How To Start A Vape Shop
Many first time entrepreneurs have started and grown successful vape shops in every state in the country. However, within a few short years many also realized that they didn’t have any formal business experience. VapeMentors was founded in 2013 by Norm Bour, a lifetime entrepreneur, to help these people.
After 30 vape business launches and 200+ students in our online community, VapeMentors has become the largest provider of business advice for vape shops, eCommerce sites and e-liquid brands.
This is article is a culmination of everything we have learned helping vape shop owners open a shop for the first time.
There’s a lot to know about opening a vape shop. Here’s what’s in this article
- Picking A Vape Shop Location
- How Much Does It Cost To Open A Vape Shop?
- Financing Your New Vape Shop
- Point Of Sale and Merchant Account Services for Vape Shops
- Wholesale Vaping Supplies
- Insurance For Vape Shops
- State Vaping Laws
- Federal Vaping Laws
- Vape U – Online Training For Vape Shop Owners
Picking a Vape Shop Location
Perhaps the most challenging part of starting a vape shop is picking the right location.
The best guide for picking a good location is our ebook “How to Pick a Vape Shop Location”. You can download it here:
For now, here is a quick summary of how to pick a location.
How to open a vape shop built for success
- Size: Stores that are too big are more expensive to operate. Too small is, well, too small. 500-1500 square feet is the sweet spot.
- Branding: Spend the time needed to create a solid brand that will resonate with target market and location. Successful stores craft and communicate a consistent brand image from top to bottom. From the name of the store to the location to the décor and experience they deliver, customers know what to expect when they walk in the door. This is no accident.
- Signage: Make sure your sign is visible from the street and there is plenty of parking.
- Location: Your shop should be in a high foot traffic area that is located near an anchor store. Anchor stores are things like grocery stores, gas stations and movie theaters – basically anything that has built in foot traffic and widespread appeal. Don’t count on your store bringing in foot traffic on its own.
- Competition: Research your market, and don’t skip this step! Even with a perfect location a vape shop cannot be successful if it does not mach your market and beat your competitors.
Here are our top tools for researching your vape shop’s competition:
- VaporSearchUSA – Search for all the vape shops in your area to understand your competition
- Yelp – Research your competitors
- Google Earth Pro – Provides detailed demographic information for your market. Use it to understand age, sex and income information
- CityFeet.com – The “Zillow” of commercial property listings. Use this to look up commercial listings
How Much Does It Cost To Open A Vape Shop?
This is a difficult question to answer with one blog post. Every shop is different, but here is what we say in general:
- $25,000 for a small shop
- $50,000 for a large shop.
There are lots of expenses involved in starting a vape shop. You’ll have to factor in the cost to design and build the space, your rent, licensing and insurance. One of your biggest expenses is your inventory – starter kits, mods, parts, e-liquids, etc. This can add up very fast. But you don’t want to skimp on that, because after all, that’s your primary product and the entire reason people will visit your store.
To see a detailed guide on how it all breaks down, see this post:
Financing Your New Vape Shop
One of the biggest challenges in starting a vape shop is getting the financing you need.
If you try to get a conventional loan for a vape shop, banks will put you in the riskiest category and charge you exorbitant rates. That is, if they’ll even give you a loan.
We recommend Ventury Capital. They have helped launch dozens of vape shops and will help you access the financing you need to get started and grow.
You also may want to look at non-traditional funding sources. Check out this list of new funding sources you may not have thought of:
- Crowdfunding sites like GoFundMe, KickStarter, and IndieGoGo – you may not get funding from strangers but you can send your friends and family there to get started
- Peer-to-peer lending sites like LendingClub and Prosper – much like crowdfunding, peer-to-peer lending sites hand out literal loans with somewhat higher interest. You are more likely to get approved from one of these places because it’s not from a traditional bank
- Online loan providers like SoFi, LendingTree and QuickenLoans
- Personal credit cards – not the smartest use of credit cards and certainly the most expensive forms of credit, but if you have nothing else then you may need to take this risk. $30,000 is not an impossible credit line to obtain with multiple credit cards.
We also have an extended post about financing here
Point of Sale and Merchant Account Services for Vape Shops
Most merchant account providers put vape space businesses in a “high risk” category and charge high rates upwards of 3 percent or more.
TransAct giving us their low-risk rates (well below 2 percent), and offering the same bulk pricing rates reserved for large trade associations. Check out their rates here>>>
Wholesale Vaping Supplies
Whether you’re just getting started or are frustrated with your current supplier, we have a hot tip for you. Use VaporBeast for all your vaping hardware and e-liquid supplies.
One of the fastest growing wholesale vaping suppliers in the U.S., VaporBeast will do their utmost to get you started on the right foot, with low minimum order quantities and valuable guidance on the hottest selling products.
Insurance for Vape Stores
Batteries explode, and retailers should assume they are liable for lawsuits. Insurance will protect you from losing your entire business over a $10 battery. Think of insurance as an investment, not a cost.
We heartily recommend CALCO Commercial Insurance because they are one of the very few insurance companies that specializes in our industry. They offer General Liability (with or without Product Liability coverage) as well as property coverage. They literally wrote the first insurance policy for vape shops and are among the top experts.
Other insurers view and rate e-cigarette and vaping businesses as tobacco companies and apply the exact same exclusions to their insurance policies.
CALCO pools its vaping clients and uses the insurance premium as security, which results in preferred rates and expanded coverage that addresses the needs and exposures of manufacturers, importers, distributors and retailers.
Another insurance provider is Lloyd’s.
Be aware that some brands are specifically not covered by your insurance. Get a list of brands that are not covered and do not carry these in your shop.
State Vaping Laws
State regulations on vape shops pose a much more immediate threat to your new shop than federal regulations. As of March 2016 we have no idea what the regulations will look like, but there are plenty of state regulations to worry about already.
Indiana, Iowa, California and many others are handing down regulation faster than we can keep track. While we can’t detail every legislation we can suggest some resources to do your own research:
How to research vape legislation in your state:
- CASAA is a great resource for local legislation and political action
- SFATA provides amazing tools to keep you informed
- This list of resources is the best around: http://sfata.org/resources/
- Use MuniCode to lookup your city’s municipal codes
- Every city is different. MuniCode is a database of your city’s municipal regulations, tax codes and zoning laws. Lookup your city and assume you are a “tobacco” business unless vaping is explicitly mentioned.
- Reddit is also a poplar resource.You can start on this Reddit thread about ecigs
- Visit the VapeMentors Business Forum and ask your question to the community. Get expert answers from Norm Bour, Jesse Plautz and other vapreneurs.
Don’t forget to use MuniCode to research zoning! There are many restrictions on proximity to churches and schools.
Working With Your City to Obtain The Proper Licenses and Permits
Most cities require a business license to operate, and some may require a tobacco license, special use permit or conditional use permit.
“Special use permits” AKA “conditional use permits” are what cities give to bars, night clubs and other “establishments of ill repute” to impose a sort of “nuisance” tax. Because some cities don’t know how to deal with vaping they tend to categorize them in the same place as these “nuisance” businesses.
Obviously this is unfair but nonetheless you may run into this. If you do you may need to address your city council with your concerns. Special use permits often come with hefty fees so you don’t want to be required to have one.
Tips on working with your city
City councils meet regularly to discuss new or pending regulations in your city. They often have public hearings on new legislation, giving you the opportunity to offer your input on the regulations or on your specific problems. Get a schedule from your city to learn about the next public hearing on vaping.
If you do go, please follow these tips. Remember that you don’t just represent yourself, you represent the entire vaping community.
- Be professional and dress as such
- Don’t vape in city hall or at city meetings
- Prepare a solid argument. Don’t just rant and complain
- Be mindful of public perception
Federal Vaping Laws
Federal vaping laws are changing a mile a minute and VapeMentors has a great training program for regulation newbies. It’s a 3-part email mini-course with videos and blog posts.
What You’ll Learn In This Free FDA Training Mini-Course:
- How the FDA Regulations from August 2016 will REALLY impact your vape shop or e-liquid brand
- Definitive answers on how to handle sampling, coil builds and e-liquid production
- PMTA – does it apply to you and your business?
- Dealing with state and local politicians – how to win friends in your community
- FDA vs state laws – who wins?
Vape U – The Best Training For New And Established Vape Shop Owners
Finally, we want to introduce you to our online training community and courses. We believe these are the best resources available for new and existing shop owners.
VapeMentors has helped over 35 vape shop owners and e-liquid lines start and grow a business in the vape industry. We have more than 200 students online and growing every day. If you want to get started growing or founding your vape shop, checkout our online courses below.