You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your wine shop. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
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.
Read our wine shop purchasing guide to learn about the materials and equipment you'll need to start a wine shop, how much to budget, and where to make purchases.
What are the ongoing expenses for a wine shop?
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.
Who 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.
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.
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.
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.
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.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your wine shop is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: 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.
STEP 6: 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.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
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.
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.
STEP 7: 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.
STEP 8: 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.
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.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
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.
STEP 9: Establish your 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.
Start A Wine Shop In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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.
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.
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.
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.
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.
Interested in joining a wine shop franchise? Check out our favorites.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
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.
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.
Read our wine shop hiring guide to learn about the different roles a wine shop typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.