**NEED ADVICE** Shop Owners Please Read

[TraderCigarCo.]

I have a couple questions that mainly pertain to shop owners, however, everyone is most welcome to join in the discussion. I would like to open a shop of my own in the next 5-10 years, and am looking for a game plan and a good place to start. I live in the Dallas/FT Worth Area and there are a lot of really great shops around, but there are also about 6 million people in total, so I don't believe the market is over-saturated. I've been thinking about this on and off for the past 2-3 years and it hasn't been until recently that I had decided to put a business plan in place. Any help and advice on the subject would be greatly appreciated.

I've heard mixed information on the subject of capital needed to open a shop. One guy told me that he started his shop with $15k, and though that would be really awesome, if it were true, I highly doubt you could open a shop with such little investment. On average, what is the capital needed to even begin thinking about opening a shop?

Owners:
What were some of the greatest challenges when opening your shop? How did you over come them? Looking back, what would you have done differently?

Again, for those of you that even read this, thank you for your time. I'm just a man, trying to sort out a dream.

 

[EO80]

I am right there with you brother. There is not even a single shop in my Joplin, MO area and have heard from shops in bigger cities that people tell them daily we need one.

 

[ZippoGeek]

Good thread...I'm not a shop owner, but as a former marketing guy my advice is that you only attempt this endeavor with a proper advertising budget. Most people just don't spend enough getting the word out, or their advertising plan is a complete afterthought. Physical signage, targeted direct mail, targeted inserts in major papers, display ads in neighborhood papers, etc., are all HUGE when starting a business. Targeted Post-it Notes are awesome. Avoid the big splash, full-page, full-color ad; don't let any salesman talk you into that! Spend your dough on a small, repetitive message that gets pounded into the readers' heads. Also - social media and customer e-mail lists are a free advertising NO-BRAINER. In my experience, TARGETED marketing is the way to go for a tiny, one-location business. Doing full-run ads in the Dallas paper is wasting 90% of your money. You need to hit the 10% of your metro area that's right in your neck of the woods. That's where targeted inserts come into play.

Another factor you must consider: location, location, location! How much foot and vehicle traffic does the prospective storefront get each year? Very important.

Good luck!

 

[SeaGarr]

Google sample business plans. It'll help.

 

[Craig Mac]

There are a few threads about this. I'm sure someone will provide the links to them.
I can tell you that your number to open will easily be 20x that amount if you have to do any build out for humidor or lounge, fixtures, furniture, etc....
Your inventory alone could easily be a 150K investment if you want to have a solid amount of facings and have something that will compete with other shops in the area.
2 of your biggest challenges will be smoking laws in the area and whether you can even smoke in the location you choose.

 

[Ducttapegonewild]

I am not a shop owner, but might I suggest one close to my house and supplying me with free cigars for life?

Just my thought

 

[TraderCigarCo.]

There are a few threads about this. I'm sure someone will provide the links to them.
I can tell you that your number to open will easily be 20x that amount if you have to do any build out for humidor or lounge, fixtures, furniture, etc....
Your inventory alone could easily be a 150K investment if you want to have a solid amount of facings and have something that will compete with other shops in the area.
2 of your biggest challenges will be smoking laws in the area and whether you can even smoke in the location you choose.

Thanks Craig. I tried searching for threads before I posted. Guess I didn't search hard enough. If anyone could provide the links that would be greatly appreciated.

 

[EO80]

There are a lot of threads here on pretty much everything. Andi am finding out as herfdog pointed out that tapatalk search sucks!

 

[TraderCigarCo.]

Thanks for the input so far, guys. I'm a bit away from having anything near $150k to invest in a shop and due to some financial struggles the past 2 years, my credit is shot. #thestruggleisreal

 

[problemsolverjc]

There are a few threads about this. I'm sure someone will provide the links to them.
I can tell you that your number to open will easily be 20x that amount if you have to do any build out for humidor or lounge, fixtures, furniture, etc....
Your inventory alone could easily be a 150K investment if you want to have a solid amount of facings and have something that will compete with other shops in the area.
2 of your biggest challenges will be smoking laws in the area and whether you can even smoke in the location you choose.

Both of Cmac's points are dead on. I would add that it is WAY more actual work than you think. It is not all sitting around and smoking cigars. Plan on working 60+ hours a week, and spending a lot of time working "deals" and setting up events.

 

[TraderCigarCo.]

Both of Cmac's points are dead on. I would add that it is WAY more actual work than you think. It is not all sitting around and smoking cigars. Plan on working 60+ hours a week, and spending a lot of time working "deals" and setting up events.

Appreciate it. The work doesn't scare me and neither do the "deals". I used to sell B2B insurance and am currently in Merchant Services with B of A selling credit card processing. Just trying to learn from those before me. Lol

 

[throwbookatface]

Costs are going to vary widely, especially in DFW. We've got everything from high-priced real estate to dirt-cheap land here. But $15K is not enough, unfortunately.

Local smoking regs will vary by city. Same with zoning. I'd imagine health and safety and ventilation requirements would be too - if not with the city, with your potential landlord too. Not everyone wants tobacco smoke wafting through their walls from their tenants.

Liquor/beer license too if you're gonna go that route.

While it's not the same as a bar, expenses mount quickly. Here is an article about what to expect when trying to open a bar, and another on costs. Since you'd be starting from scratch, I'd say Craig's estimate of $150K to be right. Think of the stock alone that you need to keep on hand at all times - 1,000 sticks at, say, $10 a pop = $10,000 in potential revenue you have to keep on hand, unsold, as facings just to look good.

I had a friend look into opening a coffee shop - a kiosk alone is $25K-$75K, and a sit-down place can get close to $500K on average. And that's for a place that sells product $3-$10 at a time and has customers that order once, then take up a seat for two hours and hang out on wi-fi.

Sound familiar?

Here's an article outlining why coffee shops are not a good business idea. I bet a lot is applicable to smoke shops, too. Bottom line - if you're smoking cigars with friends, you're not making a profit. "The most dangerous species of owner ... is the one who gets into the business for love."

 

[Lomey]

Costs are going to vary widely, especially in DFW. We've got everything from high-priced real estate to dirt-cheap land here. But $15K is not enough, unfortunately.

Local smoking regs will vary by city. Same with zoning. I'd imagine health and safety and ventilation requirements would be too - if not with the city, with your potential landlord too. Not everyone wants tobacco smoke wafting through their walls from their tenants.

Liquor/beer license too if you're gonna go that route.

While it's not the same as a bar, expenses mount quickly. Here is an article about what to expect when trying to open a bar, and another on costs. Since you'd be starting from scratch, I'd say Craig's estimate of $150K to be right. Think of the stock alone that you need to keep on hand at all times - 1,000 sticks at, say, $10 a pop = $10,000 in potential revenue you have to keep on hand, unsold, as facings just to look good.

I had a friend look into opening a coffee shop - a kiosk alone is $25K-$75K, and a sit-down place can get close to $500K on average. And that's for a place that sells product $3-$10 at a time and has customers that order once, then take up a seat for two hours and hang out on wi-fi.

Sound familiar?

Here's an article outlining why coffee shops are not a good business idea. I bet a lot is applicable to smoke shops, too. Bottom line - if you're smoking cigars with friends, you're not making a profit. "The most dangerous species of owner ... is the one who gets into the business for love."

This is very sound advice.

 

[TraderCigarCo.]

Anyone else out there with any experience or advice?

 

[JuzCallMeDee]

Both of Cmac's points are dead on. I would add that it is WAY more actual work than you think. It is not all sitting around and smoking cigars. Plan on working 60+ hours a week, and spending a lot of time working "deals" and setting up events.

i never see the owners of my local b&m smoke.

 

[luckysaturn13]

If he started with 15k that would probally have been his down payment for a business loan for much much more. But the bad thing about that is when you spend all you have you wont have cash for working capital. Most banks will want to see some kind of net worth to make sure there not loaning to a sinking ship. You might be able to start with a very small liquor store with 2-4 stand up humidis and save save save and then open a full fledge cigar shop.

 

[Zigarro]

Save up and wait for a more business-friendly administration after 2016.

 

[Joeytivo]

I am in the process of opening a shop and lounge in NJ and the expense is crazy. When you are ready, make sure you really take a long look at ALL of the components that go into opening a shop. Make sure you have plenty of cash because everything costs more than you expect. I am not going to lie, designing this shop to make my vision come true is the most fun I have ever had.

 

[hopzilla]

I don't have cigar-specific advice, but I've heard this in regards to getting into the craft brewery business:

It's not about loving beer, it's about loving the business side of beer. They are different, though obviously not mutually exclusive.

 

[Madcox]

The owner of my B&M is a Big Wig at Delta and he just hired people to run his shop.. and when he isn't working at Delta he is working in his shop...