Liquor or alcohol stores can be a profitable business for the right entrepreneur in the right location. According to the Internal Revenue Service, 68 per cent of businesses in this sector report a profit. However, according to the same report 89.1 per cent of income goes toward business expenses. A relatively low net profit margin means the initial cost of a alcohol store business is crucial. Unfortunately, there is no easy answer exactly how much capital you need to open an alcohol store. Nevertheless, a study of the main determining factors will help you estimate the cost.
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In the United States the sale of alcohol is a highly regulated industry. The responsibility for licensing the sale of alcohol is shared by municipal, state and federal agencies. In some states you only need a license from one of these authorities, although in most cases you need approval from at least two of them. Simply applying for a license can be a lengthy and expensive exercise. You can cut costs if you do your own paperwork, but you must still pay for filing fees. For example, in South Carolina non-refundable filing fees alone are £130.
If your application is approved and there is an opening for a license in your area, you must pay for the license. The cost of a license is established by local government within limits set by the state. Limits vary widely from one state to another. Prices also vary depending on the type of license you want for your alcohol store. For example, in Virginia a store selling beer for off-premises consumption must pay a £78 license fee, while a wine and beer off-premises fee is £149. However, in Wisconsin a class B license, which allows for the sale of alcohol for on- and off-premises use requires a one-time fee of at least £6,500. Some regions have higher fees that run into six figures.
The cost of a storefront also varies depending on the state and county you live in and the location's desirability. Locations close to commercial centres and other high-traffic areas come at a premium price. For example, the average asking lease price for a retail property in Charlottesville, Virginia in 2011 is £10.10 per square foot, while in Beverly Hills, California the average price for a metropolitan retail property is £1,526, according to LoopNet, a commercial real estate listing service.
Again, the cost of inventory will vary widely depending on the type of alcohol you plan to sell and the size of stock you want to hold. A single case of high-end wine can easily cost £650, but you could stock a small beer store for a few thousand dollars. A full off-licence inventory may cost up to £195,000.
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