The liquor store market in the United States is worth $285 billion currently, and the market is projected to grow at a compounded annual rate of around 6%.
If you are operating a liquor store business, you are in a good space because it is already growing at a decent rate. This means you just need to do all the basics right without making any special efforts to grow fast.
Howsoever well your industry, as well as your business, is growing, there would be periods of stress when your cash flow would be disrupted.
That’s when you will need credit financing from companies like Direct Lenders Funding, known for their flexible terms of approval and quick disbursals.
In the liquor store business, it is a major challenge to maintain a strong inventory because of the complex supply chain and taxation structure of this industry.
It depends on your ability to work around such challenges to be able to operate your business smoothly. There are several challenges that you would be able to overcome on your own, but there are some others that you won’t be able to handle.
Operational challenges that a liquor store might face
Compliance with regulations: Your liquor store business needs to comply with strict regulations, such as age verification requirements, restricted sale hours, and limits on the amount of alcohol that can be sold to a buyer. Failure to comply with these regulations can result in hefty fines or even loss of license.
Managing inventory: You need to keep track of your inventory levels and make sure that there is enough stock to meet demand. At the same time, you need to avoid overstocking, as this ties up capital and increases the risk of spoilage.
Dealing with theft: Liquor stores are often targets for theft, which can result in loss of inventory and revenue. To prevent theft in your liquor store, you need to implement security measures, such as surveillance cameras, alarms, and secure storage areas.
Managing cash flow: You need to balance cash flow, particularly during slower periods when revenue may be low but operating costs remain the same. If and when you face cash flow disruptions affecting your operations, look for fast and easy credit and send your funding application to reliable lenders as soon as you can.
Competition: Your liquor store business will face competition from other retailers, including grocery stores, convenience stores, and online retailers. To remain competitive, you need to offer unique products, competitive pricing, and excellent customer service.
Managing staff: You will require staff to operate the business, which can be quite a challenge. You must ensure that staff are properly trained, scheduled appropriately, and compensated fairly. You also need to deal with issues such as staff turnover, absenteeism, and workplace safety.
Marketing and advertising: Liquor stores need to market themselves to attract customers, particularly in areas where there is strong competition. However, advertising and marketing for liquor stores can be challenging, as there are strict regulations around the promotion of alcohol.
Dealing with all these challenges requires substantial amounts of money, and unless you have enough surplus cash, it would be difficult to pay for such expenses. You must also prioritize your expenses and focus more on those that cannot be avoided or postponed.
Overcome cash flow volatility with fast and easy credit
It is ideal not to incur any debt in business, but at the same time, it is very difficult to grow your business without borrowing cash to meet investment capital needs.
Sure enough, you can meet a third or a fourth of your capital investment with your own surplus or savings but what about the balance? If you don’t go for business term loans, it would be very difficult, if not impossible, to make the investment for growth.
It doesn’t really make sense for your business to miss growth opportunities just because you could not make the capital investment out of your pocket.
Debt and equity are both essential components of a business, and the measure of your business efficiency depends on how well you balance the ratio between them.
Of course, the less your debt, the better would be the value of your business, and it is also important that your debt doesn’t exceed one-fourth of the value of your business.
As your business grows in size, your debt requirements will get larger, and it will become more and more difficult to get unsecured loans based only on your current cash flow status.
The key here is to service your debt properly or repay your loan on time without any defaults, preferably. That’s when your creditworthiness or credit rating will begin to count whenever you choose to make applications for a loan.
In times of crises, you will need fast and easy access to funds
The risk of crisis is comparatively higher in the liquor business than in many other types of business, and there are several reasons for that.
Such crises don’t come with a prior warning on most occasions, and when they do, sometimes, you might miss these warnings or ignore them altogether.
Finally, when the crisis is up to you, it is likely that you will face a cash shortfall and might need fast and easy access to some kind of cash advance.
That’s when you are going to need a lending company like Direct Lenders Funding, known for their speed and flexibility in both processing as well as disbursal of much-needed credit.
The liquor store business generally comes under the small business category. The industry has strict regulations and other factors discussed earlier, for which it is considered a high-risk business. That’s a strong reason for many traditional lenders not to fund a liquor store business, although they have several other reasons for not funding such businesses. You need to do your research well enough to know that there are many alternative lenders who are much more flexible in their approach to funding businesses of all sizes, including smaller enterprises.