Liquor Store Financial Plan

Thinking about starting your own liquor store? Great, it’s a cool idea!

But in the process of shaping a business plan, you might be wondering how to draft a solid financial plan without any hassle.

Furthermore, managing the finances of your liquor store is integral for its long-term success and sustainability. So, you cannot neglect this key element.

If you’ve never done financial planning before, the process might seem intimidating in the first place. But not to worry—we’re here to guide you with our sample liquor store financial plan.

It will help you get started and provide all the details you need for building financial projections for your liquor store.

Sounds good? Let’s dive right in.

Liquor Store Financial Outlook

Before jumping right into financial planning, let’s take a moment to explore the financial state of the liquor market.

Here are some key highlights from the liquor store industry:

• The revenue of the Beer, Wine, and Liquor Stores industry in the United States was valued at $81.6 billion in 2023.
• There is approximately $304.4 billion in revenue contribution from both at-home and out-of-home alcoholic drinks sales, while the online alcohol market revenue is valued at $14.95 billion.
• In terms of per capita alcohol consumption, beer is predicted to achieve the highest volume consumption, reaching 73.72 liters over the entire forecast period.
• The total revenue of the US Beer market is forecasted to reach a whooping value of $145 billion by 2027.

So, this positive outlook indicates continued demand for alcoholic beverages and opportunities for growth & profitability within the liquor sector.

Now, without further ado; let’s understand how to prepare an investment-ready financial plan.

1. Calculate Business Startup Costs

Once you’ve decided to open a new liquor store, it’s very crucial to have a clear understanding of your finances, right? So, you’ll need to calculate the startup costs very first!

You may start by identifying all the initial expenses associated with your liquor store including, the lease or purchase of retail space, renovation costs, liquor license fees, inventory & equipment purchases, marketing expenses, and working capital.

You can also research local market conditions and industry benchmarks to evaluate the typical costs of starting a liquor store. This will help you get accurate estimates.

Try to be clear and comprise every potential cost, no matter how small it is. You can make a specific list of all the expenses, as shown in the below table:

So, having a fair idea of startup costs will help you create a proper budget and determine the necessary capital to launch your business successfully.

2. Determine Financing Requirements & Strategy

Sometimes, people don’t have enough money to start their own business. So, they might need to ask for help from others to get the initial investment.

For a liquor store, you may evaluate the current monetary position and determine how much startup capital you’ll require to fund your business. Also, assess various financing options and develop a clear strategy to secure funding.

Here are a few funding options you may consider:

• Traditional bank loans
• Small Business Administration (SBA) loans
• Angel investors
• Partnerships
• Venture capitalists

For each option, you have to evaluate the terms, interest rates, and repayment methods. This will let you devise a financing strategy that aligns with your investment goals and risk tolerance.

Then, you can decide which funding option is the most appropriate for your liquor store.

Furthermore, while seeking credit from banks or investors, you’ll need a professional document that projects how your liquor store’s financial modeling works. It will assist potential lenders to have a better idea of your business.

3. Understand Your Business Model

Developing a scalable business model is a crucial aspect of a financial plan. This is something you have to decide before you start running your business.

It is a strategic framework that defines how you generate income, manage expenses, and reach your financial objectives.

Here is a list of different types of liquor store business models you may consider:

• Standalone liquor stores
• Franchise stores
• Specialty stores
• Online liquor retailers

While deciding on any of the above models, you have to understand their financial considerations, including revenue potential, initial investment, ROI, and operating costs.

This will help you make well-informed decisions and achieve your financial goals in the long run.

4. Identify Revenue Streams

Identifying your business revenue streams is an essential part of maximizing profitability. So, try to diversify your income sources beyond liquor sales and create a robust portfolio.

It will allow potential investors or lenders to determine how much revenue your business intends to generate over the next few years.

For instance, you may include the following revenue streams in your liquor store financial projections:

• Wine sales
• Beer sales
• Specialty products
• Ancillary services(tastings, events, and delivery)

Diversifying your offerings will help you attract a broader customer base and differentiate your liquor store in a competitive market.

Well, using Upmetrics could be a great help here. It will not just calculate financial projections but also help you identify relevant revenue streams.

For better understanding, you may consider the following example prepared using Upmetrics:

Furthermore, it allows you to make informed decisions about your revenue by using different ways to forecast income streams, such as unit sales, the charge per service, recurring/hourly charges, or fixed amounts.

So, this can be an effective and accurate way of estimating your income potential.

5. Market Analysis and Pre-Assumptions

A successful business requires a comprehensive market analysis to gain valuable insights into the local business landscape.

While drafting a liquor store business plan, you’ve already conducted thorough market research and gained adequate knowledge of the target market, customer demographics, industry trends, and competitors.

So, it’s time to use that knowledge to prepare a financial forecast and make realistic assumptions about inventory turnover, sales growth, shrinkage(loss of inventory), employee wages, and marketing costs.

Here are a few key components that you should include in your plan:

Pricing Strategy

When it comes to devising a pricing strategy, there’s no bound law. Yet, you’ll need to analyze a few factors, such as your store offerings, target customers, liquor quality, and local competition, to develop optimal pricing.

You may conduct a competitive market analysis to comprehend the prevailing market rates and set competitive yet profitable sales prices for liquor products.

Remember, your prices should reflect the value of your liquor store and still help you generate sufficient returns on your investment.

Sales Forecast

A sales forecast is a primary element of any business, serving as the cornerstone for its profitability and growth.

It helps you estimate the future sales volume of your liquor store based on market demand, pricing strategy, seasonal trends, and customer segmentation.

You can analyze historical sales data and industry trends to predict future demand for your target market. Also, include your marketing efforts and pricing strategy to forecast the sales performance you expect within a specific timeframe.

Business Expenses

Generally, business expenses are operating costs or day-to-day expenses that will keep your business running smoothly.

For a liquor store, you may conduct a detailed analysis of your anticipated expenses, such as rent, utilities, payroll, inventory costs, marketing expenses, and overhead costs

In addition to that, you may consider a few factors, like market trends, industry benchmarks, and local rates, while ensuring accurate expense estimation and financial feasibility.

Here, you should note one thing—you must account for probable cost overruns or unexpected expenses during business operations. So, be conservative in your financial projections.

6. Make Financial Projections

If you want to attract investors, let the numbers do the talking. This is so because potential investors or stakeholders will look at the financial reports once and decide whether or not to invest in your business.

So, ensure that the key financial reports provide a clear idea of your liquor store’s financial health and viability.

Here’s a list of several financial statements and analyzes you should incorporate into your projections:

Cash flow statement

A cash flow statement helps you track the cash flow in and out of your business over a specific timeframe, generally monthly, quarterly, or annually.

It provides an in-depth outlook of how much cash your liquor store brings in, pays out, and ends with the cash balance. Typically, it’s an illustration of how well your store is generating cash.

You may take into account the cash flows related to sales, store renovations, wages, inventory purchases, equipment, loan repayments, borrowing, or equity.

Be realistic about your financial assumptions and measure your store’s liquidity, capability to meet financial obligations, and sufficiency of cash flow to fund future investments and expense outlays.

Balance sheet

A balance sheet provides a quick overview of your business’s financial position at a specific time.

It clearly demonstrates what you own, what you owe to vendors or other debtors, and what’s left over for you. After all, it has three main elements:

• Assets: Cash, inventory, equipment, fixtures, and accounts receivable
• Liabilities: Debts, loan repayments, and accounts payable
• Equity: Owners’ equity & other investments, stock proceeds, and retained earnings

Ideally, it is formulated as, assets = liabilities + equity

By looking at your balance sheet, anyone can get the exact idea of how financially stable your business is, how much cash you hold, and where your money is tied up.

Income statement

The income statement is also known as a profit and loss statement(P&L), explaining how your business made a profit or incurred a loss over a specific period, typically monthly, quarterly, or annually.

Depending on the structure and type of your business, consider adding these factors—revenue or sales, operating expenses, and gross margin to your profit and loss statement.

You may calculate the gross margin by subtracting the cost of sales or COGS from revenue. It enables you to determine your business’s efficiency in utilizing resources.

Further, the P&L statement should also include operating income, which is equivalent to EBITDA. And the net income is the ultimate goal of any business, found at the end by deducting the operational expenses from EBITDA.

Overall, the income statement helps you gauge your business’s profitability, financial performance, and feasibility in the long run.

Break-even Analysis

The break-even analysis allows you to determine the point at which your liquor store’s total revenue matches its total expenses, causing no profit or loss.

It helps you evaluate the minimum level of sales volume or revenue needed to cover the fixed and variable costs of your store.

This analysis provides valuable insights into your financial sustainability and helps you set sales targets, pricing strategies, and cost-control criteria.

7. Test Assumptions and Scenario Analysis

As your entire plan is prepared based on assumptions, you’ll need to regularly review and stress-test your financial projections to check their relevance with market realities and business performance.

In this stage, you may consider various “what-if” situations and think about scenarios where things go well or don’t.

For instance, you’ll need to consider the changes in market conditions, business strategies, and external factors to measure the stability of your liquor store financial plan.

By performing test assumptions and sensitivity analysis, you can adjust your strategies accordingly to mitigate risks, optimize returns, and make well-informed business decisions.

8. Monitor and Update Your Plan

Once your plan is ready, continuously evaluate and monitor your liquor store’s financial performance closely against the financial projections and key performance indicators(KPIs).

You can compare the actual financial results with the projected income streams, expenses, and ROI to take note of any variances or deviations from the plan.

If some factors are remarkably different from projections, recognize the causes behind them. This will help you understand which areas need improvement and which works as anticipated.

Also, review and update your strategies accordingly to optimize financial results and achieve long-term success.

Now that you know how to create a solid liquor store financial plan, it’s time to explore an example for easy understanding.

Liquor Store Financial Plan Example

Writing a liquor store financial plan from scratch can be a daunting task, right? But not to worry; we’re here to help you with a realistic financial plan example prepared using Upmetrics.

It includes all the key elements of the liquor store’s financial projection, including the income statement, balance sheet, cash flow statement, and break-even point. This will streamline the entire planning process and help you get started.

Start Preparing Your Liquor Store Financial Plan

And that’s a wrap. We’ve discussed all the fundamental aspects of financial planning.

But if you still feel swamped by the thought of drafting a financial plan, don’t worry; Upmetrics can be your savior here!

With customizable templates, AI Assistance, and financial planning software, Upmetrics will make your process a breeze. You’ll have to simply input the financial assumptions and let it figure out the rest.

So, wait no longer; start planning now!