How much does it cost to open a vape shop?

Just like any other business, opening a vape shop requires planning, organizing, and assessing the market to determine your profit margin. Luckily, there is enough information to suggest that, regardless of the stiff competition in the business, the vaping industry is definitely on the rise.

With FDA regulations applied to e-cigs becoming more open, the industry is not dying any time soon. So what do you need to open a vape shop and what is your budget?

How Much Does It Cost To Open A Vape Shop
The Vape Market

The Vape Market

The U.S. accounts for the highest number of vapors in the market and the industry is estimated to be worth $61.4 billion by 2025. The industry has potential and if you decide you want to invest in it, proper planning would help guarantee you with definite maximum rewards. However, like any other business, it is not a straightforward feat. If you do not consider some regulations, you may regret investing in the industry.

Taxation

Taxation

It is a wise decision to first check the excise taxes offered in your state for the various vaping products before you start. This is because of various states levy taxes on vaping products either as per milliliter of the liquid or a percentage of the equipment’s wholesale value.

Either way, you part with some money that affects your overall profit. Some states offer very high tax values like D.C levies 70% and Minnesota’s is 95% making them the highest across the nation.

Legal Issues

Legal Issues

The next challenge after assessing the tax numbers is knowing every law or bylaw that governs the business. Any regulation that can limit your operation is a red flag. In 2016, the FDA classified e-cigarettes as tobacco and this extends to vaping products forcing you to adhere to any regulation for or against the equipment.

Also, various states and cities have different conditions set to acquire business permits and licenses that would actually allow you to set up a vape shop. Finally, you need to register your shop as a business entity that would guarantee protection from any lawsuit with registration costs varying in different states.

Starting your own vape shop business

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With the number of vape shops varying from state to state, California has the highest number, charging an upwards of $50 per sq. ft as a lease fee. However, some states offer a low value of even under $1 per sq. ft as a lease fee in various industrial regions.

It is always advisable to prepare well and if you take a loan, make sure you have a plan to pay it back. The start-up costs may vary in different states, but you are guaranteed maximum returns should your execution be perfect. The other cost after meeting all the start-up expenses would be getting the right inventory.

The essential vape store supplies would be Vape juice, E-liquids, Replacement Coils, Hardware, and Battery chargers. You may also want to get these from a wholesale vaping supplier like KMG-Import.com where you would actually spend up to half the cost incurred elsewhere. Make sure you are getting quality products and not just saving on the costs.

Next, you need to determine who you are going to have as members of staff. The best people would be those with a background in retail sales and some with exceptional customer service proficiencies.

Hiring an unprofessional team may greatly affect your business and it is estimated that you may actually lose $300,000 annually if the wrong people are on your team.

According to Goldstein in Fundera, a report by Jon Merton in 2013 found that it costs $7,420 to $10,020 monthly to start a vape shop, minus product supplies. He explains that you need to have at least $50,000 with enough expense to cover the first six months to be safe.

Your insurance costs will be a bit higher as compared to other small shops averaging $711.11 annually, $100 more than most businesses. Risk factors also influence the insurance costs, property/equipment value, and the type of products stocked so you may just spend a little more.

It’s recommended that you use niche insurance brokers since they have policies that are specifically meant to cover and protect vape shops and products.

If you are looking for finance to start up your business, it is vital to know that it would not be easy.

As any start-up with no portfolio or track record, you will have no number projection to convince an investor to finance your business. Also, vape shops are considered highly risky by banks that may help finance the business. Therefore, when you want to start the business, you need to find alternative sources to finance the business.

You have the option to either open a kiosk or a retail store, either way, you need to have a clear breakdown of the costs.

A kiosk would be much cheaper to open when compared to a vape shop that can cost up to $100,000 to open. Find below a comparison of the breakdown of the costs:

Next, you need to determine who you are going to have as members of staff. The best people would be those with a background in retail sales and some with exceptional customer service proficiencies.

Hiring an unprofessional team may greatly affect your business and it is estimated that you may actually lose $300,000 annually if the wrong people are on your team.

According to Goldstein in Fundera, a report by Jon Merton in 2013 found that it costs $7,420 to $10,020 monthly to start a vape shop, minus product supplies. He explains that you need to have at least $50,000 with enough expense to cover the first six months to be safe.

Your insurance costs will be a bit higher as compared to other small shops averaging $711.11 annually, $100 more than most businesses. Risk factors also influence the insurance costs, property/equipment value, and the type of products stocked so you may just spend a little more.

It’s recommended that you use niche insurance brokers since they have policies that are specifically meant to cover and protect vape shops and products.

If you are looking for finance to start up your business, it is vital to know that it would not be easy.

As any start-up with no portfolio or track record, you will have no number projection to convince an investor to finance your business. Also, vape shops are considered highly risky by banks that may help finance the business. Therefore, when you want to start the business, you need to find alternative sources to finance the business.

You have the option to either open a kiosk or a retail store, either way, you need to have a clear breakdown of the costs.

A kiosk would be much cheaper to open when compared to a vape shop that can cost up to $100,000 to open. Find below a comparison of the breakdown of the costs:

Estimate of Start-up Costs

Cart/Kiosk Charges

Car Rent
Marketing
Insurance
Phone/Internet
Kiosk Rent
Salaries
Design
E-Liquids & Accessories
Starter Kits
TOTAL ESTIMATE:

$800 – $2,500
$100 – $500
$100 – $150
$100 – $200
$2,000 – $3,000
$1,500 – $3,000
$1,000 – $3,000
$5,000 – $3,000
$2,500 – $5,000
$11,000 – $25,000

Retail Store

Lease
Marketing
Insurance
Phone/Internet
Security
POS System
Salaries
Utilities
Build-out Cost
E-liquids & Accessories
Starter Kits
TOTAL ESTIMATE

$2,500 – $5,000
$100 – $500
$100 – $150
$100 – $200
$20 – $30
$200
$3,000 – $4,000
$250 – $500
$10,000 – $30,000
$10,000 – $15,000
$2,500 – $5,000
$28,700 – $60,000

Wrapping Up

Wrapping up

These prices vary but this is just a rough estimate of everything you will need to start. The inventory may change depending on your location and competition. However, if you are in a region with minimal competition, the start-up cost may be way less.

Like we mentioned earlier, you may want to get your inventory at a wholesale shop. The idea is to minimize costs significantly and to get the quality products needed to get you started. The key element is to get quality products and hire a team that is experienced in handling clients.

Consider doing some background research on your options and available content that can help you when you start up.

Considered a mainstream culture by some, the vape industry is rapidly growing. No matter how you look at it, vape shops will always be considered an epicenter to the industry. When setting up shop, put your clients’ needs first and determine what is needed to give them a complete experience.

What else do you think is not covered to explain how to set up a shop? Do you think that vape shops will become the next big thing in the near future?

Our wide range of vaping products can help you stand out from the crowd. Get your wholesale e-liquid supplies from us and wow your customers today.

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