Buying a liquor store!

AdamD

Good afternoon everyone! I am in negotiations for the purchase of a liquor store. Does anyone have any experience in owning a liquor store? This would be my first one. I have done a lot of research and like what i see. The last 3 years in a row have gross sales of a little over $700k with a 5-8% increase annually. Owners discretionary cash flow is around $130k.
The purchase price is going to be about $250k + inventory of $50k.

1. Does anyone have any experience to offer up some guidance?

2. If i want to finance 100% of the business..is that possible? Can i finance the inventory in with the purchase price?

Thank you for any help you may be able to offer.

BJMcCray

Hi, Adam. Hopefully, I can help a bit. My husband and I own a liquor store in Oklahoma. Without getting into specific numbers, our business is a good business, and I have read that liquor stores have a higher success rate than the average business. It`s good that the sales show an increase each of the last three years. It`s easier to continue building on a positive trend, rather than trying to turn around a decline! Whether you can finance 100% is up to the current owner or the financial institution who loans to you. We were able to, but we bought from a family member and that makes a big difference. A huge factor in liquor operations of any kind is the legal requirements. Get to work right away researching the applicable laws. You may find that you are limited on how you finance your inventory. Try calling a few other stores in your state, but far from your own location. They may be willing to share a bit of insight. You may also have a state liquor store association that can offer some help or info. It`s worth checking into. Once you are in business, several free trade publications will come to your store each month. These are quite valuable for gaining info quickly. Read them! No matter what, be sure you comply with all the laws and regulations. Good luck!

lkennedy

Hello BJ. I saw in your post you own a liquor store in Oklahoma and my husband and I are wanting to open a liquor store in the same state. Are there any specific web-sites you recommend in regards to legal requirements when owning a liquor store in Oklahoma; also what do you think a reasonable amount would be to spend on inventory start up; and do you recommend leasing or purchasing a building? Thank you, any advice would be greatly appreciated.

RanksIntl

Hello Adam and lkennedy,
 
Liquor stores are definitely one of the few businesses that can grow even in not the best economic times (look at the Great Depression).  Anyway,  if you can give me an idea of where you are in your negotiations and your experience that would be helpful.
 
Getting 100% financing will be difficult and it may take muliple lenders who are going to want to see what you have to offer.  
 
I specialize in small business start up and expansion so if you can give me more information I can give you insight and possibly offer any services that you may need.  You can email me at [email protected].
RanksIntl5/29/2009 12:39 AM

BJMcCray

lkennedy, the easiest way to get the legal requirements is to call the Oklahoma ABLE Commission and ask for the liquor store license application packet. (1-866-894-3517 - http://www.ok.gov/able/ )
Your initial inventory amount can be as much or as little as makes sense in your market. It depends on the size of your town, the number of competitors, and honestly what you can afford to purchase. A few thousand dollars might do it, if you are going to bootstrap your way up. Ten thousand is a probable minimum, and it can range right on up to really big numbers in a hurry.
You`ll have to decide about leasing or purchasing on your own. Locations that meet the legal requirements (set backs from schools, church properties, etc.) can be tough to find, so you may have to take whatever you can get.

bigcitylife

I would like to ask you a few questions about opening a liquior store and some of the requirements.. If I open one up can I hire someone that has a felony against them or do you know. And does everyone that works for you have to have a license to sell it? I know I would have to have a license different than a person that would be just working in it for me right?  You could help me alot if you would answer some of my questions.. Does a liquior store really make that much of a profit and the space I am looking at isn`t that big I would say 10 by 20 or 30ft. Is there a certain footage I have to have to open on up in Oklahoma. I am from Oklahoma that is why I am asking someone that is from Oklahoma an I run onto your comment... hope you can help me. About how much is a  license if I apply for one?

BJMcCray

People with certain felonies can be licensed clerks in Oklahoma. Every person who works as a clerk does need a license, and yes, of course the retail store owner requires a special license. The amount of the license fee varies by the size of the town you`ll be located in. 
The space you are looking at sounds very, very small to me, but I`ve seen stores that were around that size.
I hope I`ve given you a start, but you must do your own research.  Start with the ABLE Commission. You`ll find them at http://www.ok.gov/able 

infinique1

I think you can easily get a bank loan if you use the inventory as collateral.

zzzchris

I hate to sound negative but remember your holding a state license to uphold the State and federal laws from the ABLE. The primary licence holder should not actually ever work at the store so if a mistake in sales to a minor is made they won't lose their licence and the doors will stay open. Remember if this occurs you will be handcuffed and taken to jail for committing a State crime and felony. between bonds lawyer fees and court cost you or your employee can be out thousands.
A small store could produce sales from 300 to 1200 on a good day. The average mark-up is around 34% if you can keep your shelf's stocked. And remember if you buy less than a case there is a per bottle handling charge.