Despite public health initiatives and anti-tobacco laws, demand for cigars remains high. In fact, restrictions on where individuals may smoke may benefit cigar businesses. Cigar stores, if permitted, can serve as smoking lounges and are one of the few venues where individuals may still enjoy a smoking product.
Cigar lounges in the United States have increased at a 2.7 percent annual rate in recent years, with an annual revenue of $903 million, according to IBISWorld. With just 930 companies in the market, there is plenty of room for newcomers to build cigar stores.
Table of Contents
Follow these ten steps to open a cigar shop:
Prepare your Cigar Shop
Create a legal entity for your cigar shop.
Fill out a tax registration form for your cigar shop.
Create a Business Bank Account and a Credit Card
Create an accounting system for your cigar shop.
Obtain the Required Permits and Licenses for your Cigar Shop
Purchase Cigar Shop Insurance
Establish your Cigar Shop Brand
Make a website for your cigar shop.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. This basic guide to opening a cigar business has been put together by us. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses associated with operating a cigar shop?
The initial investment required to launch a cigar store is substantial. Lionel Melendi, proprietor of a cigar store in Brooklyn, advises company entrepreneurs to have at least $500,000 in capital. Savvy company entrepreneurs, on the other hand, may be able to operate a store for less money up front.
The following are some of the most significant costs associated with operating a cigar shop:
acquiring a business location
constructing the site
acquiring inventory to sell
purchasing a humidor for cigar storage
purchase of cutters and lighters (if also serving as a lounge)
There are also legal and insurance fees to consider.
Business owners with limited resources might save money by choosing a smaller site in a high-traffic region. If solely selling cigars (and not operating as a lounge), a mall kiosk may suffice. Alternatively, a small storefront at a major junction may be ideal. Cigars don’t need much room to exhibit or store, thus overall area isn’t as crucial.
Business owners may order a variety of cigars but not too much of any one cigar to cut overall inventory expenses. Cigars are tiny and light enough to mail in one or two days if required. While frequently overnighting orders isn’t a good long-term strategy, it allows entrepreneurs to get started without locking up too much cash in inventory, which might take months to sell.
The humidor is one expenditure that company owners should not scrimp on. A excellent humidor might cost up to $20,000, but it is essential. The humidor keeps the cigars fresh and prevents them from spoiling. A shop’s whole stock might be damaged if it does not have a high-quality humidor.
What are the continuing costs of running a cigar shop?
A cigar shop’s continuing costs are modest. Employee salary, leasing and utility bills, and inventory expenditures are all included.
Who is the intended audience?
Cigar smokers have generally been assumed to be elderly males. This is still true in general, although patterns among cigar smokers are changing. A cigar shop’s target market is as follows:
98 percent male, however female participation is increasing
mostly between the ages of 40 and 60, but expanding among young persons
Regardless of gender or age, knowledgeable about cigars
What is the business model of a cigar shop?
The sale of cigars generates revenue for a cigar store. Cigars are often offered in sticks or boxes.
How much money may you charge your customers?
According to Holt’s Clubhouse, cigars normally cost between $5 and $8 and may cost between $40 and $50. In certain circumstances, sought-after cigars may be even more expensive.
What kind of profit can a cigar business make?
A successful cigar store company may generate a lot of money. Mike’s Cigars in Miami sells 1.5 million cigars every year. Mike’s Cigars generates tens of millions of dollars in yearly earnings only from cigar sales.
How can you increase the profitability of your company?
Profits at cigar shops may be increased in a variety of ways. Lottery tickets, drinks, and food products, as well as other smoking-related things, may be sold in shops. Some stores offer cigarettes, tobacco, hookah, and vapes. Shops may even design their own white label cigar brands to sell.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
If your cigar store is sued, becoming a legitimate business organisation, such as an LLC or corporation, prevents you from being held personally accountable.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for Federal Business Licensing
The federal government’s Food and Drug Administration regulates the sale of tobacco products. Examine the FDA’s website on tobacco retail regulations.
Requirements for State and Local Business Licensing
Certain state permissions and licences may be required to run a cigar store. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.
For information on local licences and permissions, visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A cigar shop is often conducted from a storefront or standalone structure. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can get a valid CO for a cigar store company.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building regulations and zoning criteria for your business’s location to guarantee that your cigar shop is in compliance and may receive a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Market and Promote a Cigar Shop
The marketing of a cigar store should be aimed at recruiting local cigar smokers. Storefront signs, as well as local ads, are excellent marketing tactics. Advertisements may be put in newspapers, on the radio, and at local taverns.
Cigar shops may find success marketing to companies or placing machines in local pubs or clubs in addition to selling to individual clients. These are less clear since companies may avoid tobacco items and cigar-selling machines aren’t authorised everywhere. However, if achievable, any of these may deliver a large sales gain.
How to Keep Customers Returning
Because just a small percentage of the population smokes cigars, cigar shops must keep regulars coming back. Treating frequent clients well, keeping new cigars in stock on a regular basis, and hosting special events all promote return visits.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.