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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 5, 2022
Investment range
$7,950 - $62,800
Revenue potential
$200,000 - $730,000 p.a.
Time to build
1 – 3 months
Profit potential
$50,000 - $75,000 p.a.
Industry trend
Growing
Commitment
Full-time
Here is what you will need when opening a liquor store:
Starting a liquor store has pros and cons to consider before deciding if it’s right for you.
Trends
Challenges
You can start an online liquor store for about $8,000. Costs include licensing, a website, and inventory. To start a physical liquor store, you’ll spend $60,000 or more to rent the space and stock the store.
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150–$200 | $175 |
| Business licenses and permits | $1,500–$3,000 | $2,250 |
| Insurance | $100–$300 | $200 |
| Business cards and brochures | $200–$300 | $250 |
| Website setup | $1,000–$3,000 | $2,000 |
| Location rental | $0–$3,000 | $1,500 |
| Space preparation | $0–$3,000 | $1,500 |
| Inventory | $5,000–$50,000 | $27,500 |
| Total | $7,950–$62,800 | $35,375 |
Your average sale per product should be about $20. Your profit margin from an online store should be about 25%. If you have a physical location, it will be about 10%.
In your first year or two, you could work from home and sell 200 products online per week, bringing in more than $200,000 in annual revenue. This would mean $50,000 in profit, assuming that 25% margin. At this stage, you might open a physical liquor store and hire staff, reducing your margin to 10%. Your sales could increase to 100 products per day. With an annual revenue of $730,000, you’d make nearly $75,000.
There are a few barriers to entry for a liquor store. Your biggest challenges will be:
Now that you know what’s involved in starting a liquor store, 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 better, who your competitors are, and your business landscape.
Research liquor stores in your area and online to examine their products, price points, and what sells best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a liquor store that stocks all the latest pre-made cocktails and seltzers.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as craft beer or high-end wine.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll need to look at the most popular types and brands of liquor to decide what to stock. You’ll also need to decide if you want to sell beer and wine, as well as liquor. You could also offer tobacco products and food items to increase revenue.
Your prices will depend on the prices you pay to distributors. You’ll mark up those prices by 25% to 30% to get your retail prices. When you have a physical store, your expenses will be rent, overhead, and labor. You should aim for a profit margin of 10%.
Once you know your costs, you can use our 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 will be anyone over 21. You should spread out your marketing to include sites like TikTok, Instagram, and Facebook.
Choosing the right location for your liquor store is critical. It can make a significant difference in attracting customers and building a successful business. Consider factors such as visibility, accessibility, demographics, and competition when deciding on a location.
Look for a spot that is easily visible and accessible to potential customers. Analyze the surrounding demographics to ensure there is a demand for a liquor store in the area.
Additionally, be mindful of the level of competition nearby. By carefully evaluating these factors, you can select a location that enhances the potential for success of your liquor store.
In the early stages, you may want to run your business from home as an online store to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and will rent out a storefront. 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:
Discover over 320 unique liquor store name ideas here. If you want your business name to include specific keywords, you can also use our liquor store name generator. Just type in a few keywords, hit the Generate button, and you’ll have dozens of suggestions at your fingertips.
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 with 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’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to liquor stores.
If you’re willing to move, you could really maximize your business! Keep in mind that 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 liquor store 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, by mail, or by fax. Visit the IRS website to learn more. Keep in mind that, 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’re 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 options, other than friends and family, for funding a liquor business.
Starting a liquor store business requires obtaining a number of licenses and permits from local, state, and federal governments.
You’ll need a liquor license and specific liquor permits at the state and local levels. Check with your local governments for requirements.
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 may also need 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 liquor 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 Fishbowl, KORONA, or POS Now, to manage your ordering, purchasing, inventory, invoices, sales, and payments.
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 website builders. 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.
However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Marketing strategies for a liquor store should aim to build a strong local presence, establish brand recognition, and foster a community of loyal customers. Here’s a structured set of creative marketing ideas.
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today, customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your liquor store 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 liquor store 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 liquor business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in liquor 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 liquor. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a liquor 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.
Liquor stores have always been busy, but the industry started booming in 2020 and is continuing. Liquor is a $81 billion industry, so why not open your own liquor store and get a piece of the action? You can start an online store for far less than a physical store, then open a brick-and-mortar store later and maybe start franchising and go nationwide.
Now that you’re loaded with business knowledge, it’s time to finalize your plan and launch your new liquor store!
Yes, a liquor store in a good location can be profitable. You do, however, need to do a high volume of business to make money because profit margins are low.
To handle competition in the liquor store industry, provide exceptional customer service, offer a wide selection of products, implement a loyalty program, provide unique services, and stay up to date with industry trends.
The minimum age requirement for opening a liquor store varies by location and jurisdiction, as laws and regulations governing the sale of alcohol are set by each individual state or country. In the United States, for example, the minimum age requirement to sell alcohol varies from 18 to 21 years old depending on the state.
In some states, there may also be additional requirements for owning or operating a liquor store, such as obtaining a license or permit from the state or local government. These requirements may include background checks, training courses, or proof of financial responsibility.
Therefore, if you are interested in opening a liquor store, it’s important to research the specific laws and regulations in your area to determine the minimum age requirement and any other requirements for obtaining a license or permit.
The average hours for a liquor store can vary depending on the location and local laws and regulations. In general, liquor stores tend to be open for several hours each day, often from mid-morning or early afternoon until late evening.
In the United States, for example, many liquor stores are open from around 10am or 11am until around 9pm or 10pm, although there can be considerable variation depending on the specific store and location. Some stores may open earlier or stay open later, particularly on weekends or during the holiday season.
In the United States, “ABC” typically stands for “Alcoholic Beverage Control,” which is a government agency responsible for regulating the sale and distribution of alcohol. In some states, the agency is known as the “Alcohol and Tobacco Control” or “Alcohol Beverage Control” agency.
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