Starting a Cigar Shop

[Doogie]

the best thing you said was "customer service", thats what its all about. that keeps the guys comming back

[Jonesee]

LPS, maybe I can help a bit. I have a long history with this type of thing and I've bought and sold my own business.
It looks like you have some sound basic research.

* Your traffic count seems high at 22,000 cars every 48 hours in a community that has a population of 23,000-50,000. My guess is it is a major thoroughfare. If it is, do you have easy accessibility from the road? Will you be on a corner? Accessibility and visibilty are paramount.

* Have you crunched the numbers? Do you have enough cash to set up the store? Pay the lease, buy the humidors and stock them?

* After setting up the store and opening for business will you have enough savings remaining to remain open and live off of for the first 3-6 months?

* If possible, stay away from debt for capitalization. If you are going to a bank be prepared for them to require a minimum of 50% equity if not closer to 70% and it is unliklely they will floorplan your inventory at all. Count on them asking you to personally gurantee the note.

* Once in business, being visible and part of the community is everything. You will need to be known and liked by everyone and your store will need a welcoming reputation. Count on joining a Rotary Club, supporting little league teams, high school sports and various local charities. I don't know how old you are, but be prepared to hook up with the fraternities and organizations on campus.

Of all the retail stores, cigar stores appear to have a low cost of entry. Cigary is right though. You are looking at a retail business for non-essential products. People are going to do without cigars before they cut back on alot of other purchases.

And finally. Do you like your weekends? Forget about them. As a business owner I woked 6 days a week 12 hours a day day-in and day-out. I had it easy compared to my parents who owned a successful retail business and never took a vacation day for the first 9 years... 30 years later however, they retired to a life of comfort we all dream of.

OK. If after all of that you still want to give it a run I wish you all the best. If you need any help at all just send me a PM I have some time and there would be no charge. I trust I am not in your area and I am sure I have a non-circumvention agreement around here I would sign so you know I wouldn't steal your idea. I would be glad to look over your business plan or give you hints on creating one. I'll also be glad to look over your lease, potential bank notes, or anything else. I have over 25 years experience in this type of thing and maybe I've seen something or made a mistake you can avoid.

Best of Luck on your endeavour. Please keep us posted I am pulling for you!!!!!

[BlueHavanaII]

Originally Posted by Jonesee

LPS, maybe I can help a bit. I have a long history with this type of thing and I've bought and sold my own business.
It looks like you have some sound basic research.

* Your traffic count seems high at 22,000 cars every 48 hours in a community that has a population of 23,000-50,000. My guess is it is a major thoroughfare. If it is, do you have easy accessibility from the road? Will you be on a corner? Accessibility and visibilty are paramount.

* Have you crunched the numbers? Do you have enough cash to set up the store? Pay the lease, buy the humidors and stock them?

* After setting up the store and opening for business will you have enough savings remaining to remain open and live off of for the first 3-6 months?

* If possible, stay away from debt for capitalization. If you are going to a bank be prepared for them to require a minimum of 50% equity if not closer to 70% and it is unliklely they will floorplan your inventory at all. Count on them asking you to personally gurantee the note.

* Once in business, being visible and part of the community is everything. You will need to be known and liked by everyone and your store will need a welcoming reputation. Count on joining a Rotary Club, supporting little league teams, high school sports and various local charities. I don't know how old you are, but be prepared to hook up with the fraternities and organizations on campus.

Of all the retail stores, cigar stores appear to have a low cost of entry. Cigary is right though. You are looking at a retail business for non-essential products. People are going to do without cigars before they cut back on alot of other purchases.

And finally. Do you like your weekends? Forget about them. As a business owner I woked 6 days a week 12 hours a day day-in and day-out. I had it easy compared to my parents who owned a successful retail business and never took a vacation day for the first 9 years... 30 years later however, they retired to a life of comfort we all dream of.

OK. If after all of that you still want to give it a run I wish you all the best. If you need any help at all just send me a PM I have some time and there would be no charge. I trust I am not in your area and I am sure I have a non-circumvention agreement around here I would sign so you know I wouldn't steal your idea. I would be glad to look over your business plan or give you hints on creating one. I'll also be glad to look over your lease, potential bank notes, or anything else. I have over 25 years experience in this type of thing and maybe I've seen something or made a mistake you can avoid.

Best of Luck on your endeavour. Please keep us posted I am pulling for you!!!!!

Great advice!

Couple of other things:
-Do a business plan before you commit to anything. This will not only get you thinking, but give you great guidance as well as the necessary documentation for any loan. score.org has templates.

-When you write your business plan, double your costs for buildout and inventory and halve your revenues. You need to go into this realistically.

-Plan on being in the shop every hour it is open for the first year or two. You will have to learn your customers habits and needs.

-Check out Tobacconist University and get certified. The knowledge there is a necessity.

-Keep your eyes on your state legislature. Smoking bans and tax increases are constantly changing!

Good luck!

Jim

[LPs]

Thanks for the great advice! I have been working on a business plan, and luckily me and a friend are doing it together and are committed to being open from 9am to 9pm everyday! We are both in college he is an undergrad, and I am a grad student. We have both been working and saving so that when we open there will be no loans necessary, and we don't plan on buying a place just renting a place for $650.00 a month. I also planning on making a website to sell goods and advertise, and I think that dealing with fraternities is a great idea.

[chippewastud79]

I understand that you are saving, but do you really have over $100,000 to start this thing without a loan? You are going to have to make some pretty serious initial orders from major manufacturers to have their product in your store, not to mention premium humidors to keep them in and an entire computer system. I know in time, with your research you will have all the concrete numbers but it sounds like a hell of an investment to be able to afford without a small business loan.

[Arnie]

Originally Posted by LPs

I have been thinking about starting a cigar store. The closest cigar store is roughly 25 minutes away, and it lacks a good selection and customer service. I first thought that the cigar stores were located in this city due to good demographics, but I compared the demographics between my city and and the one with cigar store. The demographics for my city were far more superior, which leads me to believe that if I opened a cigar store here it would be successful. I am thinking about renting a place where the traffic volume over 48 hours averages 22,000 cars, and I plan on buying three commercial humidors since I can't build one in the store.

Are there any recomendations before I start to make my first move? Sorry I did not tell the city where I am located, but I did not want anybody to get any ideas. However, it is a college town that ranges from 23,000 to 50,000 when school is in session. I would greatly appreciate some tips!!!

Do you have any business experience? What are the terms of the lease? Have you spoken to the cigar wholesalers in your town? The factory reps? Do you have any savings to live on just in case your shop doesn't start making money for a couple years? Are you familiar with the ocean of cigars, their flavor profiles, fillers/binders/wrappers, all the different sizes and how the sizes may taste a little different, do you feel confident to make recommendations when someone comes in to ask for your help? There are so many things to consider. The reason I want to ask you is that I've been in the restaurant business for over 30 years and you cannot imagine how many times I've seen someone get into the business without having lots of experience and they fail. It's not that easy. Do your homework and ask yourself if you are ready to make a huge sacrifice in time and effort. Does your family back you?
Give us a little info before you ask for our opinions or else we can't help you.

[snowboardin58]

I will say that the smoke shop here at Michigan State University in East Lansing, Michigan, us owned by the son of the original owner and he has an employee who is always there to take over and work when he can't. The only employee will be taking the business over eventually, but regardless, the place has been around since the 50's I believe. It looks like it too! It is a small shop and the humidors have some great sticks, some good sticks, and a good amount of hardly heard of but decent to good sticks. Oh, and they always seem to have the best prices! On just about anything.

[carterwsu]

I have frequented many cigar stores, and went to a university which has the same population stats. It seems, unfortunately, that bringing in new customers for the sole purchasing of cigars is not a successful way to go. Most successful cigar stores that I have seen, sell cheap cigarettes, chewing tobacco, and liquor (if possible). Their main focus is and will always be cigars, but it is a way of getting new clients in the door. Offer an environment that is condusive to spending free time in the shop. This may range from having "the game" on, to offering card games/dominoes/board games that allow patrons to spend time entertained, while spending money on the inventory.

The second point you need to concern yourself with, is taking an honest look at your clientele demographics. Your starting a shop in a college town, where there may/may not be people with free money to spend. Keep your inventory realistic to what the price range of your customers can spend. Now, I am not saying only sell this or that price range of cigars, however keep in mind that an average college student will not drop $8-$10 on a cigar very often.

Some questions/thoughts to ponder
Look at ways that local businesses increase sales through advertising and promotions.
Is there a local college newspaper that offers cheap advertising?
Can you maintain business hours during the summer months when the population decreases?
Lastly, the most important lesson I ever received about business. Can you handle some failure, and still persevere towards success?

Good luck and best wishes on your endeavor.

[pdubbz41]

Let me first say good luck,if there is any advice I could give u it would be to think about roling your own cigars.believe it or not if u have a talanted roller and a good blend thats all u need.I m not telling u to stay away from the industy sticks but u can make more profit on your own.

[rlaliberty]

My only advice is to sell something else too....maybe wine or coffee products.

[winston]

I don't have any advice I just hope your opening in Chattanooga, TN or North Georgia area we need another one here.

[fiddlegrin]

Originally Posted by LPs

I really don't want that big of a place just a small place that has a cheap rent. Luckily, I will not have to take out a loan to start the shop, but I would like to make some money back eventually.

It might be usefull to consider getting some experience by doing some hours in someone else's shop. Paid or not...

Best wishes,

[tjwheels]

If possible get into some festivals, beer & wine, music (anything outdoors). I had a friend in the business and he made more money in the festivals then he did in his store. In the end he was still taxed out by the state and dropped cigars from his store.

[Saint Jimbob]

Good luck on the venture. I'd get a couple partners, if for no other reason than to spread the risk a bit. I've been considering something similar, but with the current economic and tax climate, we may have to look at alternative business models.

I've been thinking about the co-op model, where you have members which invest in the co-op and thereby get a discount. Or, these members could donate stock (cigars, etc) for credit in the communal humidor. Someone much smarter than I would have to hash out the details.