May buy a wine store. Insurance? Accounting/Sales Software? LLC?

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ekovitch
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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#1 Post by ekovitch » November 23rd, 2016, 5:12 am

Hi folks, I have an opportunity to purchase an existing small wine shop, annual revenue about $350,000. (Thread on evaluation was helpful, thanks to those who contributed!) I have a couple of questions.

In MI you can have tastings at the store, and I am concerned about liability (even if we didn't have tastings, someone could trip over a case of wine on the floor...). What kind of insurance should I be looking for? Any recommendations on carriers?

Current owner's entire management system is paper and pencil. Can anyone recommend a system to track sales, inventory, etc.

I am assuming that an LLC is the way to go. Any best practices to share?

Much appreciated.
Last edited by ekovitch on November 29th, 2016, 6:57 am, edited 1 time in total.
Errol Kovitch

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Jim Brennan
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May jump in. Insurance? Accounting/Sales Software? LLC?

#2 Post by Jim Brennan » November 23rd, 2016, 8:31 am

Errol, you should repost with a different title, and I think you'll get more insights and comments. I wouldn't think this is about buying a wine store based on your title.

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PeterJ
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May jump in. Insurance? Accounting/Sales Software? LLC?

#3 Post by PeterJ » November 23rd, 2016, 12:45 pm

I'm sure you'll get lots of opinions but my daughter opened what has become a very successful craft beer bar two years ago as an LLC. She is now converting her tax filing to that of an S Corp. Apparently you can have the best of both world by doing that. From what she told me she maintains the simplicity of an LLC but can take pass-throughs as an S filer. It may be more complex than that, but that's all I remember her saying.
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#4 Post by PeterH » November 23rd, 2016, 4:14 pm

We run our small business as an S Corp. A couple of employees operated a small wine store, revenues about what you are anticipating, as an LLC. I can't see a big difference either way, but as you get serious you will be wise to consult both a lawyer and account in advance.

For insurance, let an agent shop around for you. The best company in one part of the country may not even do business in another. Agencies will be familiar with which companies are seeking small clients, and which ones will give you the cold shoulder (in terms of above market rates and poor service). A normal retail policy will come with general and product liability coverage, plus other coverages you might not even be thinking about- liability on use of automobile for business, handling of employee insurance, data loss, etc.
Our agent does comparison shopping every year, and is not shy about changing companies.

Speaking of data, Quickbooks can probably handle all your bookkeeping and inventory needs. I've never used their POS interface, but for a $350K business you don't need to be particular.

P Hickner

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ekovitch
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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#5 Post by ekovitch » November 29th, 2016, 7:59 am

Thanks Peters J and H!

I'll look into S corps. Next call is to an insurance broker!
Errol Kovitch

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John Davis
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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#6 Post by John Davis » December 1st, 2016, 10:12 am

Pretty much what Peter said. I would get a couple of quotes from a couple of different insurance agents. Along with the insurance he mentioned get an umbrella liability policy, too. Make sure your data loss includes data recovery and record (paper) recovery. I don't think a company that small would need employee practice insurance but check with your agent (one of your employees accuses you or another employee of something).

Liability, alcohol related or a slip and fall is a fact of life and if you are in business long enough you'll have a slip and fall. Which is why you have insurance! Yes, S corp.

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C. Bowman
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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#7 Post by C. Bowman » December 2nd, 2016, 8:27 pm

Errol,

Some of this may have been covered above but my .02

If you have your personal insurance (house,cars etc) with one insurer, you may be able to use that as a tool to get a better rate with it all in one place. We were able to get a little better rate that way. Anytime you have the public + alcohol and if you're serving, the liability insurance is not cheap, add employees & workman's comp can be expensive. I have no idea how/if the laws differ in MI from CA.
If you have to lease the building the business is in the owner will require certain types/amounts of liability insurance to protect the building which is different than insurance on the business. It's not always easy to find an underwriter to cover a place with alcohol even if it's just wine/beer. We have the added nightmare of insuring with the sales of cigars.
As far as accounting, Randy does our dailies in quickbooks and tax time we turn them over to our accountant. If you have any specific questions you are more than welcome to PM me.
Carrie
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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#8 Post by Milton Hudson » December 23rd, 2016, 7:48 am

Couple of suggestions.
Quickbooks is ubiquitous. Most acountants will work with it, it will work on several platforms (mac, pc) and you can choose web based or hardware (pc) based. One major caveat - Enlist the services of an accountant familiar with your industry to set up your initial chart of accounts and give you some guidance regarding use and adding accounts. $500 spent on the front end may save you $1,500 on the back end straightening things out.
Figure out a good inventory management system so you know what you order/sell/have on the shelf and how long the stock sits. Be ruthless about inventory management. Meaning if it doesn't sell within your established parameters, get rid of it. Bloated overpriced inventory will suck the life out of the business and prevent you ordering good stuff that will sell.
Understand your insurance coverage, find the holes in coverage and decide if you can live with the risk of that hole existing. The above advice about bundling with your personal is good, not only will you save money, but having more of your stuff with one agent means he'll be more attentive to your needs as he has more to lose if you leave.

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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#9 Post by jeff davidson » December 23rd, 2016, 9:10 am

I created/ran a website for a store for about 10 years. They eventually replaced the system I built with an off the shelf platform which managed pos, web and real-time inventory. I'm not sure which platform they chose but I'm impressed with the site responsiveness. there was some sort of integration with their accounting package.

Might be worth trying to figure out what they implemented. Take a look:http://www.pjwine.com

ps I've not worked with the store for over 10 years, so I don't have any financial interest in posting their site.

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M A T T H A R T L E Y
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May buy a wine store. Insurance? Accounting/Sales Software? LLC?

#10 Post by M A T T H A R T L E Y » January 5th, 2017, 11:30 am

ekovitch wrote:Hi folks, I have an opportunity to purchase an existing small wine shop, annual revenue about $350,000. (Thread on evaluation was helpful, thanks to those who contributed!) I have a couple of questions.

In MI you can have tastings at the store, and I am concerned about liability (even if we didn't have tastings, someone could trip over a case of wine on the floor...). What kind of insurance should I be looking for? Any recommendations on carriers?

Current owner's entire management system is paper and pencil. Can anyone recommend a system to track sales, inventory, etc.

I am assuming that an LLC is the way to go. Any best practices to share?

Much appreciated.
Couple of thoughts:

- LLC and S-Corp are BOTH pass through entities. If you are going to own the company outright, LLC is usually easier as an S-Corp paperwork can be cumbersome.
- Do you really need to buy $350,000 worth of sales? How much would it cost to just do it yourself? If his entire management system is paper and pencil you'll need a full inventory done - personally hand count all bottles crossed against paid invoices. Why pay him for such a small business?
- You'll want a good POS system that can export to Quickbooks etc. There are a lot out there but bases on sales something like this might be simple enough - http://revelsystems.com/
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