3 reasons vape shops fail & how to avoid them

June 20, 2019

Thinking about opening up a vape shop? You might be onto something. Nearly 5% of the U.S. population vapes, which accounts for about 10.8 million people, while a third of those vape daily. Additionally, some experts expect the vaping and e-cigarette industry to grow to more than $61 billion in the next decade as more and more people switch to this alternative to traditional cigarettes.

However, just like any business, there are certain pitfalls you need to avoid if you’re planning on opening a vape shop in the near future. Here are three reasons why vape shops typically close down shortly after they open, and what you can do to give your vaping business a healthy head start.

1. There’s not enough capital.

Unfortunately, it’s not as easy as just hanging up your shingle and selling vape products. Opening your own store could cost anywhere from $25,000 to $100,000, depending on whether or not you franchise, and there are always additional costs along the way. When you become a franchisee for a big vape company, you’re typically set up with everything you need to open your business, including licenses, inventory, and operating systems. Independent stores need to acquire all of that by themselves but can do so on their own terms.

Either way, there are a number of costs you should take into account when planning to start your new business. Rent for your store, accounting costs, marketing materials, point of sale (POS) systems, and training for your employees are necessary costs no matter what business you’re starting. The costs specific to your vape shop should include inventory like:

  • E-Cigarettes
  • E-liquids
  • Batteries
  • Battery chargers
  • Vape juice
  • Replacement coils

All of these costs can add up quickly, and let’s face it: most people don’t have a hundred grand—or even a quarter of that amount—lying around in a bank account. Small business loans are usually the way to go when starting up a new business, which is where a service like Clover Capital comes in. This innovative program allows you to turn future credit card sales into the capital you need to get started, which eliminates a lot of the headaches you’d normally run into with a traditional small business loan.

2. The local laws are unfriendly.

Local vape shop regulations can put a serious damper on your vape shop plans. States like California and Indiana are creating regulation after regulation regarding vaping and vape shops, so you should definitely do some research about your state’s stance on vaping—as well as the city or locale in which you intend to open your vape shop. Here are a few things you should keep in mind when navigating the tricky world of vaping regulations:

  • What kind of license is required to operate? Some locales require special use permits, while others consider vape shops the same as tobacco shops.
  • What are the zoning laws in your area? While you may plan to operate your shop in a business district zone, you could run into issues if it’s too close to a church or school.
  • Do you have to charge any special taxes? Some cities impose “sin” or “nuisance” taxes on things like tobacco and alcohol—and yes, e-cigarettes.
  • Are you able to sell cannabis? While still a federal offense, the sale of cannabis has been legalized in a number of states. This could be a lucrative item for your business but could also open up a lot of legal concerns.

In certain cases, you may need to get involved with your city council regarding vaping regulations. Your best opportunity is at a public meeting, so it’s important to make a great first impression—especially for those who may not have the most positive opinion about vaping. Come prepared, professional, and ready to make a valid argument in favor of your position on vaping.

3. Good employees are hard to find.

Businesses live or die by their staff, and this is doubly true for highly regulated industries like vaping. Not only does your staff have to be knowledgeable about your products, they also need to be dedicated to following the rules, like never, ever selling to minors—even it means checking the ID of every person who walks through the door, no matter how old they appear. There’s always someone watching, and one wrong move could cost you a ton of money in fines or worse, get your business shut down.

In addition to knowing and following the rules, your employees need the ability to speak about your products with every type of customer that walks through your door, from a first timer to the experienced aficionado. They should also do this in a friendly, yet professional manner, which requires a level of training to get right. Gusto is a Clover app that handles employee management, which includes everything from payroll and HR tasks to training and gathering feedback. Automating these employee management tasks can free you up to make sure your employees are equipped with everything they need to make your business a success.

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