In this 10 part series, we are going to pull back the curtain and take you behind the scenes as we started our wine and liquor store. We recommend starting at the beginning. Some of this information will be specific to our store and New York State, but we will try to keep most of the information general to apply to a variety of brick and mortar stores. If you have any questions, please leave them in the comments and we will do our best to answer.
>> Introduction – 10 Part Series: How to Start Your Own Business
>> Part 1 – Find Your Desire: Why Do You Want to Open a Store?
>> Part 2 – Research the Market: Will it Support Your Product or Service?
>> Part 3 – Finding the Ideal Location
>> Part 4 – Get Required Licenses
>> Part 5 – Prepare the Location
>>Part 6 – Waiting for Licenses
>> Part 7 – Getting Approved
>> Part 8 – Final Preparations
>> Part 9 – Grand Opening
>>>> Part 10 – 1 Year Review: A Look Back (You Are Here)
Well here we are, our final post in this 10 part series. It has been a lot of work for us to put the series together, so hopefully you have found some value along the way. If not, then this is our last chance and we will try to make it fantastic for you! To be honest, I’m hoping this post is the most valuable of them all, and I believe that it will be. Up until our grand opening, everything was just a plan or a guess. Once the store officially opened, everything suddenly became real. In this post, we will go through the various aspects of our first year in business.
The First Week
Our goal in starting this business was to create a business that would generate us an additional stream of income, and not just another job. In order to do this, we needed to hire people and create systems that would allow the business to operate without us. Just like the guy who owns the McDonald’s in your town, we wanted to hire others and not be working in the store everyday. If you looked at our first week, we failed pretty miserably.
If you are interested in learning more about building businesses and systems, we highly recommend The E-Myth Revisited (Book | AudioBook) and The 4-Hour Workweek (Book | AudioBook | Our Review). We use the concepts within those books to run all of our businesses.
Going into opening day we had hoped to have several employees already hired and trained, but we had 0 employees on the day we opened. Ariana and I worked at the store the full day Saturday and the full day Sunday (after the previous couple of long weeks and long hours). Then on Monday I had to return to my day job. Without having employees hired, Ariana took Elena and worked the day shift for the store (11 AM – 5 PM) and I drove down after my day job and worked the night shift (5 PM – 8 PM). We live ~45 minutes away from the store, so during that week I was leaving the house at 7 AM and getting home around 9PM.
The good news is that we quickly hired 3 employees (1 full-time and 2 part-time). Over the next several months we only had to fill in occasionally at the store. During the second half of the first year, I (Tom) only actually worked at the store on 3 occasions when an employee could not work.
Business Plan vs. Reality
One of the most interesting items to look at after the first year was our business plan. Even though we did quite a bit of research and planning, there is only so much estimating that you can do with opening a new business. Here were some highlights from the business plan vs reality.
- We originally planned to have 3 employees + Ariana (Manager). We now have 5 employees + Ariana.
- We spent a little more on our sign and shelving than we anticipated, which reduced how much inventory we could initially stock. We believe this was money well spent.
- We underestimated the amount of money we would spend on replenishing and growing our inventory.
- We exceeded our year 1 target revenue by $28,000+.
Things We Did Well
There were some items that we did that made a business difference in our first year in business.
- We purchased a point of sale system. This allowed us to do a variety of reporting, including automatically generating a reorder report based on setting reorder levels for each product. This greatly reduced the time spent reordering inventory. Additionally, we could run a variety of reports to help make business decisions (ex. top-selling products during a period).
- We hired great employees. We hired for personality and it paid off. Our employees were not always experts on wine, but that can be trained. There is no replacement for a great personality and enthusiasm. Our customers love our staff and the experience of our store.
- We documented all of our procedures and steps in a binder for employees. We trained them on these processes and it provided them a self-help reference when needed.
- We focused on building our Facebook page. As of this writing we have 929 likes. We have been able to connect with our customers. Additionally, we can share new products and promotions with them. Not only is this low-cost marketing, it reaches a good portion of audience and allows us to interact with them.
- We implemented a request list. This allowed customers to request products. So as we ordered new inventory we were able to stock what our customers wanted. Asking your customers what they want is much better than trying to guess.
- We focused on New York State wines, several from small wineries. The big wine and liquor stores often did not carry these wineries because they self distribute, so we had a niche from targeting local wine.
- We created processes for just about everything that we did. For example, we created a spreadsheet to assist with reordering that reduced time spent and allowed us to stay within our budget based on sales and expenses.
- We really focused on providing a great experience at the store. In a future post, we will walk through all of the things we have done to make shopping for wine easier in our store.
- Because our personal incomes come in from multiple other sources, we can reinvest all profits back in to grow the business faster.
- Our first few months we did not have a process down to determine how much we should spend on reordering inventory each week. This meant that we had to contribute personal funds on a few occasions to cover our orders.
- We did not look close enough at when various taxes were due. Since sales tax is due quarterly, we assumed it ran Jan-March, when in fact it ran December-February. Because Christmas & New Year are the two biggest sales weeks, not only was out sales tax due a month before we thought, but it was also higher than we initially anticipated.
- We initially had our accountant handle our payroll. After reviewing, we spent $2,400 during the first year to have him handle payroll and filing sales tax. After review, we switched to ZenPayroll and filed sales tax ourselves. This saved us $1,360/year.
- We did not review our Profit & Loss report as often as we should’ve. Otherwise we would’ve made changes (like switching our payroll provider) earlier.
- We did not send our employees through alcohol awareness training. We recently did this and it helped answer a lot of their questions. Given that we are selling a product that is restricted to people 21+, it is important for our cashiers to understand how to verify a license and when to deny a sale.
- We should have requested additional funds at start-up. When ordering inventory, discounts are applied to ordering multiple cases. We missed out on some of these discounts initially as we were trying to get a broad selection of products. More funds at the beginning would have allowed us to have both a broad selection and a lower cost per case.
Overall we have had a great first year. We have been embraced by the community and continue to expand our client base and selection of products. We have partnered with local organizations to organize events such as Wine in the Valley, which brought 500 people out to taste various New York State wines this past fall. We have also learned a ton about operating a retail store. This is quite different from many of our other business ventures and we have enjoyed the experience.
We really hope that this series helped pull back the curtain and show you the steps required to open a brick and mortar store. Obviously each type of store will have its own nuances, but the general process should be similar. If you would like assistance in starting your own business, please contact us an we can assist you. In the future, we will pull back the curtain on our other businesses as well, including many of our tips and tricks for managing not only the businesses but also our family and relationship.
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