6 Things to Keep In Mind When Buying a Liquor Store
Liquor stores have proven to be stable businesses that are not heavily affected by economic changes, and are easy to run hands-off. Although it is true that liquor stores are stable, some changes in the industry are important to keep in mind before deciding to run an absentee business.
In recent years, negligence from owners in having proper licenses for the business has resulted in the top reason why liquor stores close or are sold to new owners. A few things you should consider:
- Licenses Change Per Location: When buying a liquor store, keep in mind that different cities and states have different regulations and requirements for licenses. Do your research to make sure you are in compliance to avoid any potential issues or fines.
- Licenses Are Traded Per Locale: Sometimes the cost of the business may be significantly lower than he cost of the licenses. This is because depending on the demand of the area, licenses can be traded openly like a stock market, sometimes bringing the cost to hundreds of thousands of dollars.
Inventory is essential in a liquor store’s success. Having great variety and current products that are popular will increase your sales.
Liquor stores are normally valued on location, licenses and inventory. Although this is common knowledge for most buyers, it is something that has to be taken into account prior to a sale.
Not An Absentee Run Business
Unlike common belief, liquor stores are not the ideal business if you are looking for an absentee run business. Some factors that prevent it from being so are the amount of cash handled in-store, proneness to crime and theft, and long operating hours. Not having a grip on these things as a business owner can prove problematic if you don’t have a trustworthy staff that you can rely on.
Variety is King
Due to changing preferences and tastes from customers, not having variety in your liquor store will lower your overall profits, and as a matter of fact, may even hurt your store’s reputation for other potential customers.
Online presence and reputation is a real clincher for new clientele. Having a positive reputation for variety and good choices will generate tremendous new business for you.
Location and Convenience
For most new customers, location is the most important factor as it is more convenient to stop at the liquor store that is easily visible and accessible. However, if location is not on your side, focus on great reputation through great choice. Customers who are looking for choice will not mind going to your location, regardless of how easy it is to find.
Also, research the area for crime rates and good visibility for you. Darker locations with less visibility tend to attract more crime and theft.
Look Closely Into Financials
Book keeping is important for any business, but so much more for liquor stores. Liquor stores have a bad record for book keeping. With so many cash transactions being handled daily, it’s easy to overlook an important portion of income or expenses.
When looking into financials, make sure you look at cash transactions. If there are none to be found, you can assume the business owner is not reporting. This is a notable gap to leave up to guessing, especially because it could also indicate that employees are stealing money from the business as well.
Understanding the business’ financials to its fullest is the most important tool you will have in your favor, do not overlook this information.
Why Jan Wild?
If you are interested in buying a liquor store, contact Jan Wild for professional help with over 35 years in the industry. Jan will help you find a smart investment that makes sense for you.