Cigars have been a popular after-dinner and sporting tradition in many circles in the 21st century and began a resurgence in the 1990s. Cigar stores and cigar bars have popped up in cities across the country in response to the trend, and many have enjoyed great success. However, opening a cigar shop is a lot more involved than you might expect. The entire process takes a good chunk of money, as well as thoughtful planning, good business sense and, of course, a passion for cigars.
The first step in opening a business is raising the required capital. It will probably take several hundred thousand dollars to open a quality cigar store. According to Lionel Melendi, a Brooklyn-based fourth-generation cigar shop owner, you need at least $500,000 to open up a cigar shop. Diana Gitts, owner of well-known Up Down Tobacco Store, points out that one humidor alone can cost upwards of $20,000.
The Food and Drug Administration began regulating tobacco in 2010 and restricts the sale, distribution and marketing of cigarettes, cigarette tobacco and smokeless tobacco products to those over age 18. Some states require a minimum age of 19 to buy tobacco products. All states require a retail tobacco sales permit, and some municipalities also regulate retail tobacco sales. You will also need a local sales tax permit, as well as an IRS-supplied employer identification number if you plan to hire employees.
Finish Work and Stocking
Once you find a properly-equipped retail facility, all you need to do is repaint and take care of any other finish work before decorating and stocking. Unless you've got more than enough capital, it is probably a good idea not to go overboard with your initial inventory. You don't want to cut corners on your selection, but at the same time you don't want to get stuck with a lot of inventory that's not moving. You can always order more of a particular cigar if you start to run low, and most cigars can be shipped priority mail or even overnighted.
Although most cigar shops ultimately succeed or fail based on word of mouth, an effective initial marketing campaign will help get your cigar store off and running. A grand opening with specials, and possibly refreshments or non-tobacco product samples, is an important part of a marketing plan, as is a professional retail website with ecommerce capabilities. Local advertising can also be surprisingly effective for a small business such as a cigar shop.
- U.S. Food and Drug Administration: Tobacco Retailers and the FDA
- Oregon.gov: Smoke Shop and Cigar Bar Certification
- Texas Window on State Government: Cigarette, Cigar and Tobacco Products Regulation Frequently Asked Questions
- Internal Revenue Service: Starting a Business
- CNN Money: Getting Started -- Smoke Shop
- The Battalion Online: Student Entrepreneurs Open their First Cigar Shop in the Brazos County Area
- Comstock/Comstock/Getty Images