3 Things to Consider When Buying a Liquor Store

Posted On: / By: Brian Knoderer
Buying A Business

Owning a liquor store can be an excellent business opportunity. It is no secret that liquor store businesses have flourished more than expected in the last year due to the COVID-19 pandemic, especially as they were declared an essential business. To stay compliant with all regulations, liquor store owners have to pay special attention to a wide variety of factors. From managing your inventory to understanding state-specific legislation, there are many things you need to know before buying a liquor store.

Top Considerations to Make When Buying a For Sale Liquor Store

Liquor store businesses grew a whopping 13% in 2020. Leaping into this industry can be very beneficial for the right buyer, but you must be diligent in your preparations.

1. Understanding Your Tax and Legal Obligations

One of the first steps new owners must take is applying for a liquor license through their state’s alcohol control board. This cost can vary depending on the state, ranging from $115 in Vermont to nearly $14,000 in California.

Liquor stores also face much higher taxes for spirit sales than convenience stores, grocery stores, and other competitors pay for wine and beer. When in operation, you’ll be expected to pay the Alcohol Excise Tax from the Alcohol And Tobacco Tax And Trade Bureau, which places a fee per proof gallon of alcohol on liquor sales. This fee can range from $2-$7 in most states to over $33 in Washington.

Obtaining new licenses and assessing tax duties are just two factors that liquor retailers must consider from the government regulation side of things alone. It’s recommended you consult with an advisor to understand all of your legal obligations best.

2. Setting Your Store Up For Success

As previously mentioned, receiving a liquor license is one of the first things business owners have to worry about when purchasing a new liquor store. The process varies depending on the liquor store aislestate you intend to operate in, so be sure to review your specific fees and obligations beforehand.

Inventory management is another large step to launching a successful liquor store. It is essential to understand your target market and have an idea about the types of products you should regularly stock up on. Plus, if you’re buying an existing liquor store, you’ll want to evaluate relationships with distributors to see if you can create better profit margins for your new business.

The last thing to consider when starting your store is whether there are any opportunities to grow. Whether you are starting from the ground up or buying an existing business, consider ways to best target your demographic. For example, social media is one avenue that can be used to reach a new audience.

3. Financing Options

Another major consideration is how you will cover the starting costs of your retail business. Due to the high costs of owning a liquor store, seeking financial assistance is imperative to hit the ground running. Acquiring a small business loan from a bank or financial institution is one possible way to finance your store. This type of loan is dependent on the borrower’s credit history and collateral, as well as their overall business plan. While it may not cover all costs, a small business loan is a great way to receive a financial boost.

Another option would be a loan through the Small Business Administration. SBA loans are typically more long term and have lower interest rates than other lenders. However, these loans can take longer to receive.

There are many factors to consider when becoming the new owner of a liquor store. If this business venture is something you see yourself doing, reach out to Sunbelt Business Brokers to receive guidance through the buying process. Get more information about buying a business in the liquor industry today!

Brian Knoderer is the President of Sunbelt Business Brokers. He has over 20 years of experience as a business owner and managing business transactions. As a seasoned intermediary, Brian has successfully represented companies in a broad range of industries helping business owners achieve their desired exit strategy or growth initiative.

Brian is also co-owner of Sunbelt Indiana and Managing Director of MMI Capital Partners, a franchisor focused investment banking firm.

Previously Brian was involved in several entrepreneurial ventures as well as having held corporate roles in Franchise Development for Prime Hospitality and Choice Hotels.

Brian is a graduate of Ball State University with a degree in Management Information Systems and earned his MBA from Butler University. He has received the Certified Merger & Acquisition Advisor (CM&AA) designation, holds both the Series 7 – General Security License and the Series 63 – Uniform Securities Licenses, and is a licensed Real Estate Broker. He has been affiliated with several organizations including the Entrepreneur Organization, a Member of the International Business Brokers Association, Venture Club, and a Board Member of The Entrepreneur Institute.

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