Most successful liquor stores follow a simple formula: Focus on high-profit items. A liquor store that sells large quantities of low-profit items may still struggle to cover monthly expenses. The key to maintaining steady cash flow is therefore buying high-profit items in medium-sized quantities. But how are you supposed to do this if you aren’t sure what will sell? What about new items?
Much like jewelry stores and auto shops, it’s common for liquor stores to have nearly all of their operational funding tied up in inventory. A young liquor store might have to spend hundreds of thousands of dollars just to get a clear idea of demand, or pay vendors before paying themselves. Liquor stores are also seasonal, with the majority of their sales taking place during the holidays. Tumultuous revenue makes it difficult to purchase high-profit items, which are predictably more expensive. And the off-season is when distributors are most likely to offer discounts for bulk purchases.
By the end of the year, a liquor store is supposed to have turned its entire inventory at least eight times. To protect their already-sensitive profits, many stores buy multiple season’ worth of inventory or pay bills upfront; well ahead of due dates. As if this wasn’t challenging enough, maintaining high-profit inventory takes away money that could otherwise be spent on marketing or renovations.
United Capital Source has many years of experience providing Small Business Loans for Liquor Stores. We can provide all types of business lending products. Contact us today for your FREE business funding consultation!
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Upgrades &Liquor stores are typically ideal candidates for business loans against credit card sales. Most of their customers pay via debit and/or credit card, and their finances are prone to occasional dips in revenue. Perfect cash flow is not a mandatory requirement for business loans against credit card sales, which are paid back via a fixed percentage of debit and credit card transactions. This payment system makes credit card processing loans the perfect tool for buying inventory at any point of the year.
Traditional, short-term working capital loans might be more appropriate for liquor stores looking to replace equipment or simply stay current on vendor bills. Some UCS clients use working capital loans to continue ordering items on a cyclical basis, making them eligible for discounts. When an item is selling unexpectedly well during a busy period, a business line of credit could help the store order more items and offer exclusive deals.
In an industry where inventory management is so important, borrowers are encouraged to pursue additional working capital solely to keep the right amount of inventory in stock at all times.
One of our liquor store clients is located in a South Florida beach town. He contacted us after being approached by an alcohol manufacturer about showcasing a new line of pre-made, plastic-packaged beverages. In order to host the launch event, he needed to purchase a minimum quantity of the beverages and pay for the event to be promoted in local media.
It took United Capital Source just three days to approve and distribute a merchant cash advance. The store owner was able to quickly tell the manufacturer “yes” and purchase the items before a competitor capitalized on this fleeting but lucrative opportunity. Apply now to see how much you qualify for!
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