Writing a great tobacco store business plan isn’t easy — but trust us, it’s well worth it.
A business plan is more than a document for investors. It’s a chance to see if your tobacco store concept has legs, deepen your knowledge of the industry, and understand the costs involved.
In this article, we’ll cover:
- Why every tobacco store needs a business plan
- The key elements in a successful business plan
- The eight steps for writing a tobacco store business plan
Let’s get started.
Why Your Tobacco Store Needs a Business Plan
A business plan serves a few distinct purposes for would-be tobacco store owners.
First, a business plan gives you a roadmap for your store, its goals, and how you’ll achieve them. A good tobacco store business plan can be referred to after you open to see how your performance aligns with your goals and gives you a north star to aim for.
Consider a business plan as a dry run of your business before you start investing real money into it. It gives you a low-risk way to dial in your pricing, operational plan, financial projections, marketing strategy, and more.
Second, a solid plan is a requirement if you’re looking for investors in your business. It’s a proof of concept that will help give financial backers and bankers confidence in your idea.
Related Read: How Much Does It Cost To Open a Tobacco Shop? 8 Key Factors
What Should You Include in a Tobacco Store Business Plan?
A business plan usually consists of these seven elements:
- An executive summary: Your elevator pitch
- Company overview: A detailed vision of your business and niche
- Market analysis: How you’ll showcase your industry knowledge
- Products and services: The diversity of your products and specialty items
- Financial projections: Your financial goals and the money needed to get started
- Marketing strategy: The methods you’ll use to attract and retain customers
- Operational plan: Your organizational structure, inventory strategies, and daily tasks
Click on the links above for a more detailed overview of writing each section.
How Long Does It Take To Write a Business Plan?
If you haven’t written a business plan before, writing one can take anywhere from a few weeks to a few months. A finished business plan will be about 15-20 pages long.
If you’re confused as to why it might take months to write that number of pages, consider what else goes into a successful business plan:
- Research: If you want your business plan to be based on more than just hopes and dreams, you’ll need to research the industry and your local area. This step usually takes the most time.
- Graphics and design: If you’re using this document to attract investors, you don’t want to assault them with 15-20 pages of text. You’ll want graphs, pictures, and other visuals.
- Proofreading: Writing a business plan is an intense process, but don’t just call it a day after you finish the first draft. Double-check your numbers and have other people proofread your plan to ensure it’s the best it can be.
Remember, creating a business plan is your opportunity to map out your costs, risks, and goals before you get started. Having one can help you set goals and keep costs under control. Long story short: A business plan is worth the investment.
Writing a Tobacco Store Business Plan: 8 Steps
Writing a business plan from scratch can be intimidating, but we’re here to help.
Here are the eight steps to writing a tobacco store business plan that will set you up for success.
1. Understand the Legal Landscape
Unfortunately, selling tobacco isn’t as easy as selling other types of products.
Before you start typing up a business plan, it’s vital to have a detailed understanding of how the industry works in your state and local area, tobacco rules and regulations, and what locations will support a tobacco business.
Knowing the answers to these legal questions will ensure your prospective business is possible and allow you to focus more on the actual business side of your business plan.
2. Market Analysis
Market analysis isn’t the first section in a business plan, but it is the first thing you should do before writing anything else. This is arguably the most important part of a business plan, as it demonstrates that you know your industry, your location, and how to be successful in it.
Here are some questions you’ll be answering as part of your market research:
- What’s trending in the industry? Does your shop serve these needs?
- What tobacco stores or cigar shops are in your area?
- What products do they offer?
- What are their strengths? What do you do better?
- Who is my target customer? What are the demographics in my area?
- What kind of demand is there for tobacco in my local area?
- Are there holes in the market? How does my business address these gaps?
The end goal of market analysis is to find your niche: the unique combination of products, services, and atmosphere that will differentiate you from competitors and draw people to your store.
For example, you may find that several tobacco stores in your area sell staples like cigarettes and vapes, but no one offers a wide selection of cigars and specialty tobacco. This could be a profitable avenue to take.
Long story short: Your market research will help define every other part of your business plan. We highly recommend doing this part of your business plan first.
3. Write an Executive Summary
The first section of a business plan is the executive summary, a one to two-paragraph pitch for your company. Your executive summary should include:
- Who you are
- What differentiates you from competitors
- Why you’ll be successful
- Who your target customers are
- Where you’ll be based
- Who’s in charge
- Your goals
The executive summary is intended to capture people’s attention, so keep it clear and concise. You can go into detail later. If you do a good job, people will be excited to jump into the more detailed sections later on.
3. Business Overview
The next section of your business plan details your mission statement, history, who you are, and how all of these things will help you succeed in the tobacco business.
Paint a vivid picture of your business by describing the location, the atmosphere you want to create, and the range of products you plan to sell. At the same time, share your background and that of your partners, explaining why you’re a perfect fit to make this business come to life.
Last, highlight any competitive advantages your business has, such as a unique location, expertise in tobacco products, connections to suppliers, or anything else that stands out.
Related Read: How To Manage a Hookah Shop: 5 Steps to Success + Tools
4. Products and Services
Your selection of items will help define your business, but this section is much more than a list of brands.
Instead, the products and services section of your business plan should go into:
- What you plan to sell (e.g., types of products, specific brands, accessories, merchandise, snacks)
- Unique services you’ll provide (e.g. cigar lounge, custom product bundles, subscription boxes)
- Pricing strategies
- What products are unique to your store
- If you plan to sell online
- Future offerings
Your starting inventory may very well change after you open your doors. That’s a good thing. The best tobacco stores change things up based on sales data and customer preferences.
Acknowledge your willingness to respond to trends or ambitions to expand into other areas in this section.
5. Financial Projections and Startup Costs
The goal of every business is to make money and a healthy profit.
This section shows exactly how you will do that, including how much you’ll need in startup costs, your ongoing costs, expected revenue, and breakeven point.
Include monthly and yearly revenue targets along with projected year-over-year growth. This will show potential investors that your business is sustainable and create a north star you can refer to once your doors open.
6. Marketing Strategy
While tobacco stores are more limited than other industries in how they can advertise, a solid marketing strategy is still an essential part of your business plan.
This section of your business plan will outline the various methods you’ll use to attract and retain new customers. These can include:
- Tobacco store promotions and events
- Newsletter and social media strategy
- Website
- Magazine or print ads
- Customer loyalty programs
Highlight your various strategies and how these will help grow your business in the long run. You can also detail what data you’ll be basing marketing decisions on.
For example, you could use the sales data on your point of sale (POS) system to understand your bestsellers or how your different promotions performed.
7. Operational Plan
With all the strategic and financial plans laid out, it’s time to get into the details. How will your store run on a day-to-day basis? What employees will you need and what will their roles be?
This section will show that you know exactly how to effectively run a small business.
Include details like:
- Inventory management strategy (e.g., what software you’ll use, how often you’ll do counts, when you’ll reorder)
- Number of employees and their roles
- How you’ll maintain legal compliance (e.g., age-verification tools)
- What software and technology you’ll use to assist with managing the store
- What your daily needs and goals will be
The operational plan will provide a solid structure for the more strategic goals you’ve laid out previously. In other words, how will you take your great idea and make it a reality on a daily basis?
Make Better Decisions and Simplify Tobacco Store Management With the Right Technology
Writing a tobacco store business plan is the first step in a long and exciting journey. While starting a store without a plan might be tempting, we don’t recommend it.
Writing a detailed business plan is a low-risk way to find and solve problems you didn’t know you had, gives you a chance to discover your niche, and lays the foundation for long-term success.
However, the best-laid plans are nothing without real-world solutions to back them up. To manage your tobacco inventory, stay compliant, and deliver the shopping experience customers expect, you also need the right tools.
POS Nation can help. Download our Tobacco POS System Buyers’ Guide to learn everything you need to know about how a tobacco-specific system will simplify your daily tasks and boost profitability.
