With American restrictions on Cuban products looking to be coming to an end soon, there is a lot of excitement within the cigar industry. It also means that it might just be the perfect time to start a cigar retail or manufacturing business. If you want to know how to start a cigar business, then the first thing you’ve got to do is become an expert on cigars.
That doesn’t mean that you need to smoke them. It does mean that you’ll need to know how they are made and what benefits they can provide. Cigar sales are staying strong because they embody luxury, but are affordable for the average person. If you can set your products apart from the rest, then you’ll be able to follow these additional steps and find success.
1. Get to Know the Local Laws on Smoking.
There are numerous local laws about smoking and selling smoking products that you’re going to need to know. You may need to have special permits just to get your business started. There may be commercial locations that are not zone for a cigar business. Make sure that after you get to know the world of cigars and can provide a certain expertise about the product that you also get to know the local requirements to make and sell cigars as well.
2. There Are Some Unique Capital Expenses.
Cigars require a certain environment to maintain their integrity. Not only will you need to invest capital into the typical startup expenses, like a retail location and inventory, but you’ll also need to have a variety of humidors available as well. Cigars can begin to degrade in a regular atmosphere, so just selling them out of a box isn’t going to fly – especially if you want to be a high class purveyor.
3. Consider Your Approach.
Some communities have restricted cigar sales so dramatically that finding a retail location with a reasonable amount of traffic can be nearly impossible. You will want to consider your retail approach very carefully. Sometimes having an online business selling cigars and storing them in a home humidor for future shipping is a better option.
The same is true for those who are thinking about making their own cigars. There are specific zoning regulations in place that may make it impossible to start a production line. You may not have anyone skilled at rolling in your community either. Weigh the pros and cons carefully and then choose the path that makes the most financial sense.
4. Get Prepared For Your Tax Responsibilities.
If you hire just 1 employee, then you’ll need to register for a tax identification number. Because cigars are a smoking product, there’s a good chance that you’ll need to collect a regular sales tax and then a smoking tax on top of that, which will requuire specific licensing. There may be additional taxation responsibilities on your revenues based on how you structure your cigar business.
You may wish to consult with an attorney at this stage. Because the retail world of cigars and cigarettes is constantly evolving, your business structure may need to change several times while in business so that you stay in compliance. The same is true for those looking to make their own cigars. Because these responsibilities also vary from community to community, it is important to note that no two cigar businesses are really alike.
5. Take a Different Approach.
Starting your retail cigar business or manufacturing your own cigars might not be the right business structure today. You can directly market your cigars to retailers who can sell them on your behalf. You can even sell them door-to—door if you wish. Cigars are relatively small and portable, so they could even become a subscription service business that is similar to the Dollar Shave Club. Some cigar businesses have even purchased vending machines for distribution, though that may not be legal in some jurisdictions. The point is that you’ve got options. Make sure to consider all of them.
6. Be Consistent.
The quality of your cigars must be consistent. Your sales approach must also be consistent. If people cannot rely on the quality of your inventory, then they aren’t going to purchase the cigars they want from you. If you aren’t making your own, then look for suppliers that oversee the production process to maintain quality. If you are creating your own, then make sure your manufacturing process is consistent across the board.
If you want to know how to start a cigar business, then follow these steps and you’ll be on your way to success. Remember to find the right level of insurance for your needs, follow all local and national laws, and make your cigars stand out. When you can do that, you can have a profitable business.