Opening a vape shop is like opening other retail shops except the inventory costs can be a little lower to maintain, and the regulations you will have to adhere to are complicated and cumbersome. Getting connected to a knowledgeable supplier reduces the learning curve dramatically. The better you research and prepare, the less you will have to learn “on the fly.”
- Understand Start-up Costs.
According to eshopper’s guide,” How to open a vape shop [step by step guide]”, Vape shops are a relatively cheap business to start with costs ranging from $25,000 to $50,000 depending on the size of the store and location.” This is in line with the cost to open any retail shop.
Of course, the better the location the more it will cost, and opening multiple locations will be an incremental amount more per location.
The report is only a year old, and the authors use actual numbers so I will include them here. They suggest that in addition to the standard costs of opening a retail location there are a few expenses unique to the vape industry such as, “E-Cigarette Kits & Accessories $7,500, Miscellaneous Vaping Accessories $10,000 to $20,000, iPad and Point of Sale software will cost around $2,500.” This adds another $20,000-$30,000 in addition to start-up costs such as insurance, licensing, and a lease for the store which varies by location.”
They also suggest having at least two months’ monthly expenses on hand when you start your business in case it takes a couple of months to get your business off the ground.
- Study the guidelines and laws around selling vape products.
The FDA has a list of guidelines and laws for anyone wanting to open up a vape shop. It is a comprehensive list of rules for selling each type of vape product. They also have additional resources listed on the FDA site. However, the FDA website only covers federal guidelines. Each state and municipality has a different set of regulations and taxes that govern vapes in that region. Some states tax vapes based on the quantity of vape juice in the device (mL), while others tax vapes based on the wholesale cost of the vape.
- Write a business plan and plug your numbers into it.
Now that you have gathered the important information you need to know (Steps 1 & 2) begin pulling together your business plan using any online business plan template. This will help you organize your thoughts, facts, figures, goals, and timelines both for yourself (better execution) and for others who may ask for it: legal, investors, banks, boards, etc.
In your business plan address how, you are going to handle the following:
- On-going monthly expenses (fixed costs)
- Maintaining Inventory: Wholesale juice cost, devices, disposables, wholesale vape pods, and merchandise.
- Online, or Brick and Mortar? (Paying rent, or a web designer, or both). Online retail in the vape industry is very expensive and highly regulated. Make sure you do your homework if you plan on launching an online vape business to see if it is feasible.
- Sole proprietor, LLC, Corporation, Incorporation costs
- Timeline of your important benchmarks with associated costs (open by, hire employees by, stock inventory by, open doors by, etc.) You will need this to make sure you have enough capital on hand for each stage prior to opening your doors and then budgeting month to month.
- How you will effectively promote your vape shop.
- Choose the Right Products and best vape supplier
Find a knowledgeable supplier with helpful personnel. This will be your lifeline to obtaining popular products at the right time in the right quantities. You should be able to leverage their infrastructure to handle on-time deliveries. Leverage their creative team to provide marketing collateral, store displays, posters, and marketing collateral. The supplier should be well-stocked, well respected, and have the infrastructure to handle everything a smaller retail organization does not.
Make sure that the vape supplier has great shipping, sales, and marketing teams. You should also check out whether you can purchase wholesale disposable vapes and wholesale vape pods with them because they are the hottest selling items on the market. If they do not, look elsewhere.
- Review, Fine-Tune, Wash-rinse-repeat
You will continue to learn and improve your business over time. Go back to your business plan frequently. Are you “on course”? Have things changed? Going back to your original plan will keep you focused on achieving your goals.
