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Friday, January 14, 2011

Things to consider when opening a wine shop or bar

While recently contemplating all the expenses and other variables that go into starting a profitable bottle shop or wine bar, I came up with a small list of things one might consider before opening the doors on a wine business.

1. Keeping your overhead as low as possible
I believe that this is the number one concern for a brand new wine shop or wine bar. By "overhead" I'm referring to your overall operating expenses. Monthly rent, payroll, utilities, insurance, revolving inventory, and advertising costs are all things to add up to find out exactly how much it will cost to run your business every month. What you need to ask yourself is "how many bottles of wine or glasses of wine would I need to sell to cover these expenses and still make a decent profit at the end of the month?".

When just starting out I would suggest working in the shop as the owner as much as humanly possible to avoid having to shell out hourly pay to any employees. I would also suggest starting with a modest inventory and to work with wines that have a fast sell through rate that you can turn and burn. Try not to sit on any significant dollars in the form of rare cultish wines that only serve a very small niche market of collectors. (Unless you already have a special order for a customer).

2. Location, Location, Location
The location of you shop will be probably one of the most important decisions you will have to make when deciding on opening your wine business. Ask yourself the following questions:

-What is the overall demographic of the population where I plan to lease my retail space? Age, Religion, Expendable income....ect.

-Are the businesses that surround my shop wine friendly and will they network and send potential customers to my business? Will they be customers themselves?

-What is the traffic like both on foot and vehicle in front of my store? What kind of location would attract wanderers into my business?

-Is my landlord a shrewd business man or one who will want me to succeed and form a long term business relationship?

3. Building your online presence
I cannot stress the importance of building your online presence for you wine shop/bar in the form of an active newsletter, a busy social network, a dynamic industry blog, and a bustling online wine shop. If you can be selling wine out the back door to the UPS or Fedex truck imagine how much this will help you meet the goals mentioned in point number one of keeping you expenses low and making a profit above your business expenses.

4. Passion about the wine business
I suspect many wealthy wine collectors will get involved in this business because they have an extreme passion for wine. Let me just tell you that wine enjoyment and enthusiasm is not the same as the business of selling wine. If you don't have a passion for the industry and the business of selling wine, then I would suggest that you keep out of the game. It could be a very costly mistake and one that would all but destroy your love and enchantment with the beverage.
 
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