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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on March 19, 2023
Investment range
$46,600 - $96,000
Revenue potential
$140,000 - $280,000 p.a.
Time to build
1 – 3 months
Profit potential
$56,000 - $112,000 p.a.
Industry trend
Growing
Commitment
Full-time
Here are the most important factors to consider when you want to open a wine shop:
Trends
Challenges
The most popular red wine varieties are:((https://today.yougov.com/topics/consumer/articles-reports/2019/11/05/most-popular-best-wine-poll-survey))
The most popular white wine varieties are:
Startup costs for a wine shop range from $46,000 to $96,000. The largest expenses are your initial inventory and operating budget.
You’ll need a handful of items to launch your wine shop, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $100 - $500 | $300 |
| Business licenses and permits | $500 - $3,000 | $1,750 |
| Insurance | $100-$500 | $300 |
| Location rental and setup | $5,000 - $10,000 | $7,500 |
| Initial Marketing Budget | $200 - $500 | $350 |
| Initial Inventory | $25,000 - $50,000 | $37,500 |
| Glassware | $700 - $1,500 | $1,100 |
| Initial Operating Budget | $15,000 - $30,000 | $22,500 |
| Total | $46,600 - $96,000 | $71,300 |
Wine shop profit margins are usually a robust 40%.
In your first year or two, you might sell 10,000 bottles per year at $14 per bottle, bringing in $140,000. This would mean a nice $56,000 in profit, assuming that 40% margin. As your store gains recognition, sales could climb to 20,000 bottles a year. With annual revenue of $280,000, you’d make a tidy profit of $112,000.
You can also bring in additional revenue from wine tasting events.
There are a few barriers to entry for a wine shop business. Your biggest challenges will be:
Now that you know what’s involved in starting a wine shop, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers, their preferences and desires, as well as the business landscape
It’s worthwhile to take some time to analyze your main competitors, locally and online, to identify opportunities and gain a better understanding of the market.
This should identify areas where you can improve your business and gain a competitive edge. What’s more, knowledge of the market will help you make better business decisions.
You’re looking for a market gap to fill. For instance, maybe the local market is missing a wine shop with an extensive selection of French wines, or a wine shop that offers a wine club with special events and discounts.
You might consider targeting a certain aspect of your industry, such as European wines or South American wines. This could jumpstart your word-of-mouth marketing and attract clients right away.
Talk to your potential customers about which wines they prefer, what they might be finding in the area and why they would frequent your shop. Examine wine trends in your area.
A wine shop has mostly local business, so examine what kind of people live in the area to determine what they might like. Wealthy districts might prefer fine French or Italian wines, while a college area might tend toward lower-priced California wines.
You could boost revenue with wine tastings, wine and tapas nights, or starting a wine club that offers members several bottles at a discount for a monthly fee. You could also do online sales and local delivery.
The average price of a bottle of wine is $14, but prices vary greatly based on variety, region, and age. Examine competitor prices in your area to see their typical markups. Then look at your costs for different types of wines.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market is going to tend to be local, so again, look at who lives and shops in your area. Is it a younger demographic you might find on TikTok, or is it a more established market that spends more time on Facebook and LinkedIn?
You’ll need to find a suitable space for your wine store, preferably in an area with high foot or street traffic. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademarking process, and complete your domain registration and social media account creation.
Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to wine shops.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your wine shop will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a wine shop. You might also try crowdfunding if you have an innovative concept for your shop.
Starting a wine shop requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You’ll need to obtain the appropriate liquor licenses for your state and local governments. You may also need other state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your wine shop business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Wine Software or Magstar, to manage your inventory, transactions, purchases, and customer lists.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace.
This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.
Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now” or “Order” if you’re also selling online. This can sharply increase purchases. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your wine shop meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your wine shop business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a wine shop business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in wine shops for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in wine. You’ll probably generate new customers or find companies with which you could establish a partnership.
As your business grows, you will likely need workers to fill various roles. Potential positions for a wine shop business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Starting a wine shop takes some capital, but it can pay off in a big way, both financially and from the rewards that come from sharing your passion. A third of Americans drink wine at least monthly, so you should be able to generate a steady stream of customers.
Now that you have the business part down, you’re ready to start your entrepreneurial journey and build a lucrative wine shop that will be the local go-to spot for wine connoisseurs!
A wine shop can be very profitable if you understand the business and how to mark up wines. It can also make significantly more revenue by holding wine tasting events or even having a wine bar.
An active wine shop owner spends the day ordering inventory, assisting walk-in customers, hosting wine tasting events, and perhaps tending the wine bar. They also manage employees and do the accounting.
Wine is an industry that will never go away, so it will always be in demand. A successful wine shop can also grow by adding new locations.
You could start a wine shop on the side if you want to hire people to manage it for you, but that’s going to make your wine shop much less profitable. You could start an online wine shop on the side, but online wine sales come with certain restrictions.
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