How did you start your retail wine business?

A forum for and about wine retailing. Consumer questions, retailer rants, etc. All are welcome to post
Post Reply
Message
Author
User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#1 Post by Joy L » December 15th, 2014, 11:08 am

Those of you who own retail wine shops - how were you able to start your business financially? I'm looking for advice and ideas on how to fund my dream of owning my own store someday. I have worked ITB in restaurants for the past 5 years, but would love to be my own boss and have a retail shop. I don't like the idea of debt, and don't have hundreds of thousands of dollars laying around, so I'm thinking the only way to get this off the ground would be to find investors. Have any of you started your business this way? Any words of wisdom from all of you who have done this would be greatly appreciated.
LINDH0LM
ITB

Richard Leland
GCC Member
GCC Member
Posts: 549
Joined: August 14th, 2009, 2:20 pm
Location: San Francisco

How did you start your retail wine business?

#2 Post by Richard Leland » December 15th, 2014, 9:05 pm

Are you thinking about a big store or a small, neighborhood shop? If you're thinking about going big then an extraordinarily detailed business plan would be the first step to give you something to talk about with potential investors. If you envision something smaller then I think that might be a difficult sell, since most investors generally want to see a return on their investment and you'll be lucky if you make enough to live on.
Richard
ITB

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#3 Post by Joy L » December 16th, 2014, 8:29 am

Obviously the goal is to be able to make a living, so would need something size wise to make that happen. I appreciate the feedback on the business plan, which I know to be essential. My city has a handful of really mediocre wine shops, mostly catering to the Napa lovers and mass produced plonk you can get anywhere. We want to open something with more of a niche - specializing in small, grower-producer wines; much of what is loved on this forum. I think there is a market for such a shop, as there are many wine lovers in Omaha and several great restaurant wine lists to cater to their tastes. Just not a really great wine shop...yet.
LINDH0LM
ITB

User avatar
Thomas Keim
GCC Member
GCC Member
Posts: 9296
Joined: June 7th, 2009, 5:52 pm
Location: St Paul, Minnesota

How did you start your retail wine business?

#4 Post by Thomas Keim » December 16th, 2014, 10:57 am

The biggest key is not sinking all your money into the store's interior. I just consulted for a group that had about $75,000 to spend. They sunk $50,000 into making the store look great, and now they have very little money left over for actual inventory.

Get yourself about 2,000 square feet, a decent, easy to get to location (forget having to be on a trendy street etc - just make sure it's easy to get in and out of). Buy yourself a $300 cash register and sink every penny into your inventory. You can easily make a go of it with $25,000 - $30,000 worth of inventory to start, and turn your profits into more inventory.

People could care less about pulling a bottle of wine from a fancy wine rack, they just want a great wine at a great price - in all categories.
ITB - Old World Imports - Yoerg Brewing Company

"What if I fall?" "Oh, but my darling, what if you fly?"

User avatar
Matt Mauldin
GCC Member
GCC Member
Posts: 1047
Joined: May 26th, 2010, 3:32 pm
Location: Goleta, CA

How did you start your retail wine business?

#5 Post by Matt Mauldin » December 16th, 2014, 9:49 pm

Thomas Keim wrote:The biggest key is not sinking all your money into the store's interior. I just consulted for a group that had about $75,000 to spend. They sunk $50,000 into making the store look great, and now they have very little money left over for actual inventory.

Get yourself about 2,000 square feet, a decent, easy to get to location (forget having to be on a trendy street etc - just make sure it's easy to get in and out of). Buy yourself a $300 cash register and sink every penny into your inventory. You can easily make a go of it with $25,000 - $30,000 worth of inventory to start, and turn your profits into more inventory.

People could care less about pulling a bottle of wine from a fancy wine rack, they just want a great wine at a great price - in all categories.
I think this is great advice. There is definitely a subset of great wine shops in California that are no-frills but with great inventory. Some of them are even located in industrial warehouse spaces- i.e. Renegade Wines in Santa Barbara or Topline Wines in Glendale. Invest on inventory and contact management for email marketing...
ITB- Zaca Mesa Wholesale Sales Manager

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#6 Post by Joy L » December 17th, 2014, 9:31 am

Thomas Keim wrote:The biggest key is not sinking all your money into the store's interior. I just consulted for a group that had about $75,000 to spend. They sunk $50,000 into making the store look great, and now they have very little money left over for actual inventory.

Get yourself about 2,000 square feet, a decent, easy to get to location (forget having to be on a trendy street etc - just make sure it's easy to get in and out of). Buy yourself a $300 cash register and sink every penny into your inventory. You can easily make a go of it with $25,000 - $30,000 worth of inventory to start, and turn your profits into more inventory.

People could care less about pulling a bottle of wine from a fancy wine rack, they just want a great wine at a great price - in all categories.
Thanks for the advice. I'm sure it's easy for people to get into decorating mode and forget where the money is made.
LINDH0LM
ITB

User avatar
M A T T H A R T L E Y
Posts: 2002
Joined: June 3rd, 2009, 8:54 am

How did you start your retail wine business?

#7 Post by M A T T H A R T L E Y » December 17th, 2014, 11:55 am

Joy L wrote:
Thomas Keim wrote:The biggest key is not sinking all your money into the store's interior. I just consulted for a group that had about $75,000 to spend. They sunk $50,000 into making the store look great, and now they have very little money left over for actual inventory.

Get yourself about 2,000 square feet, a decent, easy to get to location (forget having to be on a trendy street etc - just make sure it's easy to get in and out of). Buy yourself a $300 cash register and sink every penny into your inventory. You can easily make a go of it with $25,000 - $30,000 worth of inventory to start, and turn your profits into more inventory.

People could care less about pulling a bottle of wine from a fancy wine rack, they just want a great wine at a great price - in all categories.
Thanks for the advice. I'm sure it's easy for people to get into decorating mode and forget where the money is made.
I think all of the advice above you should take with serious caution, especially the $300 cash register comment. Just a terrible idea.
___________________________
ITB

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#8 Post by Joy L » December 17th, 2014, 1:43 pm

I think a good POS is a must, from my experience working retail in the past. Need something that can track inventory, cost, easy to manage reporting, time tracking, etc. Also hopefully something that could sync with an online store at some point if we have a web store. Any suggestions on a good system?
LINDH0LM
ITB

User avatar
M A T T H A R T L E Y
Posts: 2002
Joined: June 3rd, 2009, 8:54 am

How did you start your retail wine business?

#9 Post by M A T T H A R T L E Y » December 17th, 2014, 3:25 pm

Joy L wrote:I think a good POS is a must, from my experience working retail in the past. Need something that can track inventory, cost, easy to manage reporting, time tracking, etc. Also hopefully something that could sync with an online store at some point if we have a web store. Any suggestions on a good system?
We use Microsoft

If we were starting again I would give these guys a very hard look.

http://www.lightspeedpos.com/retail/pos-system/
___________________________
ITB

User avatar
PeterJ
Posts: 1700
Joined: June 25th, 2009, 1:24 pm
Location: Mission Viejo, CA

How did you start your retail wine business?

#10 Post by PeterJ » December 17th, 2014, 4:58 pm

Richard Leland wrote:Are you thinking about a big store or a small, neighborhood shop? If you're thinking about going big then an extraordinarily detailed business plan would be the first step to give you something to talk about with potential investors. If you envision something smaller then I think that might be a difficult sell, since most investors generally want to see a return on their investment and you'll be lucky if you make enough to live on.
Where were you when we started our business in 2005? :o Back then you could possibly have done alright until the recession hit and on line sales became so difficult for the little guy. I loved the business but wouldn't do it again now.

I suppose I should qualify that to say that I wouldn't do it in a large market. I DO think high quality, harder to find, small production wines will sell to a knowledgeable customer base that is willing to pay the price. One thing that I feel people underestimate is the difficulty of maintaining necessary profit margins with a customer base that can check competitive pricing on their cell phones. The best strategy there is to be selling wines in very limited distribution or those you are able to buy in deepest discount quantity. Just my humble opinion, but how I see it.
Peter J@ckel

User avatar
Randy Bowman
GCC Member
GCC Member
Posts: 8868
Joined: January 27th, 2009, 2:23 pm
Location: Napa, CA

How did you start your retail wine business?

#11 Post by Randy Bowman » December 17th, 2014, 6:15 pm

Joy,
We had a friend that was running a wine and cigar shop into the ground. We bought it all for 50K, probably double what it was really worth. We put 20k into inventory and started a basic website ourselves, which we updated a couple years later. I built many of our wine racks using wood wine boxes and built most of our displays. We also spent a few thousand on wood racks from Vigilant.

http://vigilantinc.com/wineracks/wine-rack-kits.php

We found a POS system took up a lot time because of the range of products we have and how often they change in cost due to multiple distributors. (Back then cigars didn't come with upc codes and you had to scan them from a binder by the register.) The ones we looked at were too inflexible or required adjustments via the cash register because of the way we do business. We keep our inventory and cost on the spreed sheet we upload to our website and use Quickbooks for all our accounting needs.

Parking, parking, parking. Did I mention parking. At our first location, we were in a shopping center. Parking wasn't bad until it went upscale and put in a Whole Foods, Trader Joe's and a restaurant two doors down. We couldn't even park near our store, nor could our customers.

We moved to an empty carpet warehouse attached to a tire store with lots of parking. The build out to satisfy the city requirements and our vision of the new store approached 300K.

Peter is pretty much spot on about the business model. We carry some mainstream wines and a lot of small production and hard to get wines. Our walk in cigar sales pretty much pay the bills and if we had only been a wine store when we moved, (2008), I doubt we'd still be in business. Our location dictates some of the wines we carry. If walk in traffic is only familiar with popular mainstream wines, you have have some for them to fall back on if they are not receptive to suggestions or recommendations.
IN THE BUSINESS SHILL: An associate of a person selling goods, who pretends no association to the seller and assumes the air of an enthusiastic customer.

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#12 Post by Joy L » December 17th, 2014, 8:39 pm

M A T T H A R T L E Y wrote:
Joy L wrote:I think a good POS is a must, from my experience working retail in the past. Need something that can track inventory, cost, easy to manage reporting, time tracking, etc. Also hopefully something that could sync with an online store at some point if we have a web store. Any suggestions on a good system?
We use Microsoft

If we were starting again I would give these guys a very hard look.

http://www.lightspeedpos.com/retail/pos-system/
I will check them out. I like that they look Mac friendly, as I would prefer a Mac based or compatible system.
LINDH0LM
ITB

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#13 Post by Joy L » December 17th, 2014, 8:50 pm

PeterJ wrote:
Richard Leland wrote:Are you thinking about a big store or a small, neighborhood shop? If you're thinking about going big then an extraordinarily detailed business plan would be the first step to give you something to talk about with potential investors. If you envision something smaller then I think that might be a difficult sell, since most investors generally want to see a return on their investment and you'll be lucky if you make enough to live on.
Where were you when we started our business in 2005? :o Back then you could possibly have done alright until the recession hit and on line sales became so difficult for the little guy. I loved the business but wouldn't do it again now.

I suppose I should qualify that to say that I wouldn't do it in a large market. I DO think high quality, harder to find, small production wines will sell to a knowledgeable customer base that is willing to pay the price. One thing that I feel people underestimate is the difficulty of maintaining necessary profit margins with a customer base that can check competitive pricing on their cell phones. The best strategy there is to be selling wines in very limited distribution or those you are able to buy in deepest discount quantity. Just my humble opinion, but how I see it.
Thanks for sharing your experience. We do want to focus on limited production, hard to find (especially here) wines. When I was purchasing for restaurants, we did a huge chunk of our buying with direct imports, and thus almost no one else in town could get the wines we had on a regular basis. Wholesale pricing in Nebraska really sucks - it is close to retail for many wines found in large cities on either coast. Thankfully, we have a great customer base of wine lovers already built from working in the restaurant industry here for the past several years, so hopefully that will be a great start and we can build from there.
Randy Bowman wrote:Joy,
We had a friend that was running a wine and cigar shop into the ground. We bought it all for 50K, probably double what it was really worth. We put 20k into inventory and started a basic website ourselves, which we updated a couple years later. I built many of our wine racks using wood wine boxes and built most of our displays. We also spent a few thousand on wood racks from Vigilant.

http://vigilantinc.com/wineracks/wine-rack-kits.php

We found a POS system took up a lot time because of the range of products we have and how often they change in cost due to multiple distributors. (Back then cigars didn't come with upc codes and you had to scan them from a binder by the register.) The ones we looked at were too inflexible or required adjustments via the cash register because of the way we do business. We keep our inventory and cost on the spreed sheet we upload to our website and use Quickbooks for all our accounting needs.

Parking, parking, parking. Did I mention parking. At our first location, we were in a shopping center. Parking wasn't bad until it went upscale and put in a Whole Foods, Trader Joe's and a restaurant two doors down. We couldn't even park near our store, nor could our customers.

We moved to an empty carpet warehouse attached to a tire store with lots of parking. The build out to satisfy the city requirements and our vision of the new store approached 300K.

Peter is pretty much spot on about the business model. We carry some mainstream wines and a lot of small production and hard to get wines. Our walk in cigar sales pretty much pay the bills and if we had only been a wine store when we moved, (2008), I doubt we'd still be in business. Our location dictates some of the wines we carry. If walk in traffic is only familiar with popular mainstream wines, you have have some for them to fall back on if they are not receptive to suggestions or recommendations.
I couldn't agree more on the parking tip. We ideally would like to offer delivery also, which would help if it were located in an area where parking was an issue. The plan is for it to be a joint wine shop but also with a specific specialty food side, which hopefully would be our bread and butter and drive traffic as well.

I appreciate everyone's input so far - you all have given me lots to think about.
LINDH0LM
ITB

User avatar
Brent C l a y t o n
Posts: 5210
Joined: May 6th, 2009, 9:21 am
Location: Kew Gardens, NY

How did you start your retail wine business?

#14 Post by Brent C l a y t o n » December 17th, 2014, 8:53 pm

I'm in NYC. If you have a million bucks to start, you're in good shape. First you have to pick a spot & sign a lease, because you can't apply for a license w/o a leased space. If you're smart you negotiate free/reduced rent the first 6mo while you're applying for the license which you won't necessarily get. You can start the buildout while you're waiting if you are confident/brash. Then there's the lawyer fees (you have to pay for a good liquor lawyer who can expedite your app and hope they also have friends on the board) and have your act together on the professional side. Be prepared to have everyone from churches & schools & community boards to oppose you unless you are connected. Purchasing an existing store mitigates these issues but be prepared to pay more for an existing license than if you were doing a new location, and you still might have to do space renovation. After that, plan for 250-500k starting inventory. That's life in the big city.
ITB Sales IG@bigdaddyb420wine

User avatar
Randy Bowman
GCC Member
GCC Member
Posts: 8868
Joined: January 27th, 2009, 2:23 pm
Location: Napa, CA

How did you start your retail wine business?

#15 Post by Randy Bowman » December 17th, 2014, 9:08 pm

Brent C l a y t o n wrote:I'm in NYC. If you have a million bucks to start, you're in good shape. First you have to pick a spot & sign a lease, because you can't apply for a license w/o a leased space. If you're smart you negotiate free/reduced rent the first 6mo while you're applying for the license which you won't necessarily get. You can start the buildout while you're waiting if you are confident/brash. Then there's the lawyer fees (you have to pay for a good liquor lawyer who can expedite your app and hope they also have friends on the board) and have your act together on the professional side. Be prepared to have everyone from churches & schools & community boards to oppose you unless you are connected. Purchasing an existing store mitigates these issues but be prepared to pay more for an existing license than if you were doing a new location, and you still might have to do space renovation. After that, plan for 250-500k starting inventory. That's life in the big city.
And I thought CA was tough. NY is ridiculous. If Joy is successful, I may consider revisiting the city I was born in.
IN THE BUSINESS SHILL: An associate of a person selling goods, who pretends no association to the seller and assumes the air of an enthusiastic customer.

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#16 Post by Joy L » December 17th, 2014, 9:17 pm

Randy Bowman wrote:And I thought CA was tough. NY is ridiculous. If Joy is successful, I may consider revisiting the city I was born in.
Nice to hear from a former Omahan! Fingers crossed on the successful part; I'm just at the beginning stages of planning, so it will be awhile before anything takes off. But you gotta start somewhere...
LINDH0LM
ITB

Doug Schulman
GCC Member
GCC Member
Posts: 4603
Joined: October 21st, 2009, 9:42 am
Location: MA

How did you start your retail wine business?

#17 Post by Doug Schulman » December 21st, 2014, 12:00 pm

Joy, I know nothing of the market where you are, but some questions come to mind beyond some of the good advice you've already received (and I'm glad you think a solid POS system is important).

Does your state allow DTC shipments from out-of-state retailers? (this will affect the importance of the next issue)

How is the selection and pricing from your local wholesalers? If you don't know, you should probably find out before you start putting too much time and money into this. I know in some places, there could be a lot more success for small retailers like what you want to be if the wholesalers were on board. Take New Hampshire, for instance. Terrible selection, too-high pricing, and strong competition from Maine and (especially) Massachusetts right near by. You won't have the issue of competition from neighboring states, but you might not be able to get a lot of the wines you want to sell or sell them for reasonable prices. Even if you see some impressive restaurant lists, those restaurants might be taking your state's entire allocation of some of those wines.
ITB - retail sales and education

User avatar
Dave Erickson
Posts: 73
Joined: January 10th, 2010, 10:50 am
Location: Massachusetts

How did you start your retail wine business?

#18 Post by Dave Erickson » December 27th, 2014, 2:46 pm

I have never owned a wine store. But I've worked in many, and seen ones that have prospered and ones that died. Here is my free advice (and we all know what free advice is worth): If I were to consider opening a shop that carried specialty items (hard to find, organics, etc.) I would start with some market research: Who are your potential customers? I can think of a couple shops that are successful because they have a solid database of customers. When they get a good deal on Barolo, for example, they use e-mail and/or the phone to contact customers who are looking for Piemonte wines. I can think of at least one place that often sells out specials before they're even received. Does wonders for cash flow, and they don't even have a mechanism for on-line purchases. Not suggesting this is easy, or "the answer." But I'd never open a shop without first having at least some idea of who I'll be selling to.

Doug Schulman
GCC Member
GCC Member
Posts: 4603
Joined: October 21st, 2009, 9:42 am
Location: MA

How did you start your retail wine business?

#19 Post by Doug Schulman » December 29th, 2014, 9:21 am

oops, I see that you addressed some of my questions before I posted. I guess you've got a handle on the pricing/availability issue. That's good since I assumed the situation there would be as you described.
ITB - retail sales and education

D. Wirsig
BerserkerBusiness
BerserkerBusiness
Posts: 838
Joined: July 26th, 2009, 11:06 am
Location: Los Angeles

How did you start your retail wine business?

#20 Post by D. Wirsig » December 29th, 2014, 4:38 pm

For all the retail shop owners or ITB'ers... I'm curious, what are some of the unexpected costs you see that a start-up may not anticipate?
Dan
--
http://www.vinoterawine.com/
ITB - Pasadena, CA Wine Merchant

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#21 Post by Joy L » December 30th, 2014, 12:24 pm

Dave Erickson wrote:I have never owned a wine store. But I've worked in many, and seen ones that have prospered and ones that died. Here is my free advice (and we all know what free advice is worth): If I were to consider opening a shop that carried specialty items (hard to find, organics, etc.) I would start with some market research: Who are your potential customers? I can think of a couple shops that are successful because they have a solid database of customers. When they get a good deal on Barolo, for example, they use e-mail and/or the phone to contact customers who are looking for Piemonte wines. I can think of at least one place that often sells out specials before they're eveng an received. Does wonders for cash flow, and they don't even have a mechanism for on-line purchases. Not suggesting this is easy, or "the answer." But I'd never open a shop without first having at least some idea of who I'll be selling to.
Good question, Dave. We do have a good base of potential customers in the guests we have been serving for several years here in restaurants. Many of them have come to us, asking when we would be opening our own place, before we even thought of doing so. We have a pretty loyal foodie dining crowd who has trusted us and some have even followed us from place to place. I don't even think I'd be considering all this if I didn't have a specific group of customers already in mind.
LINDH0LM
ITB

User avatar
Joy L
Posts: 64
Joined: January 15th, 2014, 8:37 am
Location: Denver, CO

How did you start your retail wine business?

#22 Post by Joy L » December 30th, 2014, 12:25 pm

Doug Schulman wrote:oops, I see that you addressed some of my questions before I posted. I guess you've got a handle on the pricing/availability issue. That's good since I assumed the situation there would be as you described.
[cheers.gif]
LINDH0LM
ITB

User avatar
Dave Erickson
Posts: 73
Joined: January 10th, 2010, 10:50 am
Location: Massachusetts

How did you start your retail wine business?

#23 Post by Dave Erickson » January 1st, 2015, 9:42 am

Joy L wrote:
Dave Erickson wrote:
Good question, Dave. We do have a good base of potential customers in the guests we have been serving for several years here in restaurants. Many of them have come to us, asking when we would be opening our own place, before we even thought of doing so. We have a pretty loyal foodie dining crowd who has trusted us and some have even followed us from place to place. I don't even think I'd be considering all this if I didn't have a specific group of customers already in mind.
That's awesome! Onward and upward! champagne.gif

User avatar
roger_richards
Posts: 39
Joined: March 17th, 2009, 7:33 am
Location: Costa Mesa, CA

How did you start your retail wine business?

#24 Post by roger_richards » January 10th, 2015, 11:56 am

Agree with all of the advice in this thread. You do not get ITB to make lots of money - it has to be something you love. My concept has a tasting bar with limited food menu along with retail and online. The bar makes the most margin and allows the other aspects of the business to thrive. You need a constant source of new potential customers while you build your base. If you have a close business relationship with a restaurant, perhaps partnering with one and finding an adjacent space is an option.
ITB experimenter/Wine Lab owner

Doug Schulman
GCC Member
GCC Member
Posts: 4603
Joined: October 21st, 2009, 9:42 am
Location: MA

How did you start your retail wine business?

#25 Post by Doug Schulman » January 15th, 2015, 6:35 pm

D. Wirsig wrote:For all the retail shop owners or ITB'ers... I'm curious, what are some of the unexpected costs you see that a start-up may not anticipate?
The problem I see most often is that people don't realize how much money they will continually have to put in. Too many people think they can open a store, put however much money into starting inventory, and then sort of coast, letting money roll in and reinvesting. Worse, some think they'll be able to reclaim a significant portion of that initial outlay while reinvesting the profits. The dynamic of this business does not allow for that kind of thing. I'm not sure any retail business works as perfectly as that, but my experience is with wine/beer/spirits. When it comes down to it, operational costs will pretty much always exceed the budget. Replacing inventory and fleshing out selection will be costly, and a good portion of that cost, especially early on, will have to come from further available funds rather than from business income. Eventually things do even out, but it takes longer, with a lot more "initial" (translate to first couple of years) investment than too many people realize. I know that doesn't directly answer your question, but I think it is related. I've seen too many wine shops end up with dwindling inventory in the first couple of years because the owner(s) didn't understand the dynamics of wine retail. Once that progression begins, there is usually only one outcome. A lot of money has to stay invested in that business, even more than the initial investment, for long-term success to eventually be realized.
ITB - retail sales and education

User avatar
Randy Bowman
GCC Member
GCC Member
Posts: 8868
Joined: January 27th, 2009, 2:23 pm
Location: Napa, CA

How did you start your retail wine business?

#26 Post by Randy Bowman » January 15th, 2015, 7:52 pm

Dan,

In addition to Doug's spot on overview, there are a number of things to consider:
Tenant Improvement The City of Napa would not accept my plans. In addition to permits, I had to hire an architect to reproduce my plans, an electrical engineer for electric and lighting and a mechanical engineer for heating/cooling. I added ceilings, requiring a certified fire sprinkler engineer/contractor's plans. Then the cost of inspections.
Refigeration for wine storage is costly as is build out of refrigerated spaces and any repair.
Storage space is never adequate.
Employees They come with a number of additional costs, plus time spent on scheduling, training and payroll.
Insurance can be problematic depending on where you are located and whether you "serve" alcoholic beverages.
Pay Per Click if you are going to do e-tail. You must know how it works before using it. I watched as a new on-line retailer bid $25 per click on a wine. Imagine how quick your competition can bankrupt you. He was done in 4 days.
Earthquake/disaster Who knew. You can't prepare for when real shit just happens.
This is the tip of the iceberg. You can't cover it all or make it bullet proof.
IN THE BUSINESS SHILL: An associate of a person selling goods, who pretends no association to the seller and assumes the air of an enthusiastic customer.

Richard Leland
GCC Member
GCC Member
Posts: 549
Joined: August 14th, 2009, 2:20 pm
Location: San Francisco

How did you start your retail wine business?

#27 Post by Richard Leland » January 16th, 2015, 9:27 am

D. Wirsig wrote:For all the retail shop owners or ITB'ers... I'm curious, what are some of the unexpected costs you see that a start-up may not anticipate?
Doug and Randy's excellent posts should be taken to heart. But keep in mind that there will always be something else - I've had my shop for 18+ years and there are still surprises. And I'll add that I wasn't able to take a penny out of the business for the first three years.
Richard
ITB

User avatar
Josh A. Luhn
Posts: 26
Joined: February 13th, 2015, 8:58 am

How did you start your retail wine business?

#28 Post by Josh A. Luhn » February 25th, 2015, 3:06 pm

Best of luck!

User avatar
jeffz
GCC Member
GCC Member
Posts: 203
Joined: August 4th, 2009, 2:03 pm
Location: Glendale • California

How did you start your retail wine business?

#29 Post by jeffz » June 22nd, 2015, 7:31 pm

Maybe it is too late to post on this topic but I haven't been on the boards in a while...

Hi Joy,

As much as Tom's sentiments might be good natured, I respectfully disagree. Drumming up $25-$30k for inventory & buying a register is way too short-sided to be "advice."

First, most businesses fail because they are under-capitalized. What I mean by that is they budget to get open but don't have access to cash after that. If I were you I would secure $250k. That could be hitting up family & friends, crowd-sourcing, offering smaller investment with a payoff in discounted inventory later, 0% credit card offers, small business loans, whatever you have to do, BUT gain access to cash. Things will always be more than you think. You may open for under $100k (if you are lucky) but what if you have 6-12 months of anemic sales? Then what? Have access to cash, cash, cash.

Second important point: do your due diligence. Write a thorough business plan with good details and with a laser like focus on what you intend to do. Shop at every wine store within 25 miles for weeks. See what their staff does. Check out the inventory they work with. Figure out how to build a better mouse trap.

Third: apprentice or work at a retail shop. I have many friends who like the idea of wine retail but never work in it and have a different idea of what it is. Sometimes it is super boring. Some times it is really fantastic. But don't be fooled that it is hunky dory all of the time. As your own boss the buck stops with you. So be prepared to change lightbulbs, wash the bathrooms, sweep the floor, figure out who to pay first, deal with lame employees, etc… and then you can get to the "fun" stuff like selling the wine you like & buying from a cool new importer.

The margins are very slim in wine so do it because you love it not because you want to get rich quick. You probably know that already. Generally margins in wine are around 30% unless you are a "discounter" turn-and-burn operation. But it sounds like you want to buy interesting things and "educate" people. That takes time. Be patient. Compare margins in the clothing industry and you will become depressed, 500% +. Crazy.

Sometimes time is your only friend. Have a long term strategy. Fight for a long term lease. If you are locked in to your set expenses not only will it help you, but if you "have" to sell some day, you will be more valuable to someone.

I could go on forever because I am living your dream (and in my 9th year of it), so if you have any other questions or comments let me know, I am happy to share!

Most of all, good luck, you are going to need it!
Jeff Zimmitti
Rosso Wine Shop
Owner-buyer-accountant-janitor

User avatar
Thomas Keim
GCC Member
GCC Member
Posts: 9296
Joined: June 7th, 2009, 5:52 pm
Location: St Paul, Minnesota

How did you start your retail wine business?

#30 Post by Thomas Keim » July 20th, 2015, 5:48 am

jeffz wrote: As much as Tom's sentiments might be good natured, I respectfully disagree. Drumming up $25-$30k for inventory & buying a register is way too short-sided to be "advice."
The first store I built (for myself)

1 $300 cash register -
$800 for shelving, wooden boxes, display tables -
$15,000 worth of inventory -

Doing $550,000 worth of business a year by the end of the second year -

Sold the store for $150,000 four years later for a profit of $130,000+

The only thing that was short-sided was selling the damn store because it was so profitable -

I have built stores over the years with million dollar plus build outs - and smaller stores like the one I just mentioned - both too many to count - which one do you think worked the best?
ITB - Old World Imports - Yoerg Brewing Company

"What if I fall?" "Oh, but my darling, what if you fly?"

User avatar
jeffz
GCC Member
GCC Member
Posts: 203
Joined: August 4th, 2009, 2:03 pm
Location: Glendale • California

How did you start your retail wine business?

#31 Post by jeffz » July 20th, 2015, 5:13 pm

Sorry Tom, didn't mean to get your hair standing up. But it is a way different climate now. You were talking pre-recession, and pre-everyone and their brother having a wine shop now. Those were Vin de Pays days! At least that is the current L.A. reality. Maybe where the OP (Joy) will look to open it will be different. The example you list above is quite the "outlier" by today's standards.

As another example, we opened in 2006 with a shoestring budget (less than $100k) but I would not have been able to keep it going with only a startup of $25-$30k. We just had access to more if we needed.

Red Carpet is bust. Pallet Food & Wine is bust. And I think Vin de Pays didn't last too far after '08 (and after you sold). A few others have come & gone too. Rent is higher. Competition is fierce. And the online game is creeping in... I'm just trying to give a realistic view of our, albeit bigger city, reality.

Just a short list of things Tom omits:

Finding a good space, rent isn't cheap, lease plus deposit, City permits, County Health permits, Building & Safety Permits (if construction), Plan check fees, State ABC permits and licensing, construction, materials, consulting, furniture, racking, legal filings, electrical work, plumbing, flooring…

you get my drift. And this is all before you buy all of your "life blood" -- your inventory.

Believe me, have as much access to cash as you can. But be frugal too.
Jeff Zimmitti
Rosso Wine Shop
Owner-buyer-accountant-janitor

User avatar
Thomas Keim
GCC Member
GCC Member
Posts: 9296
Joined: June 7th, 2009, 5:52 pm
Location: St Paul, Minnesota

How did you start your retail wine business?

#32 Post by Thomas Keim » July 22nd, 2015, 8:38 am

jeffz wrote:Sorry Tom, didn't mean to get your hair standing up. But it is a way different climate now. You were talking pre-recession, and pre-everyone and their brother having a wine shop now. Those were Vin de Pays days! At least that is the current L.A. reality. Maybe where the OP (Joy) will look to open it will be different. The example you list above is quite the "outlier" by today's standards.

As another example, we opened in 2006 with a shoestring budget (less than $100k) but I would not have been able to keep it going with only a startup of $25-$30k. We just had access to more if we needed.

Red Carpet is bust. Pallet Food & Wine is bust. And I think Vin de Pays didn't last too far after '08 (and after you sold). A few others have come & gone too. Rent is higher. Competition is fierce. And the online game is creeping in... I'm just trying to give a realistic view of our, albeit bigger city, reality.

Just a short list of things Tom omits:

Finding a good space, rent isn't cheap, lease plus deposit, City permits, County Health permits, Building & Safety Permits (if construction), Plan check fees, State ABC permits and licensing, construction, materials, consulting, furniture, racking, legal filings, electrical work, plumbing, flooring…

you get my drift. And this is all before you buy all of your "life blood" -- your inventory.

Believe me, have as much access to cash as you can. But be frugal too.
Damn Jeff - why didn't I notice it was you I was being snarky with? I was on the road last week, getting horrible WiFi in my room after long days and it must have gotten to me -

You DID open at the right time -but so much of a store's success is the person in charge - and you have that unmitigated charm that pretty much assured your success. I often check your website to see what you are up too and just love what you are doing. And, I didn't know Red Carpet had gone under (or is going under) - they always had a stuck up their arse anyways -

You can put 3 million dollars into a store, put a couple of putz's in charge and you are going no where. So I am still a firm believer that hands on management and savvy wine buying is the key - at any level of cash spent -

A guy that used to work for me here in the Twin Cities has a shop that might be the messiest damn thing you have ever seen, and by Saturday, the shop is completely wiped out. Come Monday, another $20,000 worth of inventory shows up - and he blows it out as fast as it comes in - very simple website (http://www.brightwines.com/) attaches a PDF file to his weekly e-mail blasts and he just rocks - it's a one man show all the way - so it can be done -

I have actually been doing some 'bar-rescue' type consulting lately aside from my brokerage business, mainly wine shops that are heading downhill, and it is amazing how much you try and help them, and they just look right through you not wanting to believe that THAT is what has to be done. Luckily the last two gave me total control, and the freedom to train in new management - and I must admit - I really, really miss the retail business -

Hope things are going great for you Jeff - keep knocking 'em dead -
ITB - Old World Imports - Yoerg Brewing Company

"What if I fall?" "Oh, but my darling, what if you fly?"

User avatar
jeffz
GCC Member
GCC Member
Posts: 203
Joined: August 4th, 2009, 2:03 pm
Location: Glendale • California

How did you start your retail wine business?

#33 Post by jeffz » July 23rd, 2015, 10:36 am

No harm, no foul Tom. I really wanted to drive home the idea to the orig poster that it is always good to have backup cash!

Things are good. 9 years in and still growing every year (except 2012, that was a weird one). I'm better now than I ever was (at buying, management & everything else) and we have remained consistent in our search for excellent values and hard to find imports. I did have to expand my domestic picks to keep up with customer demand but that just made us a littler more appealing to the neighborhood.

But best of all, I still love it. Having went from being a musician to working in the music 'biz (as an art director and international sales manager) I always knew there was a chance that once you turn your passion into a biz there is a chance you stop loving it.

Not the case. & still doing the hustle. Hope you are well Tom! And nice to hear you are still hustling too.
Jeff Zimmitti
Rosso Wine Shop
Owner-buyer-accountant-janitor

Post Reply

Return to “Wine Pimps”