Liquor Store Business Plan
Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their own liquor stores. On this page, we will first give you some background information with regards to the importance of business planning whether you are opening a new liquor store business or expanding an existing business. We will then go through a liquor store business plan template step-by-step so you can create your business plan today.
Purpose of a Liquor Store Business Plan
A liquor store business plan will help you meet the typical challenges of operating a new liquor business and control your store’s growth in a logical and organized way. It will also prove to outside investors and lenders that your liquor store is a good financial risk.
Your business plan provides an overview of your liquor store as it exists today, as well as a defined growth plan for the next three to five years. It explains your business goals, identifies key obstacles, and provides solid strategies for meeting your goals. It is a living document that should be updated regularly as your liquor store grows and evolves.
Sources of Funding for Liquor Stores
Bank loans and angel investors are the most common sources of secure financing for a liquor business.
Banks will want to review your liquor store business plan and be confident that you can repay your loan and interest. To gain this trust, the loan officer won’t just want to ensure that your financials are reasonable; they’ll also need a competent strategy. Such a strategy would provide them with confidence in your ability to run a company successfully and professionally.
Angel investors are the second most popular type of safe money for a liquor store. Angel investors are individuals who have lots of money and will give you a check. They will either take an ownership stake in return for their cash or, like a bank, extend you a loan.
How to Write a Business Plan for a Liquor Store
The liquor industry is highly competitive, which requires liquor store owners to put extra effort into setting their stores apart from other businesses. The liquor industry also changes frequently, so you must be willing to evolve your liquor store’s strategy as well. Such conditions make it all the more important to write a liquor store business plan that lays out your liquor store’s future.
The following sections should be included in all business plans:
Your executive summary provides an overview of your business plan, but it is normally the last section you write because it provides a summary of each key section of your business plan. Investors and lenders will use this section to decide whether to read on, so make it count.
The goal of your Executive Summary is to quickly engage the reader. Briefly describe your liquor business, including the type you are operating and the status. For example, are you a startup? Do you have an existing liquor store that you would like to grow? Or, are you operating a chain of liquor stores?
Next, provide an overview of each of the subsequent sections of your business plan. For example, give a brief overview of the market analysis proving that an unfilled need exists and your store’s unique qualifications to meet that need. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing strategy and plan. Identify the key members of your team. Finally, offer an overview of your financial plan and sales projections.
Company Description & Overview
In the company description, detail the type of liquor store you are operating and how it exists in the present moment.
In addition to explaining the type of liquor store you operate, the Company Description section of your business plan needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include partnering with a reliable supplier for a volume discount, securing a significant amount of funding, new store openings, etc.
- Your business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal business entity here.
- Your unique qualifications to compete in the industry. This might include sole distribution of a local winery’s new products or you offer an elegant patio to hold weekly tasting parties.
In your industry analysis, you need to provide an overview of the liquor business. This process can be confusing because most average-sized cities have numerous liquor businesses. However, you only need to focus on your relative market or niche where your liquor store fits.
While this may seem unnecessary, it serves multiple purposes.
First, researching the liquor industry educates you. It helps you understand the market in which you are operating.
Secondly, a market analysis can improve your strategy particularly if your research identifies trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your business plan, you achieve just that.
The following questions should be answered in the industry analysis section of your liquor store business plan:
- How big is the liquor industry (in dollars)?
- Is the market decreasing or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth potential over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your liquor business. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local or regional population.
Discuss the ways you will dominate your niche. You may consider the following questions:
- Will you specialize in hard-to-find liquors?
- Are you connected to your town’s tourism market?
- Is your business a small corner store where people stop on their way home from work?
Research the current trends and future projections for your segment of the alcohol industry, and develop a strong plan for overcoming any identified hurdles.
The customer analysis section of your liquor store business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: young adults, wealthy connoisseurs, craft beer drinkers, working-class beer drinkers, tourists, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of liquor business you operate. Clearly, wealthy connoisseurs would want a different atmosphere, pricing, and product options, and typically respond to different marketing promotions compared to young adults.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the customers you seek to serve. Because most liquor businesses primarily serve customers living in the same neighborhood, city, or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers. Consider the following:
- Do your customers see your liquor store as a place to get in and out of quickly, or a spot to see and be seen on a Saturday night?
- Do they purchase one or two bottles for home consumption, or buy in batches for weddings and corporate events?
Narrow down your customer demographics as precisely as possible, and identify their unique needs. Then create a plan for meeting those specific needs.
This section should identify the indirect and direct competitors your liquor business faces and then focus on the latter.
With regards to direct competition, you want to detail the other liquor stores with which you compete. Most likely, your competitors will be other retailers of liquor within the neighborhood or within a certain radius of your store.
Indirect competitors are other options that customers have to purchase from you that aren’t in the same target market or industry but may offer similar products or services. This primarily includes grocery stores, bars, local breweries, and other places that serve alcohol. You need to mention such competition to show you understand that not everyone who drinks alcohol frequents a liquor business.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What products do they offer?
- What is their pricing (premium, low, etc.)?
- What are their strengths?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective.
The final part of your competitive analysis section is to document your competitive advantages. For example:
- Will you provide superior alcohol products?
- Will you provide alcoholic beverages that your competitors don’t offer?
- Will you provide better customer service?
- Will you offer competitive pricing?
Think about ways you will outperform your competition and document them in this section of your business plan.
Traditionally, this section includes the four P’s: Product, Price, Place, and Promotion. For a liquor store business plan, you should include the following:
In the product section, you should reiterate the type of liquor business that you documented in your Company Analysis. Then, detail the brands and specific products you will be offering. For example, you may sell Hebrew beers, Bud Light Lime, etc.
Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections, you are presenting the items you offer and their prices. Make sure you are pricing products to sell, provide a healthy profit margin, and offer an additional competitive advantage to your patrons.
Place refers to the physical location of your liquor store. Document your location and mention how the location will impact your success. For example, is the location on a major road, highway, or intersection? Will it be easy to park at your liquor store?
The final part of your marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Attractive Storefront for Passing Customers
- Establish a Web Presence
- Social Media
- Banner Ads at Local Venues
- Discount & Coupon Promotions
- Local Newspaper Ads
- Local TV & Radio Advertising
- Community Events
Finally, any good marketing plan includes a plan for retaining your loyal customers. This may include the following:
- Birthday Club
- Regular Customer Promotions
- Customer Loyalty Program
Once you’ve obtained the customer sale, make sure you’re finding additional ways to keep them coming back.
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your neighborhood liquor store such as ordering alcohol, unloading deliveries, stocking shelves, labeling liquor bottles, following state regulations, and maintaining strict control to prevent shrinkage (loss due to theft or breakage). Document all of these tasks in your operations plan so employees know the expectations for their role on the liquor store team.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your X,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch in new markets.
To demonstrate your liquor store’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to expand a liquor company.
Ideally, you and/or your team members have direct experience in the alcohol business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board or hiring a business advisor. This individual or group of individuals would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in liquor stores and/or successfully running a small business or retail store.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to create a sales forecast. For example, will you serve 20 customers per day or 100? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $50,000 on building out your liquor store, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your projected cash flow statement will help determine how much funding you need to start or expand your business and make sure you never run out of money. What most entrepreneurs and small business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a $100,000 contract that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for liquor supplies. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key start-up expenses:
- Location build-out including design fees, construction, etc.
- Cost of store equipment including shelves, display cases, etc.
- Cost of goods sold
- Payroll or salaries paid to staff
- General liability and business insurance
- Taxes and permits
- Legal expenses
- Other expenses including a liquor license, business licensing, workers’ compensation, etc.
Financiers also look for a solid exit strategy that shows a deep understanding of the target market and willingness to capitalize on profitability.
Attach your full financial projections in the appendix of your business plan along with any supporting documents that make your business plan more compelling. For example, you might include your store design blueprint or location lease.
Putting together a new business plan for your own business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the industry, your competition, your business operations, and your potential customers. You will have developed a marketing strategy to reach your new customers, and will really understand what it takes to launch and grow a successful liquor store.
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Liquor Store Business Plan FAQs
Growthink's Ultimate Liquor Store Business Plan Template allows you to quickly and easily complete your Liquor Store Business Plan.