Starting a brick and mortar

RandJCigars · 06-29-2014, 09:41 PM

I just opened my second cigar lounge / b&m and I would echo what these guys have said; if you live in a good state where taxes aren't ridiculous and bans aren't prevalent, than go for it. I am in Texas, specifically south of Houston. Houston has a smoking ban but an amendment to the ordinance allows smoking indoors as long as your sales are 90% or more tobacco.

More specifically, my new lounge is in Friendswood....where there are NO smoking bans. Where the city council voted to allow business owners to make their own decisions on whether or not to allow smoking. (I love Friendswood...I live there). Furthermore, Friendswood has no ordinance or law against smoking AND drinking...in other words...I could hypothetically sell alcohol eventually if I wanted to.

Things to think about going into it:
1. How much square feet are you wanting vs needing. My original store in Pearland is a whopping 895 square feet...tiny. However, because of my setup, I still have 350 facings. My friendswood store is 1450 square feet. I have 500 facings there, a large lounge, an office, and a good sized warehouse in the back for my wholesale business. Moral is...what do you actually need vs what do you want? Do you need an office? Do you need a storage room? Are you wanting a walk-in or a cabinet system (I am a huge proponent of a cabinet system). What capacity are you aiming for for your smoking area/lounge?

2. Do you have a GOOD contractor ready to dedicate up to 3 months for a commercial build out? It would help to find a contractor that can sub out a guy who is familiar with really good HVAC systems/ERV systems/ Ventilation methods. Make sure if you do go forward with this...that ALL subs know the scope of the work. They need to know every detail so they don't unbid it...only to comeback and request a change order because the project needs this or that.

3. The location you want will determine where you get your cigars; direct from manufacturers or from wholesalers/distributors. It may not be the same where you live, but here in the Houston area....if a new lounge/b&m opens within 5 miles of another established cigar business...that lounge will not be open direct. In other words, the reps will not open direct accounts with you for the respective manufactures. I wholesale and distribute all brands...so believe me I know...I reek the benefits of guys that do that.

4. The Lease Language. This is important. Most leases have a section or paragraph that is titled "Use". This paragraph is, by default, "retail". However if you want to allow smoking...you must demand that the paragraph be changed and worded to suite your business. I do this with all my leases...it simply necessary to protect you and your business.

5. Cost. This is probably the biggest factor for anyone opening any type of business. Just to give you a rough estimate, my new lounge cost me right around $100,000 for buildout/construction + Furniture/Fixtures (which includes TV's, Display Cases, Cabinets/Millwork, etc). The Cigar Inventory alone was an additional $50,000. Accessory Orders totaled $5000 (humidors, briar pipes, lighters, cutters, butane, humidors, ashtrays, etc). This was for a 1450 square foot space that had never been built out so we had to do it all; Demising wall, all interior partition walls, plumbing, electrical, HVAC/ventilation, floors, paint, ceiling grid and tiles, etc. Plan well, establish a good relationship with your bank so you can get a good business loan. Also get a business credit card from Capitol One...they have one that gives 2% cash back and the points never expire. A card like that will pay you back so much...you won't believe it.

If you have any other questions, feel free to ask!
Good Luck!

Jimmy

mosesbotbol · 06-30-2014, 07:05 AM

Quote:

Originally Posted by RandJCigars

I just opened my second cigar lounge / b&m and I would echo what these guys have said; if you live in a good state where taxes aren't ridiculous and bans aren't prevalent, than go for it.

How's business? Sounds like you have a lot invested. Between paying off your loans, along with salary, BAU operating costs, etc... Is there any left over? I don't mean for you to open your books, but to just illustrate that at the end of the day, the margins aren't that big and any missteps could wash away any profit.

Perhaps I am wrong and the cigar business is flush with cash?

06-29-2014, 09:41 PM	#1
RandJCigars JSR Join Date: Jan 2011 First Name: Jimmy Location: Friendswood Posts: 105 Trading: (3)	Re: Starting a brick and mortar I just opened my second cigar lounge / b&m and I would echo what these guys have said; if you live in a good state where taxes aren't ridiculous and bans aren't prevalent, than go for it. I am in Texas, specifically south of Houston. Houston has a smoking ban but an amendment to the ordinance allows smoking indoors as long as your sales are 90% or more tobacco. More specifically, my new lounge is in Friendswood....where there are NO smoking bans. Where the city council voted to allow business owners to make their own decisions on whether or not to allow smoking. (I love Friendswood...I live there). Furthermore, Friendswood has no ordinance or law against smoking AND drinking...in other words...I could hypothetically sell alcohol eventually if I wanted to. Things to think about going into it: 1. How much square feet are you wanting vs needing. My original store in Pearland is a whopping 895 square feet...tiny. However, because of my setup, I still have 350 facings. My friendswood store is 1450 square feet. I have 500 facings there, a large lounge, an office, and a good sized warehouse in the back for my wholesale business. Moral is...what do you actually need vs what do you want? Do you need an office? Do you need a storage room? Are you wanting a walk-in or a cabinet system (I am a huge proponent of a cabinet system). What capacity are you aiming for for your smoking area/lounge? 2. Do you have a GOOD contractor ready to dedicate up to 3 months for a commercial build out? It would help to find a contractor that can sub out a guy who is familiar with really good HVAC systems/ERV systems/ Ventilation methods. Make sure if you do go forward with this...that ALL subs know the scope of the work. They need to know every detail so they don't unbid it...only to comeback and request a change order because the project needs this or that. 3. The location you want will determine where you get your cigars; direct from manufacturers or from wholesalers/distributors. It may not be the same where you live, but here in the Houston area....if a new lounge/b&m opens within 5 miles of another established cigar business...that lounge will not be open direct. In other words, the reps will not open direct accounts with you for the respective manufactures. I wholesale and distribute all brands...so believe me I know...I reek the benefits of guys that do that. 4. The Lease Language. This is important. Most leases have a section or paragraph that is titled "Use". This paragraph is, by default, "retail". However if you want to allow smoking...you must demand that the paragraph be changed and worded to suite your business. I do this with all my leases...it simply necessary to protect you and your business. 5. Cost. This is probably the biggest factor for anyone opening any type of business. Just to give you a rough estimate, my new lounge cost me right around $100,000 for buildout/construction + Furniture/Fixtures (which includes TV's, Display Cases, Cabinets/Millwork, etc). The Cigar Inventory alone was an additional $50,000. Accessory Orders totaled $5000 (humidors, briar pipes, lighters, cutters, butane, humidors, ashtrays, etc). This was for a 1450 square foot space that had never been built out so we had to do it all; Demising wall, all interior partition walls, plumbing, electrical, HVAC/ventilation, floors, paint, ceiling grid and tiles, etc. Plan well, establish a good relationship with your bank so you can get a good business loan. Also get a business credit card from Capitol One...they have one that gives 2% cash back and the points never expire. A card like that will pay you back so much...you won't believe it. If you have any other questions, feel free to ask! Good Luck! Jimmy __________________ R & J Cigars - JSR Cigar Distributors, LLC 713-340-2428