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  Home > Discussions > Liquor Store Ownership: What Buyers Should Know Before Buying

Blog Post Liquor Store Ownership: What Buyers Should Know Before Buying

Initiated By: Spencer Siegel: BBN Facilitator at 925-701-8064 X315, 925-784-6747 (Cell) - Log In To Message/Email This Contributor

Comments & Replies: 1   Topics: business valuation, buying a business, due diligence, liquor license

Discussion Description: Liquor stores, like all small businesses, have their own nuances of ownership. In this BBN discussion, we cover things potential owners/buyers of liquor stores should know and think about in order to find success during the due diligence process and ultimately when running a liquor store business.

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With any business, financials are always important to the owner, but for liquor stores owners (as it is retail) keep a watchful eye on gross profit and expenses. An owner that understands margin and pricing strategies will succeed. A great way to save money as a liquor store owner is purchase inventory at well-priced "drops" to get the best bulk deals from distributors.

When purchasing inventory, it is important to keep monthly sales trends in mind, seasonal holidays will increase sales, but January and February are slower months. Even from the start inventory is key to the success of a liquor store, owners will usually have to buy an additional $50,000 to $100,000 of inventory when buying a store to be competitive. If there is enough capital, it is best to buy one liquor store and then operate it for 6 months before buying two more stores, economies of scale will allow less in-store working hours and buying larger bulk orders that are more cost effective.

One of the biggest things that come with owning a liquor store is the long hours. Many liquor stores, especially ones making less than $500,000 in sales annually, require owners to work 7 days a week for up to 80 hours. Along with requiring long hours, liquor stores are a retail business and will have owners interact with customers.

Owners with good customer skills will help their business become well established and experience return customers more often than stores with owners that do not try to deliver good customer service. Since liquor stores can be intensive most of the time it is not advisable to buy one during busy holiday seasons if you do not have experience running one. While employees can help run a liquor store, there is an issue of employee-theft along with normal customer-theft.

Three big ways to make more in net income is by selling wine and having knowledge of it (wine is trending, and gross profit margins are higher), having the lottery to bring in traffic, and controlling occupancy cost through owning store real estate.

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Contact: Spencer Siegel at 925-701-8064 X315, 925-784-6747 (Cell)   Log In To Message/Email This Contributor
Profile: I have worked with business buyers, owner/sellers, agents, brokers & advisors on BizBenNetworks sister website for the last 5 years as a facilitator, moderator, and optimizer of postings and website content. Let me assist you with achieving success in either selling or buying a business.
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