Bridging the Way BayState Business Brokers blog

Important Things to Know if You are Planning to Buy a Liquor Store

by | Oct 1, 2013

A liquor store can be a profitable business to buy but, like any other business, requires good management, organization and people skills to operate. You should be able to manage employees and direct tasks to maximize profitability for your store. If you plan to work on the floor, good customer service skills are essential. The more products you can recommend to customers the better your store will do and you will ensure repeat customers for many years to come. In Massachusetts you also must be a citizen of the United States and a resident of Massachusetts to get a new liquor license or transfer an existing one. Good credit is also important because you will need to establish credit with your vendors to purchase products.

How Much Do Liquor Stores Sell For?

How much you pay for a liquor store will vary based on the geographical area where you want Buying a liquor storeto buy the store as well as individual business factors such as store margins and rent. For example in Massachusetts, where most towns do not have any licenses available, you can expect to pay around 50% of sales or 3-4 times seller’s income for a liquor store. Stores in more desirable towns may sell for more, as well as stores that have updated interiors, high product margins and reasonable rent. To get a bank loan to buy a liquor store you will need 20% of the total purchase price (including inventory) liquid for a down payment and will need to have good credit. You should also make sure to have some money left for lawyer and accountant fees and working capital. Banks will also want to see some related experience – if it is not directly in owning or working in a liquor store, it can be general business experience, retail experience or related education such as a business degree or MBA.

How Will You Run the Business?

Liquor stores require either a full-time working owner or an owner who can put a trusted full-time manager into place. A working owner can expect to work about 50+ hours a week and will be involved in the ordering, inventory management, employee management, bills/financials and other management activities for the business. Liquor stores are difficult to run absentee because there is a lot of cash involved in the business and you need to make sure that it goes into the right hands – yours – and not your employees. Correctly managing the inventory is extremely important in running a successful liquor store and typically requires a hands-on owner.

What is Your Exit Strategy?

Yes, even before you buy a liquor store or license you should have an exit strategy. It is important to plan the future of the store so that you can make smart business decisions. You may decide to undertake renovations if you plan to own the liquor store for a while and it will increase business, or hold off if you see the liquor store as a shorter term investment. Keeping accurate and detailed financial records will be important when you sell the liquor store. Accurate financial records are essential when selling so that a buyer can easily verify your figures, get a bank loan for the business and pay you in full at the closing. You should keep yearly invoices and daily register receipts and also consider putting in a POS system which will help you run the business and allow you to download detailed reports. Putting the right procedures in place now will ensure a smooth transition when you are ready to sell the liquor store.



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