Starting your own vape shop in the UK can be a lucrative business opportunity. Before starting, it is important to research the market and understand the regulations in place for the sale of vaping products. You’ll need to obtain a license from your local authority and make sure your shop complies with all relevant laws and health and safety requirements.
In terms of setting up the shop itself, you’ll need to secure a suitable location, purchase inventory and equipment, and create a business plan outlining your marketing strategy, target audience, and financial projections.
It may also be helpful to establish relationships with suppliers to secure a steady supply of products. By offering high-quality products and providing excellent customer service, you can build a loyal customer base and establish your shop as a trusted destination for vapers.
The 6 steps to opening a vape shop
It’s no secret that starting a small business can be difficult, but opening a vape shop, managing one, and complying with FDA regulations can be particularly challenging.
The U.S. is by far the largest market for e-cigarettes, which represents an estimated 35 million users in 2016, and someone needs to provide them with the supplies they need. As you launch your vaping business, consider the following steps and their costs if you are determined to start a vape shop.
Step 1: Write a business plan
To start a vape shop, your first step should be to decide what type of business you want to start, your name, and the structure of your business. You should write a business plan before you do any of these other steps, even though they are important for finding out how to open a vape shop.
It takes a lot of dedication and perseverance to start a vape shop since it is not only a popular industry but also one that is constantly faced with changing regulations and bans lately.
Research your state’s vape shop laws before you open one. If vaping products are subject to higher excise taxes where you live, your brick-and-mortar location may not be viable. Despite the fact that vape products don’t currently have a federal excise tax, certain states and municipalities do levy taxes on them, either as a percentage of the wholesale value or per unit.
These states and localities have varying tax values, but those with the highest rates (such as Minnesota’s 95%, and D.C.’s 70%) can make starting a vape shop prohibitively expensive, as vape shop owners have to raise their prices accordingly—and perhaps lose business to online sellers who charge lower prices.
Describe in your business plan how you intend to overcome any obstacles your business might encounter. Ensure that your business can help meet the demand for vaping products in your area by analysing the competition in your area.
However, even when you’re planning your marketing campaign, you’ll have to comply with the FDA’s e-cigarette regulations-which prohibit, for instance, advertising without displaying health warnings.
Having completed this legwork, you can choose a business entity and come up with a name for your business. Make sure the name you want is available on your state’s Secretary of State’s website. The names already in use should be easily searchable in an online database.
You might find choosing a business entity for your vape shop business to be straightforward, at least partially because the type of business entity you choose depends on whether or not you have business partners. In case you’re running your business alone, you may want to set up a limited liability company to protect yourself from liability. Your best bet might be a limited liability company, an S corporation, or a C corporation. You can choose from a wide variety of business entities.
Step 2: Register your business, get any licenses or permits
Registering your vape shop in the UK with the local council, Companies House, HMRC, and other relevant authorities is a crucial step in setting up your business. Here’s what you need to know:
Local Council: You’ll need to obtain a business license from your local council to operate your vape shop. You may also need to comply with local regulations, such as fire safety and health and safety requirements.
Companies House: If you’re setting up a limited company, you’ll need to register with Companies House. This involves filing the appropriate forms and paying a fee.
HMRC: You’ll need to register with HMRC for corporation tax if you’re setting up a limited company. If you’re operating as a sole trader, you’ll need to register for self-assessment.
VAT: If your taxable turnover is above £85,000, you’ll need to register for VAT with HMRC.
It is important to seek the advice of a professional, such as an accountant, to ensure that you comply with all relevant regulations and obligations. Failing to register with the appropriate authorities can result in fines and penalties, so make sure to take the necessary steps to protect your business.
Step 3: Account for essential startup costs
Before launching their brick-and-mortar locations, small business owners need to take a few steps. Among the first steps to starting a business are opening a bank account, securing a location, selecting a supplier, securing a point-of-sale system and accounting software, launching a marketing campaign, and hiring and training staff. Your startup costs must be taken into account throughout the entire process.
Getting started with a vape shop requires you to stock your inventory, too. Don’t underestimate these costs. The following products should be at least included in your vape shop, to begin with:
To get double the stock at half the cost, it is wise to purchase your inventory through a wholesaler. Be sure not to sacrifice quality for quantity by doing your research.
Is there a cost associated with opening a vape store? The exact cost will depend on various factors such as the size and location of the shop, the type of products you plan to sell, and the equipment and supplies you’ll need. Some of the costs you may incur include the rental or purchase of the storefront, licensing fees, inventory, marketing materials, point-of-sale system, and insurance.
You may also need to hire employees, and pay for utilities and other ongoing expenses. Additionally, you may need to invest in advertising and promotional efforts to build brand awareness and attract customers. To get a better understanding of the costs involved, it is advisable to research the industry and consult with a financial advisor to create a realistic budget and plan for your business.
Step 4: Get business insurance
Your startup budget should include high insurance fees when it comes to how to start a vape shop.
It is estimated that vape shops pay much more than other retail shops for insurance, according to internal data from Insureon. In comparison to the average cost of general liability insurance for small businesses, the average cost for vape shops is £711.11. However, your insurance policy’s cost depends on a variety of risk factors, including your projected revenue, the value of your equipment and property, and the amount, type, and value of your products.
Although general insurance companies offer policies that cover vape shops’ property and products, there are also niche insurance brokers that work specifically with these businesses. The insurance policy covers everything from e-juice to defective products to your brick-and-mortar store.
Step 5: Get a business credit card, business account
Maintain separate business and personal finances, especially if you’re selling a regulated product. Starting a vape shop requires a business account, and this should be one of your top priorities. In order to pay employees and bills, you’ll also need a bank account where you can keep the money that comes in.
Getting funding is another important step that you can take with a business credit card since it is a means to an end. It can also help you build a good credit score for your business. Your business credit card can help you boost your credit score as much as possible in the beginning. You might find it pays off to pay it off on time, if not early, and ask your suppliers to help you boost your credit score by vouching for you to the three credit bureaus.
The card issuer is likely to turn you down based on either stat, even if they ask for your industry and length of time in business on your application. In reality, card issuers are more concerned with your personal creditworthiness and your ability to repay your credit.
When you apply for your card, the issuer will do a hard credit inquiry, as well as ask about the financials of your business. In addition to providing your personal income and outstanding debt, you must also provide information about your vape shop’s annual revenue.
Carrying a balance month-to-month can make credit cards costly. In any case, plastic may be your most affordable option to cover some of your initial expenses while you figure out how to open a vape shop if you pay your bills in full every month (which is a best practice for owning a credit card in the first place)—and you choose a no-fee business credit card. Certainly, it will be one of your easiest to access right now.
Step 6: Get funding
It’s difficult for vape shop owners to secure financing in this business, in addition to high up-front costs. You will have a hard time obtaining approval from the biggest financial institutions in your area despite your industry’s high profitability.
Banks generally do not fund start-ups, no matter what the industry-risk factor is. In addition to not having the credentials, new ventures do not have the revenue, profitability, and time in business to prove they can repay their loans.
Even some online lenders refuse to grant loans to start-ups, despite being open to funding vape shops. Alternative funding sources could be an option for the newest vape shops. New businesses are able to obtain funding by crowdsourcing, bootstrapping, borrowing from family and friends, and applying for personal loans.
Using a business credit card, which we discussed above, can help you establish business credit and help you secure a true business loan from the start. If you want to build the kind of credit lenders will consider you a good investment, pay back your card regularly and in full.
Eventually, you can apply for a bigger business loan from an alternative lender that is vape shop-friendly once you’ve built up your credit score and business’s finances.
There are some steps we listed above that specifically pertain to opening a brick-and-mortar vape shop. Whether you’re opening an e-commerce store or a vape shop online, you’ll be subject to state regulations, as well as the regulations in the country where you’re shipping your products.
As well as creating an e-commerce website for selling your products, you’ll have to create an account with an e-commerce website builder, which will add another layer of work to your setup. It is fortunate that there are many e-commerce websites and templates available to help you accomplish your goal, although your product might impose restrictions on which platforms you can use. In addition to complying with vape marketing laws, you’ll need to market your online shop. Additionally, you may need to add age verification widgets to your site.
In addition to the competition online, setting yourself apart from other vape shops might prove difficult when starting your own vape shop online. Getting started with a vape shop probably feels like extra work, but with the right knowledge, it could be a profitable move. For a better idea of whether this is feasible for you, we suggest speaking to a vape shop specialist lawyer.
Frequently asked questions
Do you need a Licence for a vape shop?
You do not need a Licence for a vape shop in the UK. There are rules around the sales of e-liquids though. And it is important to understand your role in the market – whether you are a producer/manufacturer of e-cigarettes and e-liquids or a retailer.
Is running a vape shop profitable?
Yes, running a vape shop is profitable the gross profit is about 58%, but the road there could be long. And this industry often faces changes to regulations that could result in problems with products, stocking, or selling.
Is selling vape a good business?
Yes, selling vape is a good business, electronic cigarettes seem to be much safer than regular cigarettes. In consequence, the market growth has been nothing short of tremendous in the past couple of years. In 2022, the value of the electronic cigarette and vape market reached more than five billion pounds.