calling B&M/small business owners

[CigarMonkel]

Me and a good friend are looking at starting up a shop. I did some VERY VERY rough figures today and was wondering how B&M owners make a living. The B&M's around here seem to not do THAT much business, but apparently enough to stay open. I guess i don't really have any specific questions but more just real general questions.

1) how do you make enough money to stay open/support yourself
2) how do you not smoke all your profits away?
3) what were your first steps when you were looking into starting up your B&M and would you do anything different?


any advice/tips would be helpful at this point. My friend who is gonna be my business partner for all this, his roommate is looking into starting up a Club/Bar so we're all looking into locations and small business loans together.

[Hermit]

With the anti-smoking and tax environment these days,
yer probably better off opening a strip club.

Good luck anyway!

[CigarMonkel]

Originally Posted by Hermit

With the anti-smoking and tax environment these days,
yer probably better off opening a strip club.

Good luck anyway!

surprisingly in the past 1 1/2years... maybe not even there have been two new cigar shops open up in ann arbor alone. One JUST opened a couple days ago (still haven't been to it yet). which makes a total of.. 4 or 5 B&M's in ann arbor alone (not planning on starting one here in ann arbor)

[Hermit]

That's promising.

[BengalMan]

You have Smoky's that pretty much ran the show up there, and now Ish opened up his new shop so that will provide a very high class B&M on the other side of town. Other than a few liquor stores, there really isn't any other shops. I will say this though, you will have some stiff competition just with those two shops.

[newlifetaxidermy]

I don't know anything about the cigar business, but I do know a few things about business in general. The first question you have to ask yourself is, Is there a demand for your proposed business and if so how much demand is there? What kind of competition is there in your area. You also have to consider competition from the internet and mail order.

You also need to consider how you will finance the business. I would imagine it would take a fair amount of capital to open up a cigar business. You have to build a walk-in humidor and buy inventory. In addition, if you plan to have a smoking lounge, you will have to install some heavy duty ventilation. I recommend that new business owners not borrow money to start a business. If you must borrow money, I would only approve of it to buy real estate. If you have a debt load, then that increases the amount of money you have to make just to stay afloat. I would not proceed in this type of business venture unless I had the capital in my personal savings (or investments) to start the business. And the absolute worst mistake you can make is to take a loan against your house to open a business.

If everything looks in order and you are ready to go into business, you need to determine how you will stay in business. Advertising, location of the business, product selection, etc are all key points to consider. One of the main issues many businesses face is cash flow. Obviously, you need to make enough sales to cover your expenses, pay yourself a wage, and then turn a profit for the business. Too many small business owners get caught in a cash flow problem. They think as long as they are making enough to cover expenses and pay their wages they are doing well. Then, something happens, equipment breaks, etc and they have no reserves in the business to pay for repairs, upgrades, etc. Again, if you get in this type situation, you might be forced to take on some debt, but now you will have to make even more sales to keep the business going.

Along the lines of cash flow, I think many new business owners have no clue how to price their products. You have MSRP that you can go by, but what if it costs you more than that to sell a product? You will need to know how much it costs you to sell each cigar. In my business, I know what my monthly expenses (rent, elect., water, taxes, etc) are and how much materials and labor is required to produce a mount. If I do 30 mounts a month, I divide my expenses by 30 and this is my overhead on each mount. I add that to the materials and labor cost and then lump on some profit (in my business it is around 10-15%). I know that is a moving target, especially in a business like the cigar business, but you have to try your best to figure it out. A business with a cash flow problem cannot survive unless the owner is really wealthy and likes pumping money into a losing venture (think professional sports teams).

I guess I could go on, but I won't. I do hope I have made some points for you to consider. Owning a business definitely has its rewards, but there are many headaches. Most people do not have a clue what is involved in owning a small business. If you love cigars and think the business will be profitable, go for it! Good Luck!

[newlifetaxidermy]

And don't forget...self-employment taxes are 35%

[Legend]

Originally Posted by newlifetaxidermy

I don't know anything about the cigar business, but I do know a few things about business in general. The first question you have to ask yourself is, Is there a demand for your proposed business and if so how much demand is there? What kind of competition is there in your area. You also have to consider competition from the internet and mail order.

You also need to consider how you will finance the business. I would imagine it would take a fair amount of capital to open up a cigar business. You have to build a walk-in humidor and buy inventory. In addition, if you plan to have a smoking lounge, you will have to install some heavy duty ventilation. I recommend that new business owners not borrow money to start a business. If you must borrow money, I would only approve of it to buy real estate. If you have a debt load, then that increases the amount of money you have to make just to stay afloat. I would not proceed in this type of business venture unless I had the capital in my personal savings (or investments) to start the business. And the absolute worst mistake you can make is to take a loan against your house to open a business.

If everything looks in order and you are ready to go into business, you need to determine how you will stay in business. Advertising, location of the business, product selection, etc are all key points to consider. One of the main issues many businesses face is cash flow. Obviously, you need to make enough sales to cover your expenses, pay yourself a wage, and then turn a profit for the business. Too many small business owners get caught in a cash flow problem. They think as long as they are making enough to cover expenses and pay their wages they are doing well. Then, something happens, equipment breaks, etc and they have no reserves in the business to pay for repairs, upgrades, etc. Again, if you get in this type situation, you might be forced to take on some debt, but now you will have to make even more sales to keep the business going.

Along the lines of cash flow, I think many new business owners have no clue how to price their products. You have MSRP that you can go by, but what if it costs you more than that to sell a product? You will need to know how much it costs you to sell each cigar. In my business, I know what my monthly expenses (rent, elect., water, taxes, etc) are and how much materials and labor is required to produce a mount. If I do 30 mounts a month, I divide my expenses by 30 and this is my overhead on each mount. I add that to the materials and labor cost and then lump on some profit (in my business it is around 10-15%). I know that is a moving target, especially in a business like the cigar business, but you have to try your best to figure it out. A business with a cash flow problem cannot survive unless the owner is really wealthy and likes pumping money into a losing venture (think professional sports teams).

I guess I could go on, but I won't. I do hope I have made some points for you to consider. Owning a business definitely has its rewards, but there are many headaches. Most people do not have a clue what is involved in owning a small business. If you love cigars and think the business will be profitable, go for it! Good Luck!

As a fellow business owner. Uh... What he said. ^^

[CigarMonkel]

Originally Posted by BengalMan

You have Smoky's that pretty much ran the show up there, and now Ish opened up his new shop so that will provide a very high class B&M on the other side of town. Other than a few liquor stores, there really isn't any other shops. I will say this though, you will have some stiff competition just with those two shops.

Is Ish's store the one over on Jackson by the movie theater? Is it nice? i haven't been there yet. We are thinking about putting the Store in Downtown Dexter or Downtown Saline. Both REAL homey vibe/feel to them both. Dexter is a smaller town community but not REAL small with almost a classic old downtown kinda feel (you have to go there to understand i guess). Saline is the same way just a LOT MORE wealth in that area. Both provide tons and tons of foot traffic and some local coffee shops and dinners. That i am aware of saline has 1 cigar store which is not in the area we plan on make ours in and dexter has none. Thanks for all the input guys.

[thebiglebowski]

just my two cents, but being a former small business owner, you really need to check yourself around opening a business that sells products that are considered "disposable income" - especially in this economy and in this ant-smoking environment we find ourselves in. people are tightening their belts and i don't see that changing for awhile.

[raodwarior]

Forgoing the business part of this for a second remember the SCHIP bill is sitting on Pelosi's desk just waiting to see if the office od POTUS changes party. The self called annointed one has gone on record saying he will sigh it immediatly upon taking office.

With the bill including a federal cigar tax of between $2-10 per cigar it will be enough to put most of us B&M's out of business. If that doesn't make you pause, reread NLT's post above.

[gary106334]

Originally Posted by CigarMonkel

surprisingly in the past 1 1/2years... maybe not even there have been two new cigar shops open up in ann arbor alone. One JUST opened a couple days ago (still haven't been to it yet). which makes a total of.. 4 or 5 B&M's in ann arbor alone (not planning on starting one here in ann arbor)

Hell it was just the other way around here in Hemet, CA. We had 4 shops two years ago.................0 now.

[K Baz]

Saskatchewan need B&Ms we have 2 in our province to supply population of 1 million (of course all of us don't smoke cigars - but we should). Plus oil and the economy is doing very well and you can sell cubans.

I only let you know as I need B&M and a smoking longue and I am to lazy to do anything about it.

[NCRadioMan]

The b&m I call home also sells plenty of other items like lighters, cutters, humidors, hookha's, and other pipe and cigar accessories. Also, stiens, mugs, ACC stuff, lots of collectables, metal signs. Quite the variety.