Funding your Tobacco Shop
While the number of Americans who smoke is declining, small businesses that specialize in tobacco sales continue to grow with no signs of subsiding.
Many retailers have stopped selling tobacco products, such as some supermarkets and drug store chains. This development along with smoking bans in public spaces in a number of states, have helped drive business for tobacco shops, also known as tobacconists.
Tobacco stores owners face a unique set of challenges, particularly with new regulations. Both federal and state regulators have imposed restrictions for the sale, distribution and marketing of cigarettes, tobacco and smokeless tobacco products, such as e-cigarettes, to those over age 18. In some states, the minimum age is higher.
These challenges haven’t stopped growth in the industry. The number of tobacco shops in the U.S. doubled between 1998 and 2012, to more than 9,000, according to the most recent data from the U.S. Census. Tobacco shops in the U.S. range from small stores that sell cigarettes and other tobacco products to very upscale shops that focus on high-end cigars, with walk-in humidors and a smoking lounge.
The tobacco store sector may see significant changes ahead if marijuana is legalized in more states. While it may spur some tobacco shops to try to include marijuana in its offerings, it may not be attractive to other sellers such as those stores focused on high-end cigars. The impact at this point remains uncertain.
However, what does remain certain is that many small businesses will look for financing for a number of reasons. BFS Capital has been providing small business financing since 2002. We offer an easy application process and access to funds in as few as two business days for qualified applicants.*
Your inventory will play a critical role in drawing customers. Industry experts suggest keeping a mix of new and best-selling classics in order to retain current customers and draw new people to your store.
It is commonly known that 20 percent of a tobacco store’s inventory accounts for about 80 percent of sales, according to a Smoke Shops Guide blog post.
If you have a general tobacco shop, you’ll probably need to have different types of cigarettes, cigars and other tobacco products on stock. Specialty tobacco stores, such as cigar shops, require a wide variety of brands and types, depending on your clientele.
Many tobacco stores also sell accessories, such as lighters, cigarette cases, ashtrays, tobacco pipes; hookahs, electronic cigarettes, chewing tobacco and other types of tobacco products. Your inventory should reflect your target audience, which is important to consider when planning purchases. While there are times when many small businesses go through slow periods, having the right inventory is key to get through it.
BFS Capital understands how important inventory is for tobacco stores to succeed. We’ve been working with small businesses since 2002 to provide the financing you need with an easy and fast application process. BFS Capital can provide funds in two business days to qualified applicants,* so you won’t need to miss out on buying the best inventory for your business.
Owning a tobacco store means you will need to be aware of a number of complex regulations regarding your industry.
The Food and Drug Administration began regulating tobacco in 2010. All states require a retail tobacco sales permit, which can be quite costly, and some municipalities also regulate retail tobacco sales. If your store allows people to smoke on the premises, you may also need some annual certification from your state human services department and other agencies.
Tobacco products are also heavily taxed, so it’s important for tobacco store owners to be aware of the rules regarding tax collection and payment.
It may be beneficial to consider hiring legal or accounting experts with a specialization in tobacco stores to make sure your business is fully in compliance with all regulations. While the costs can be potentially high, the burdens of non-compliance may be even more significant to your business.
You should also review your insurance policies each year to make sure it covers your business adequately. While insurance for tobacco stores can be high, the cost of not having enough insurance may be higher if your business has a crisis.
As a small business owner, you need the flexibility of making the right decisions for the future of your tobacco store, but you may not always have the funds readily available to afford the best solutions. This is where BFS Capital can be the partner you need for easy access to financing to help your business meet regulatory requirements and be fully insured in case of adverse situations.
Tobacco Store Equipment
Tobacconists range from tiny one-room tobacco stores to luxurious cigar bars, with elegant décor and furnishings and walk-in humidors.
Generally, most tobacco stores will have display counters, shelves, a cash register, and credit card machines. For those stores that allow smoking on premises, an air ventilation system and other equipment are vital. You’ll also likely need chairs and tables for customers to use when smoking.
Storage for tobacco products is also important, particularly for cigars and fine tobaccos. No matter if you have the finest products, without correct storage temperatures, it can become stale quickly, and you’ll lose the opportunity to sell it. Walk-in humidors can be built for under $10,000 to several hundred thousand, depending on the size and other features.
Meanwhile, some tobacco stores are using specialized point-of-sales software for their sector. This software includes the standard features along with ones particularly important for tobacco shops, such as ID verification.
It’s important for tobacco shops to have operational equipment. You may be delaying buying new equipment or maintaining or repairing older equipment because you don’t have the cash upfront or don’t want to tie up your credit line. This is where BFS Capital can be the partner you need for easy access to financing for improving your tobacco stores.
BFS Capital can provide funds in two business days to qualified applicants so you won’t need to miss out on opportunities to buy and maintain your equipment.
As tobacco products are heavily regulated, marketing plans for your tobacco store may be different than those for other industries.
As with all small businesses, you need to reach your target audience. For example if your store sells a lot of e-cigarettes, you may want to focus your efforts on millennials, who make up the vast majority of the e-cigarette market. Meanwhile high-end cigar bars generally cater more to an older clientele, so it may be more effective to advertise in more traditional media, such as billboards, if permitted in your location.
Online efforts may vary as some major social media platforms do not allow advertising for tobacco products. You’ll need to find specific websites where smokers can reach each other.
Word of mouth and special events are the ways that many tobacco shops spend the majority of their marketing budget, but you’ll need to see if that is the most effective strategy for your particular business.
If you simply don’t have the time to create an effective marketing plan as you concentrate on managing your tobacco store, hiring a marketing consultant may be the best way to go. Often it makes sense to get financing for these marketing efforts. BFS Capital understands the importance of marketing, and we’re here to help you with tobacco store financing.
BFS Capital can provide funds in two business days to qualified applicants so you won’t need to miss out on the opportunity to grow your business through marketing.*
BFS Capital understands tobacco store financing. We can offer the financing solutions you need to succeed and grow your business.
We know the hard work it takes to own a tobacco store. You need every possible advantage in the marketplace. We are here to help you build your tobacco store, whether you need funding to purchase inventory, necessary expenses for regulatory concerns, marketing, or other purposes.
Unlike some financial institutions, BFS provides personalized service to our customers, and a relationship manager will be on-hand to help you make the right decisions for your business. We know you have many options for your tobacco store financing, but our focus on customer service makes BFS Capital the best choice.
We have a variety of funding solutions to meet your specific needs, with business financing from $5,000 to $500,000, and an easy application process that can get the funds to qualified applicants in as few as two business days.*
Let us help you realize the tobacco store of your dreams. For more information, call 1-888-905-4334