop franchise can be a good option for entrepreneurs,
who prefer to use a proven model rather than start from scratch.
While joining one can mean slightly higher initial costs and less control,
a quality franchise offers great benefits such as initial and ongoing support,
marketing assistance, and brand recognition.
Opening a wine shop franchise typically requires $200,000-$500,000.
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Wine Shop/Business
10. Where Can I Find A Business Mentor?
One of the greatest resources an entrepreneur can have is quality mentorship.
As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times,
is a major factor of success for new business owners.
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Wine Shop/Business
11. How To Promote & Market A Wine Shop
Costs for a small startup wine store can range from $50,000 to over $300,000.
Your first year’s revenue may be negative, depending on your location.
This is a business that can take a few years to turn a profit.
Wine Shop/Business
12. How To Keep Customers Coming Back
Marketing is typically local advertising.
In some states, advertising may be restricted.
However, wine stores usually enjoy repeat and referral business from a loyal customer base.
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Wine Shop/Business
13. How And When To Build A Team
Wine stores sometimes find it difficult to differentiate themselves from other stores.
This can be, in part, due to government regulation of the industry.
However, a wine store can generally compete by marketing itself to a select market,
or implementing themed events.
For example, a wine store might organize wine flights from various regions around the world,
and host them several times per month or during different seasons.
Wine Shop/Business
14. Liquor Licensing
Businesses involved in the sale of alcoholic beverages are required to obtain,
a liquor license from the appropriate state or local agency.
- A comprehensive list of laws by state (including necessary licenses, zoning laws, etc), curated by the Alcohol and Tobacco Tax and Trade Bureau, is included here.
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Wine Shop/Business
15. Certificate Of Occupancy
A wine shop is generally run out of a small retail location.
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).
A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a retail location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a wine shop.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build your wine shop:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your wine shop business will be in compliance and able to obtain a CO.
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Wine Shop/Business
16. How Much Can You Charge Customers?
A wine store can start out as owner-operated and stay that way forever (for the most part).
However, entrepreneurs who want to grow,
and expand find it difficult to operate without an administrative team,
with a background in accounting and bookkeeping.
Profit margins on alcohol can be extremely thin due to wine being heavily regulated.
Salaries for store clerks are typically minimum wage.
Management might make between $20,000 and $50,000 per year,
while the owner may make $80,000 to $100,000 per year.
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Wine Shop/Business
17. What Are The Ongoing Expenses For A Wine Shop?
The wine stores charge their customers per bottle of wine,
or based on volume sales (e.g. case discounts).
Pricing may be restricted by state.
Fixed costs can include:
- Building lease: $30,000 – $50,000
- Administration: $20,000
- Salaries: $80,000 – $150,000
- Tastings: $3,000 – $5,000
- Inventory: $25,000 – $50,000
- Marketing: $5,000 – $25,000
Variable costs can include cost of goods sold (COGS) exceeding $190,000 in the first year.
Wine Shop/Business
18. How Much Profit Can A Wine Shop Make?
Profit margins can be extremely thin on wine sales depending on the state you live in Colorado,
for example, has very strict laws on the sale and distribution of alcohol.
Other states may allow higher margins.
It’s not unusual for wine stores to seek a 30 to 50 percent margin.
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Wine Shop/Business
19. How Can You Make Your Business More Profitable?
Making a wine store more profitable often involves growing and expanding the business.
Identifying a niche or underserved market is also helpful.
However, successful wine stores typically have one thing in common.
They have a theme. Large wine sellers, like Total Wine, for example,
sell wine at a discount and appeal to a mass market.
Other wine stores may choose to focus on wines from a specific region of the country.
Whatever theme you choose, make sure you have little or no competition in your local area.
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