Vape shops sell standard and custom e-cigarettes. Vaping is a legal business. Before opening a shop, it’s important that you research the regulations in your city and state. The cost of opening a vape shop depends on where you live and how big your business is.
In five easy steps, you can start your own vape shop.
1. Explore the Different Types of Vape Shops
There are many types of vape shops you can open. Although most vape shops require a physical location to operate, it is not necessary. An ecommerce-only vape shop can be set up that sells juices or other products online. You might consider opening a franchise vape shop to provide you with a brand and system for operating your shop.
Online Vs Brick-and-mortar Vape Shop
Customers can visit vape shops to get information about vaping devices and juices. If you don’t have a physical location, or if your customers prefer to order juices and other vaping products online, an ecommerce platform is something you should consider.
Vape shops with physical locations
Before you open a brick and mortar vape shop, make sure to check the municipal zoning restrictions. Zoning restrictions may prevent you from opening a store in a particular location. Many cities have restrictions about how close a shop can be to schools or churches. This information can be used to help you in your commercial real estate searches.
Ecommerce for a Vape Shop
It will be difficult to sell if you only go ecommerce. There is fierce competition in Google for vape products. It is a good idea to combine your website and other marketing strategies such as video marketing or social media marketing if you are looking to attract ecommerce customers.
Many POS systems also have ecommerce capabilities. You should be aware that not all payment processors will process online vape sales. They may consider them high-risk and refuse to pay you. If you are interested in ecommerce, ensure that the company processing your payments is able to accept vape shop products.
Vape Shop Franchises
If you decide to buy a franchise for a vape shop, the corporate office can help you prepare a business plan and make financial projections. A franchise like Premier Vapor has already opened 14 vape shops across the U.S. A franchise comes with a high upfront cost and royalty. Premier Vapor requires an upfront investment of between $85,000 to $120,000 from the owner.
You will use a business plan to convince people that your vape shop idea is great. A solid business plan will outline the potential for opening a vape shop, and how it will make money. If you require funding, decide if you will make a traditional or modern business plan. Financial projections are what determine how much money your vape shop can earn each month. This is the most difficult part of a business plan.
Modern vs. traditional business plan for vape shops
To get capital from a bank, investor or other financial institution, the traditional business plan is required. Similar sections are found in this business plan, such as the executive summary, management background, target market, and target market. A Business Model Canvas (BMC) is a more modern form of business plan. The BMC is a visual plan that includes updated sections such as key channels, value propositions and key activities. The BMC is recommended even if you do not seek funding.
Banks are beginning to accept the BMC as an alternative to the traditional business plan
Market Research for a Vape Shop
Market research is an important part of your business plan. It helps you to determine whether there is demand for your vape products. After you have identified the ideal customer for your vape shop, use ReferenceUSA to access market data. This data is free and available at thousands of libraries around the country.
Look into vape shop regulations in your area and state during your market research. It’s a good idea to include all relevant information from the state and local regulatory agencies in your business plan if you are looking for funding. Vaping shops are considered high-risk because of the many local regulations. San Francisco, for example, has banned the sale e-cigarettes. The official websites of your state or city will provide you with the necessary information.
Competitor analysis is the study of your competition to find out what makes your vape shop stand out. It is easy to identify your top five competitors in vape shops. List their strengths and weaknesses. What advantage does your company have over your competitors? For example, brand recognition. You know your business will succeed if it has the best lounge shop.
The most time-consuming and difficult section of a business plan is the financial projections. This section outlines how much money you will need to open your vape shop, as well as how much it will make each month. You will need to research the cost of operating a vape shop if you have never owned a brick-and mortar business. To document your forecasts, you will typically use a financial project work sheet.
Here are the details you should include in your financial projections for your vape store:
- What amount of money is needed to open your doors (also known as startup expenses).
- Monthly breakdown of income and expenditures for the first year
- Monthly breakdown of income and expenditures for the second year
- The three-year breakdown of income and expenditures by year
When creating financial projections for your vape shop, it is important to consider taxes. Although vape products are exempt from federal taxes, sales tax is often charged by many states. Minnesota, for example, charges a 90% excise tax. Your state may charge additional taxes. They could make the difference between making a profit and losing money.
Vape Shop Location Prices
This step might be difficult if you have never owned a retail shop before. It is important to determine the cost of building and maintaining your retail store before you create financial projections.
The cost of building out can vary widely from less than a thousand dollars to more like $50,000. Prices will vary depending on what features your store has such as custom lighting and luxury furniture. You may need to get estimates from others on monthly expenses such as rent, utilities and phone.
Software for Business Plans
It can be overwhelming to learn all the details required for a business plan. A business plan software can help you if you are having trouble writing a business proposal with financial projections. Live plan guides you through creating a business planning system. You can also find examples, such as a business plan for an online tobacco store. This is very similar to a vape shop. Live Plan pricing is $19.95 per month.
3. Get the capital you need to start your vape shop
A minimum investment of $25,000. is required to open a vape shop. A bank, investor or crowdfunding can provide the capital necessary to open a vape store. Start your business in an area that is affordable and keep the build-out costs low to keep startup costs down. The cost of renovating your premises is called the build-out cost. You might also need to purchase inventory, license fees, and operating technology like a POS.
The most common way to obtain funding for your business is to apply for a loan from the bank. Many new business owners don’t realize that in order to obtain a bank loan you must have the funds in a bank account. If you want $75,000 for your vape shop to open, $75,000 must be in a CD the bank can access. This is required by the bank so that if your business goes bust, the bank can get its money back. Startups are considered risky by the bank.
Find an Investor for Your Vape Shop
Connecting with investors is another option to fund your vape shop. In exchange for money, investors will typically want equity in your company. An investor might lend $75,000 to you in exchange for half of the business’ ownership. You may find that half the business is better than none, even though you will be giving up 50% of your ownership and profits.
It is hard to find an investor. If they do, their first consideration will be your financial projections. They want to know how fast they can return their money.
Start a Crowdfunding Campaign
Potential customers can pre-order products and services through a crowdfunding campaign. You will reward customers who pre-order products and services when you open. Crowdfunding can be a great way for you to attract customers before your vape shop opens. It also gives you credibility as an investor.
Your network and your ability persuade people to buy vape products from your business before you open it will determine the success of your crowdfunding campaign. A crowdfunding platform typically charges a 5% processing fee and a 3% fee for hosting your campaign. This fee allows you to use their site to host your campaign. Your campaign could be selected as an Editor’s Choice and promoted on the platform, although this is uncommon.
Make sure that your crowdfunding platform supports nicotine products before you start planning your campaign. Popular crowdfunding site Kickstarter prohibits the sale of vape-related products. However, a vape shop campaign raised thousands by exploiting loopholes in this system.
You will need to complete the usual tasks of opening a new vape shop, such as registering it with the state and opening an account for business checks. All federal, state, as well as city regulations must be followed. The regulation of vaping and ecigarettes is constantly changing. Some cities, such as San Francisco, have banned the sale entirely.
Get an Employment Identification Number
As a potential vape shop owner, one of your first legal tasks is to obtain your Employment ID Number (EIN). This number is your federal business name that the IRS uses to collect income and payroll taxes. This number is also required to open a bank accounts.
Register your Vape Shop Business
Every vape shop must register as a legal entity. Registering your business as a legal entity protects you personal assets in case of a lawsuit. An LLC is the most popular form of small business registration. You can register your company by going directly to the website of your state or you can save time and frustration using an online legal service.
“If someone is interested opening a vape shop or other small business, I recommend they form or incorporate an LLC. The incorporation of a business creates a separate entity. This protects your personal assets and ensures that the business is legally protected. You can also save taxes and establish a professional identity for your company.
–Deborah Sweeney, CEO, Mycorporation.com
Obtain State & Federal Licenses
You must be aware of the changing vaping regulations in your state and federal jurisdictions as a shop owner. Recently, the Food and Drug Administration (FDA), issued an application requirement to all vape shops that mix liquids or assemble electronic cigarettes. The application deadline was extended to 2021. The implications of the application for vape shops are unclear due to the language. Some believe it will lead to the death of vape shops , as most vape shops assemble products. The FDA application can cost upwards of seven figures.
Others believe that the FDA regulation could be beneficial for vape shops. One way to get around the regulation is to make your shop 18 years old or older, in a manner similar to an adult shop. This will prevent convenience stores from selling vape products. Customers may instead shop at your store, which could increase your sales. These laws and regulations are constantly changing. It’s important that you keep up-to-date with the latest developments by following a vape advocacy group such as Consumer Advocates for Smoke Free Alternatives Association.
Other than the federal regulations, each state and city has its own regulations for vaping and ecigarette businesses. Visit the official websites of your state or city to learn more about these regulations and obtain the appropriate licenses.
Vape Shop Liability Insurance
Vape shop owners should have liability insurance. This insurance protects you against the potential liability for selling vape products. There have been instances where e-cigarette batteries have exploded. You want to protect your business if one of your customers injures you and files a lawsuit against it. A vape shop’s liability insurance costs on average $750 annually. This is slightly more than the industry average.
Register for a Business Checking account
After you have obtained your EIN number, it is necessary to open a business checking bank account in order to start expenses for your vape shop. You should not have business and personal checking accounts. This will make it easier for the IRS to audit you. Chase Business checking offers startups secure and safe checking with a minimum balance $1,500.
5. Buy Your Vape Products
Vape products are essential before you open your doors. This step is worth researching as there are many vape wholesalers. White labeling, which is also known as selling vape products with your label on them, may be an option. You will need a point of sale (POS) system in order to sell your products in-store.
“We recommend that you open a herbal vaporizer shop. Concentrate your efforts on vaporizers that are designed for herbal oils, blends, and concentrates. Vaporizers are a popular method of delivering herbs. You will be able to stand out and appeal to a larger market that is more concerned about their health and wellbeing if you focus your attention on herbal vaporizers, and not the other nicotine delivery methods. You won’t be limited by the rapidly increasing number of nicotine cigarette laws.
–Damon Inlow, Owner, Vaporizers.ca
Get connected with wholesale vape product suppliers
The first decision you make as a shop owner is to decide which company will buy your products. There are hundreds of wholesalers selling vape products. Wholesalers are companies that offer bulk discounts on products so you can make a profit and sell them in your store.
Here are some questions to ask wholesalers before you make your purchase.
- Which country will you buy from?
- Which brands would you love to see sell?
- How much does shipping cost?
You should only carry brands you use when you open a vape shop. These brands will be easier to promote as you will already have a high opinion of them. You’ll also experience fewer returns because of their quality. Before you sell these products, make sure you do your research. E-juice regulations are constantly changing. Make sure you’re familiar with your state and country’s laws. It is not a good idea to have a lot of products that you aren’t able to sell.
Chris Innes, Owner, Elevated vaping
White Labeling Vape Products
White labeling products can help you expand your brand to juices. White labeling refers to when you take a product from another company and add your brand to it. Many white labeling juice companies will help you create your custom label. It costs about $21 to buy the juice, and $250 to purchase 100 labels.
The first step in opening a vape shop is to hire staff. You can also market your business early by publishing a press release. Market your business to potential customers. You can use both physical marketing techniques and online marketing strategies to get the word out about you business to potential customers. A grand opening could also be a good idea to announce your business to the community.
Hire Staff For Your Vape Shop
You may be the only employee in a small vape shop. Most vape shops require more than one person so you will need to hire additional staff. Average hourly pay for a vape shop representative is $9. To incentivize staff to increase customer spend per purchase, you might consider creating a commission structure. Indeed is a website that allows you to post job opportunities for free.
Manage and pay your vape shop staff
It’s important to find out if your POS software offers a free or low-cost option for employee management. Many POS systems offer employee scheduling that allows staff to check in/out of their shifts. You will also need to pay your employees. Gusto, a low-cost payroll software, starts at $45 per employee and $6 per month for each additional. It offers onboarding support as well as employee benefits administration.
Vape Shop Press Kit
Journalists should be informed about the openings of local businesses. Journalists will prefer to read a press release about your vape shop. This is a brief summary of your business. It is important to follow a specific format when creating a press release. After you have written your press release, you can either email it to local newspapers, or you can use an eReleases company to distribute it to journalists across the country for $199.
A press release should include a hook, or story that journalists may be interested in. If you decide to open a vape shop after quitting smoking, then you should share your story. Include photos of your business in your press kit.
Vape Shop Grand Opening
Grand openings are an occasion where you open your vape shop. It doesn’t need to be scheduled on your first day of business. The event doesn’t even have to last a whole day. Grand openings are a great way for your shop to be noticed.
It’s also a great hook for your press release. Local journalists will have a story to report on this. There are many types of grand openings. Consider a three-hour event that offers free food, discounted products and giveaways.
Promote Your Vape Shop
Online and traditional marketing are both options for vape shops. Traditional marketing is physical materials that are useful for networking and to use in your shop. Online marketing encompasses everything digital, such as a website, Google My Business listing and social media pages.
Traditional Marketing for Your Vape Shop
Traditional marketing includes purchasing printed materials such as flyers, flyers and mailers. You will need business cards to distribute at networking events if you are a new owner. You may also want to sponsor local events and hand out flyers. It is important to align your branding before creating marketing materials. This includes logos and messaging as well as colors.
Online Marketing for Your Vape Shop
Your vape shop has a lot of potential for online marketing. It is important to stay up-to-date on the best ways to market your shop to your ideal customers. Vape shops still need a website. Email marketing is also a great way to build anticipation for your grand opening.
These are the basic online marketing opportunities available to a vape shop:
- Website: Your website is your online billboard. Even if you don’t sell products online your website can convince potential customers to visit your shop with photos of the store, juice descriptions and testimonials. Hosting is essential for any website that stores online information such as photos. Hosting is essential to keep the website online. Dreamhost offers reliable, secure hosting for your shop.
- Google My Business Any business with a physical address and that is actively seeking local customers receives a Google My Business (GMB) free listing. This listing can be claimed, filled out and updated frequently. It will help you get your business’s information on Google and in front people searching for vape products.
Google My Business allows customers to message you questions right in Google
- Social media. Vape shops are not as successful as they were a few years ago. It is still an opportunity to reach loyal customers for free. Instagram is an excellent tool for visual businesses to reach customers.
- Email Marketing: Build anticipation with family, friends and local acquaintances before opening your shop. You can keep them updated with the progress of opening your vape shop by sending them email updates. Email marketing is a great way to keep in touch with your loyal customers by offering them vaping tips and new products.
After you have prepared the market for your debut vape shop, it’s time to officially open. It will be easier to manage customers if you do all the research and planning upfront.
How to Start a Vape Shop. Frequently Asked Questions (FAQs).
This section answers the most common questions regarding how to open a vape shop.
What is the average income of a vape shop?
The income of your vape shop depends on its location, the number of customers nearby, and the quality. Some vape shops make a lot of money with just a few hundred dollars per day. Some vape shops make more than $4,000 per day. This is revenue. The amount left over after expenses like rent or products are deducted is called profit.
Is it necessary to get a license in order to open a vape shop.
A license is required to open a vape shop. You don’t currently need a federal license to operate a vape shop. However, that could change in the coming years. The regulations of your state or locality will determine if you need a license. Vape shops are sometimes classified under tobacco regulations in some states.
Others classify vape shops as e-cigarette shops. Some cities also require an ecigarette license. San Marcos in California, for example, passed an ordinance that required any business selling tobacco products, including e-cigarettes to get a retail tobacco license.
How do I start a vape shop without any money?
Crowdfunding is a great option if you don’t have the capital to open your own vape shop. Your personal network will be key to a successful crowdfunding campaign. This will allow you to get people to pre-purchase your products before the shop opens. An investor is another option, but the average investor will also want a personal return. Before approaching local investors, make sure you have a detailed business plan and financial projections.
Is it possible to make a profit in vape shops in 2019?
Vape shops can still be financially viable in 2019. Vape shops can still make a profit in 2019. Some vape shops have a daily revenue of $300 per day. This kind of income is more likely to be earned by a shop with one employee. Some vape shops have daily revenues of $4,000+ per day. This revenue will depend on many factors, including the location of your vape shop, how well your business is managed and promoted, and how well your expenses are controlled.
How do I open an online vape shop
Approval by a payment processor is the biggest cost when you start an online vape shop. Before you can get approval from a payment processor, you must meet the legal age requirements in your state for buying tobacco online. A legal opinion letter from a lawyer will confirm that your website is compliant. This can cost between $500 and $1,000. To get approval, you will need to present the legal opinion letter at the payment processor. To sell your products online, you will need an ecommerce platform such as Shopify.
Although opening a vape shop can be more risky than other retail businesses, it can still be a profitable venture. Your daily income can vary depending on where you live and how popular your store is. You will need to create a business plan before you can market your business.