When work no longer suits you at all for any reason, be it low salary, inconvenient work schedule, bad team or something else, this means one thing - it’s time for change. You can simply find another job, or you can try to start working for yourself by opening your own business. Today's magazine guest Reconomica, Anton Karkhanin from Kursk, decided to open his own business without quitting his job yet. He opened a small tobacco pavilion in one of the shopping centers. You will find out what Anton ended up doing by reading this article.
The target audience
If you are a non-smoker, have never lit a cigarette and want to open your own tobacco stall, then this is most likely not the best idea. Simply because a smoking stall owner will better understand his target audience. However, if you have some experience in trading or you feel very confident in yourself, then of course no one will forbid you to engage in this business.
To understand the nature of the demand for cigarettes, you need to understand the mindset of a typical smoker:
Place
- they absolutely do not care where to buy cigarettes and most often they do it in the supermarket along with other purchases
Range
- if the brand they smoke is not on sale, they will be furious
Before opening your stall, you should pay attention to these two factors. They are extremely important in this business.
We will not go into details about the target audience and tell you that Peter the Great brought cigarettes to Russia. Most likely, if you are reading this text, then you are a reasonable person and therefore understand many things yourself.
Formation of assortment
When forming the assortment of a tobacco shop, you should offer potential buyers the widest possible range of cigarettes, including products from at least three of the most popular manufacturers - Philip Morris, British American Tobacco and Japan Tobacco International.
The most popular brands of cigarettes in Russia at the time of publication of the article, which must be present in the product line of any tobacco shop:
- Winston Blue
- the most popular cigarettes in the country for several years, the sales locomotive of the JTI concern. “Blue Winston” accounts for 3.6 percent of total sales of traditional paper cigarettes in Russia.
- Rothmans Demi
– 2.9% of the total cigarette market, popular mainly due to its low price. They will be in demand in residential areas with low purchasing power.
- WinstonXStyle Blue
- again Winston, and again JTI, and a share of 2.8% in the Russian market. It is popular among smokers due to its reduced odor after smoking.
- Paliament Aqua Blue
- despite the higher price compared to its competitors, it makes good sales to the Philip Morris concern. “Two and three” percent on the country’s tobacco market.
- Philip Morris compact premium mix
– cigarettes with so-called “buttons” that add specific flavors when smoking. Share of sales - 2.2%.
In addition to traditional cigarettes, it is also necessary to take into account the trend of many consumers switching to electronic cigarettes. The most popular product, Heets Purple for IQOS devices, is now surpassing even the leaders in the “tobacco” market, blue Winston, in terms of sales volumes. These products occupy 4.8% of the tobacco products market, that is, every twentieth buyer of tobacco products chooses purple sticks, which must be taken into account when forming an assortment.
Also, a tobacco shop can generate additional income from the sale of related products, such as lighters, chewing tobacco (snus) and hookah tobacco.
You will lose all your money: place and competition
We have come to the most important factor in this business - the choice of location. This factor is important for any business, but for a tobacco kiosk it is especially important and we will explain why.
People buy cigarettes in two cases:
- In advance along with other products in the supermarket
- Then when they run out
We are not going to open a supermarket, so we are interested in the target audience who simply have run out of cigarettes. Our tobacco stall must satisfy their demand.
I am a smoker and yesterday in the city center near the shopping center I ran out of a pack, I had little free time, and I needed to buy a new pack. Entering the shopping center I found a supermarket. I don’t really want to stand in a huge line for one pack of cigarettes. Having walked a little deeper into the shopping center, I saw an island with cigarettes, where I bought the desired pack.
The following moral follows from this story: you must find a pass-through place where you can quickly satisfy demand.
Tobacco shop staff
To operate a small tobacco shop, two sellers working on a “2 through 2” schedule will be enough. Their income usually consists of a small salary and a percentage of products sold.
The wage fund will average about 40 - 45 thousand rubles for two sellers, with a 12-hour working day. By the way, despite the fact that cigarettes are not food products, tobacco shop sellers must nevertheless have a medical certificate.
Place
When choosing a location, you should consider two factors: the traffic volume of the location and the number of competitors.
Typically, such stalls are located in the following places:
- Shopping center (preferably on the first floors)
- Close to metro stations
- On passing streets
- etc.
The more people who pass by your tent, the better. When you first open, many will pass by and not buy anything, but at the same time they will remember your tent and the next time they run out of cigarettes and are nearby, they will come to you.
For successful work, we only need a room of only 10 square meters. If you have a huge assortment (we’ll talk about it in more detail a little later), which goes beyond tobacco products, then you will definitely need a slightly larger and more expensive room.
At the stage of business planning, you cannot know whether it will bring you profit or whether you will incur losses. Therefore, an agreement with a tenant must be concluded for a minimum period in order to avoid paying rent for years for a business that does not bring in money.
It should be noted that a tobacco stall cannot be opened everywhere. There are a number of places on the territory where this is prohibited:
- Sanatorium
- Railway station
- Hospital
- Sports complex
- Public transport stops
- Municipal and cultural institutions
Pricing
Current legislation in the tobacco sector quite strictly regulates retail prices for products. The presence of an MRP (maximum retail price) for each brand of cigarettes does not allow the tobacco shop to sell products above the established limits. However, no one will allow you to dump in order to attract a large number of customers either - selling tobacco products less than 75% of the MRP is strictly prohibited.
Now regarding the markup on retail cigarettes. Many novice entrepreneurs are wondering - how much is the actual margin on the sale of cigarettes in a tobacco shop relative to purchasing from an official distributor? The actual earnings of a retail outlet from each pack sold vary from 7 to 15 percent.
At the same time, there are quite a lot of offers on the Internet from “gray” wholesalers offering to purchase tobacco products at prices 50 or even 70% lower than the average retail price. Do not delude yourself - most likely, this will be a product illegally imported into the country, often also very different in quality from officially supplied cigarettes. It is more expensive to buy cigarettes in bulk “under the counter” - not only will low-quality products cause a negative reaction from buyers, but there is also a high chance of receiving a significant fine from the inspection authorities.
In general, the “gray” market for excise-free cigarettes is quite large. According to financial analysts from the same JTI, it amounts to about 15 percent of the total volume of products sold in 2020.
Moreover, with an increase in excise taxes, the amount of illegal goods may increase even more. This risk should be taken into account when planning a tobacco business.
We do not recommend joining the ranks of sellers of excise-free cigarettes. The fines for tobacco shops in 2020 are significant:
- Citizens who have made a sale will be fined from 2 to 4 thousand rubles. with the confiscation of the items of the offense.
- Officials - from 5 to 10 thousand rubles. with confiscation of goods
Well, legal entities will have to pay much more for violating the law - a fine of 50 to 300 thousand rubles. with the seizure of products.
Competitors
Competitors are a factor that is closely related to location. There is no point in opening a business next to several stalls and a supermarket. Of course, you will be able to grab some piece of the profit, but with the same investments and wise choice of location, you can earn more.
Follow the development of the city in which you live. If the opening of a new large and promising shopping center is approaching, then you can make good money by occupying a prime location where there are not many competitors yet.
In large time-tested shopping centers, as a rule, all the good places are already occupied. And on one floor there are 4-5 places where you can buy tobacco products. In small shopping centers there is usually no competition, but it makes sense to open this business only if you sell hookahs, vapes, etc. along with regular tobacco products. You can make a profit due to a large assortment.
Start-up costs
To start trading in tobacco products, you need about 3 million rubles. You will spend about 1 million on purchasing equipment, paying rent and organizational issues. 2/3 of the starting capital is invested directly in the product. Don't invest everything in the product. After a month of work, you will find out which brands are the most popular.
There are a lot of brands of tobacco products. You will not be able to imagine the maximum assortment. Experienced sellers advise making a selection of products as follows:
- 75% of the retail space are well-known brands and the most popular types.
- 15% are poorly known but good brands whose quality you know and are ready to advertise.
- 5% - experimental products, for the placement and advertising of which the manufacturer pays bonuses to retail establishments.
- 5% - related products that are in high demand.
Complete the assortment with hookah, chewing or snuff tobacco, smoking mouthpieces and pipes, and cigarette cases. Such products will not bring in much revenue, but they will provide you with an excellent reputation. During the summer, your kiosk can offer refreshments to customers. In winter, hot tea and coffee are very popular. Also, you can sell chewing gum and sweets.
Beautiful renovation
The biggest mistake entrepreneurs make is at the stage of repairing and purchasing equipment. They buy expensive racks and signs. Some even hire professional designers to come up with a kiosk concept and order a logo for 70,000 rubles.
In order for you to understand why this is not necessary, it is necessary to bring some clarity.
The motivation of smokers to make a purchase is very high, and so that you understand how much, I’ll tell you a little about my friend. She lives in private houses and there is not a single shop or stall nearby. She doesn't have her own car. but she is capable of walking two kilometers at 3:00 a.m. in the winter in the snow to the nearest store in order to buy a pack of cigarettes.
Smokers don't care where they buy cigarettes. They don't get any pleasure from the buying process. All they care about is where to buy the next pack faster and the constant increase in prices for cigarettes. All!
You don’t need to worry too much even about the name, because buyers won’t even remember it.
Therefore, all you need to open a tobacco shop is an old counter and an old cash register. It would be enough. There is no need to spend millions on things that no one needs.
Of course, if your business goes well, then the profit received can be spent on a logo from Artemy Lebedev, a gold-plated display case and a diamond cash register. But first, in order to understand whether you have chosen a profitable place or not, you need to invest a minimum.
What documents are needed to open a cigarette kiosk?
You can start your own small business by opening a tobacco stall. The business plan of this enterprise provides for the legalization of the main activity, as well as any other endeavor. The founder has two options to choose from: opening as an LLC or as an individual entrepreneur - IP.
In this case, we are considering a small business, so the latter option is preferable. It will require submitting an application to the tax service with copies of your passport, TIN and original receipt for payment of state duty.
The application must indicate the chosen taxation system (most likely simplified) and the code corresponding to the type of activity - OKVED. For retail trade in tobacco products in specialized stores - this is 47.26. You can choose the most suitable options in the case of trading related goods on the official website of the Federal Tax Service.
To register a limited liability company, you will need a more extensive package of documents. You will need to conclude agreements with various service companies, register a cash register with the tax office, and obtain permits from the sanitary and epidemiological station, Rospotrebnadzor, and the Ministry of Emergency Situations on the compliance of the premises with sanitary and fire safety standards.
To register an individual entrepreneur, you will need a very small amount; you will have to wait no more than one month for a final decision.
As for the operating hours of an open tobacco kiosk, for greater success it is advisable that it trade around the clock. Of course, you can stand behind the counter yourself to develop a base of regular customers, but you will still have to hire an assistant for the night shift. If employment does not allow you to run your own business, then for full-time work you will need two or three sellers: two per shift and one substitute for the weekend.
Salespeople's excellent product knowledge and ability to provide valuable advice will help attract more customers. In addition to the basic rate, employees can be assigned a percentage payment of revenue.
Range
If you have ever been to a stall whose opening you are reading about, you probably already have an idea of what is being sold there:
- Cigarettes
- Cigarillos
- Cigars
- Tobacco
- Tubes
- Lighters
- Lighter refills
- Cigarette cases
Most customers will only buy cigarettes and lighters from you. Everything else is on the counter so that customers have something to look at while the cashier prepares their change.
The most important thing is cigarettes. They should be in the maximum range and in large quantities.
For the last few years I have only smoked Parliament cigarettes. I don't like any other brands. After a hard day at work, I walked home and discovered that my pack was running low. There weren’t even enough cigarettes to finish this article. There were no shops along the way and I had to make an extra detour of 150 meters in order to buy a damn pack of Parliament Aqua Blue. Despite the frost of -25 degrees, ice underfoot and a snowstorm, I still made it to the store that sold cigarettes. Having brushed the snow off my coat and going up to the cash register, I ask the seller to give me the Parliament. And then she says that they don’t have it!
At this moment, a person cannot experience any emotions other than negative ones. And these negative emotions are strongly associated on a subconscious level with the place where they were received, and are subsequently associated with it.
If a buyer comes to you 2-3 times, he will be refused and will have to make compromises. For example, instead of Parliament, buy Marlboro. Then, most likely, you will never see this buyer near your counter again. Therefore, carefully monitor the assortment and replenish stocks on time.
Selection of assortment
The assortment determines how quickly the goods will be sold out. This does not mean that you need to purchase the entire assortment that the market provides, but there is no need to narrow it down to just a few items - this will make the project unprofitable. There is no universal list that would satisfy the needs of smokers equally well in any region.
Some smokers prefer not just a well-known brand, but specific cigarettes. Others choose something cheaper. There will also be connoisseurs of good tobacco and expensive cigars. The task of the tobacco shop seller is to satisfy the demand of anyone who contacts him.
Within a month of work, such demand will be determined with high accuracy, and all subsequent purchases should be aimed at satisfying it.
And since deliveries take place regularly, the seller can safely promise anyone who applies that the cigarettes or cigars he needs will be delivered one of these days.
At the initial stage, the main emphasis should be on inexpensive cigarettes, since they satisfy the demand of a large number of consumers. And in the course of work, depending on demand, the range will expand. Very soon, supplies will be adjusted to the optimal sizes of all items, as a result of which it will be possible to avoid the appearance of stale goods and increase the turnover of funds.
Suppliers and fabulous margins
There are pictures circulating online that show a price list for wholesale purchases that is 40-70% lower than the price written on the pack. So, don’t believe this fabulous nonsense, you won’t find such cigarettes legally anywhere. And if you find them, their quality will be 40-70% worse than the original cigarettes.
The real discount you should expect is 7-15%
And don’t forget that you do not have the right to sell products for more than the price written on the package.
Let's assume that you opened a tobacco shop and step by step created a large franchise, at least at the city level. Then your purchases will be larger and suppliers will be able to give you a maximum discount of 16-20%
But this only applies to regular cigarettes. In addition to them, we will also sell lighters, regular tobacco, electronic cigarettes, etc. Naturally, they will have a higher markup.
Store opening
When developing a business plan for a tobacco store, you need to take into account many small details. When preparing, an entrepreneur needs to carefully study the offers of all available suppliers and select several specific companies . It is recommended to choose those companies that have been operating in this market for a long time and have a reputation as reliable counterparties . In addition, it is necessary to carefully analyze all the requirements of the control authorities. This step will minimize the risks that lead to a halt in trade.
Necessary equipment
When organizing any business, an entrepreneur needs to take into account the amount of associated costs. As we said above, one of the advantages of this direction is the absence of strict requirements for store equipment. It should also be noted that trading through a window is prohibited by current laws. This means that the entrepreneur needs to create a separate entrance for clients.
To equip the sales area, you will need to purchase closed, opaque shelving. This legal requirement must be met first. Ventilation and heating of the room deserve special attention. It is very important to maintain the correct temperature conditions, since otherwise all spoiled products will have to be disposed of. In addition to specialized cabinets, you will need to purchase a high-quality and reliable safe where the proceeds will be stored. In addition to all of the above equipment, you need to order a sales counter and a cash register.
Suppliers and assortment
How much money will it take to organize a tobacco shop? The answer to this question depends on the total volume of the assortment and the wholesale cost of the product. That is why it is very important to find suppliers with the most affordable prices. This step allows you to significantly increase the product margin, which will increase business revenue. When choosing suppliers, there is no need to rush and agree to conclude a contract with the first company. Before starting cooperation with suppliers, it is recommended to carefully study all documents for their products.
The costs of creating an assortment take up a large part of the budget. Before making the first purchase, it is important for an entrepreneur to study the tastes of his potential customers. Approximately eighty percent of the product range falls on the most popular brands. About ten percent of the assortment is allocated to the cheapest tobacco products and luxury products. The remaining ten percent includes exotic names.
It should also be noted that each product line is represented by dozens of manufacturers. The same companies produce both strong products and flavored products. In order to competently compose an assortment, you will need to spend a lot of time studying the tastes of potential customers. You can dilute the product line with additional products and accessories. Many smokers purchase various lighters and ashtrays along with cigarettes. If you have a large budget, you can add the following items to your assortment:
- several different types of tobacco;
- electronic cigarettes and hookahs;
- sets of lighter, ashtray and cigarette case.
Tobacco is a product that can be stored for quite a long time without fear of it spoiling.
Recruitment
In order to start work, one seller is enough, who will be the replacement of the owner. At first, an entrepreneur must stand behind the sales counter on his own in order to study all the needs of his clients. After this, you can hire another seller, putting him in his place. With proper placement of a retail outlet, an entrepreneur has the opportunity to trade around the clock.
You should switch to this mode of operation only if there is a demand for tobacco products in the evening and at night. In such a situation, the number of workers will need to be doubled. The salary should be of a mixed type - a fixed salary combined with a percentage of sales.
Staff
One or two employees will be enough for the work. They must understand the topic and, if necessary, tell the client something about e-liquids, tobacco or vapes.
In the first months after opening, we recommend that you do some work yourself. This recommendation is, in principle, suitable for any business. You will be able to see your target audience every day and perhaps in the end you will come up with brilliant ideas that will increase your profits by hundreds of percent.
Also, train your employees and yourself to be friendly to your customers. Smile at them and try to communicate with them more. The usual question “how is the weather outside?” will pause the automatic process of buying cigarettes and your client will remember the place where he bought the cigarettes. His mood will rise, and hence his loyalty to your stall. And this, in turn, will lead to regular purchases from you.
Where to open a store
For a retail outlet selling tobacco products, the main thing is a large number of sales, since the income from each transaction is small. Therefore, you should choose a place with high traffic. The best option is public transport stops and junctions, residential areas, stalls near business centers or offices. People buy cigarettes just passing by: they are not interested in traveling to the other end of town to buy tobacco at their favorite store. Therefore, the emphasis should be on high traffic: central streets, markets, places near factories, factories, large establishments. Some entrepreneurs open outlets in shopping malls or hypermarkets, but this is a controversial decision, since most visitors will buy cigarettes in a supermarket, stocking up on groceries, rather than going to a separate outlet to buy them. But this rule is not always true. For example, if a grocery supermarket is located in the depths of a shopping center, then visitors are unlikely to go through the entire building, so a point at the entrance will quickly pay for itself.
Please be aware of any legal restrictions. Thus, a retail outlet cannot be located closer than 100 meters to schools, kindergartens, cultural, sports and medical institutions.
Let's consider what equipment is needed in a tobacco stall. You will definitely need: a cash register, a safe or cash drawer, furniture for the seller’s location, display cases and shelves for displaying products. In principle, a room of 10 m2 is sufficient for a tobacco store. If there is no heating, then think about how you will work in the winter - you may need an electric convector. Be sure to protect the windows with bars, install an alarm and a panic button if you plan to work around the clock. To save on lighting, use LED lamps or strips - they are relatively inexpensive, work 5–10 times longer than conventional ones and consume virtually no electricity.
Often tobacco and accessories are bought as gifts
Options for increasing profits
In my city, the guys came up with an interesting feature. I have no doubt that this exists in many other cities. But in my small town this feature is used only in one place.
As mentioned earlier, there are always long queues in supermarkets and you don’t want to stand in it just for one pack of cigarettes. You can place our kiosk right next to the supermarket and sell additional products.
You need to choose products that are needed right now, that are quickly purchased and quickly left:
- Cigarettes
- Water
- Soda
- Chewing gum
- Bars
- Chips
- Alcohol
- Condoms
- Spinners?
I think you got the hint and can continue the list yourself.
Business plan
Finally, here is a brief business plan for a tobacco store so that you can assess the profitability of this event. Thus, one point in a pass-through location with good sales brings in approximately 6 thousand rubles of profit per day, respectively, 180 thousand per month, of which 50 are spent on the purchase of products. Net income per month is approximately 100 thousand rubles, i.e. the expenses made will pay off for you in three months. In practice, everything is not so rosy: at first the level of sales will be low, so you will have to invest heavily in advertising. In a couple of months, people will get used to your store, you will have regular customers and you will reach the desired level of income. We recommend that you expect a payback of 4–5 months, and if you hire an employee and do not work on your own, then add another month to this period.
Attention:
The figures given are quite arbitrary and depend on where exactly you will open a point, how many clients you will serve per day, which supplier you will find and what you will sell.
But in general, the theory coincides with practice: in the 5th month, the outlet fully pays for itself and begins to generate a stable profit. After this, we recommend that you think about opening a second store, because the technology has already been established, suppliers are available, profits are coming in, so you can quickly expand your business. You shouldn’t stop there: even in a small town you can always open 5-7 points, successfully fighting your competitors with affordable prices, quality of service, expanding the range and other nuances.
Having launched a business and put it on track, do not try to withdraw yourself and do not start saving on everything. Make sure that the store is clean and tidy, that price tags are clearly visible, and that outdoor advertising is always in proper condition.
Expenses
So, we come to the most interesting question: how much does it cost to open a tobacco stall? If you read the entire article, you realized that there should not be large expenses in this business.
| Equipment and counter | 100.000rub |
| First purchase of goods | RUB 150,000 |
| Monthly rental | 45.000r/month |
Maybe there will be more, maybe less. No one will give you the exact amount to open your own tobacco shop or a map to success, but before opening a business it is best to have about 600,000 rubles with you. and a bunch of unspoiled nerve cells.
Features of owning a tobacco kiosk
The main thing to remember when selling cigarettes is that selling goods to citizens under the age of majority is strictly prohibited! Violation of the law is fraught with heavy fines, or even deprivation of the opportunity to continue their activities. In addition, promoting a business through advertising is also illegal. This provision in the Russian Federation was introduced in mid-November 2013 into law N15-FZ. But a special license to sell these products is not required.
What else you need to know before opening a tobacco shop:
- At a kiosk in this direction, you cannot sell goods related to another area of production, for example chemical or grocery, only related assortment.
- The sale of cigarettes by the piece is prohibited. There is also a fine for such actions.
- Each package of the product must have a label with the name of the manufacturer and the price in accordance with the law.
- The price on the pack must correspond to that indicated in the documents.
- The point should be located at a distance of more than 100 meters from educational and preschool institutions.
- The sale of tobacco products is not permitted in recreation areas, sports grounds and medical institutions.
The founder needs to clearly understand these rules himself and demand compliance with them from his staff. For a successful undertaking, you will need to thoroughly study the demand, make sure that there are no similar points nearby, and prepare for the fact that the initial purchase of goods may take more than 2/3 of the initial investment.
Tobacco business – where to start?
Let's consider the main stages of starting a business selling tobacco products.
Selecting a sales format
If a businessman decides to start selling tobacco products, he must be well versed in the realities of this market. To achieve success, you should decide on the format of doing business, and also constantly analyze changes in the legislative framework:
- Trade kiosk. Opening a tobacco kiosk will be the easiest, since it will require a small investment in rent, as well as for the purchase of goods. This format of doing business is quite simple to implement: the entrepreneur periodically purchases small quantities of cigarettes and other tobacco products, after which they are sold by the stall seller. The return on investment with this model depends primarily on the location of the outlet and the number of regular customers.
- Tent. If an entrepreneur does not know where to get money to develop his business, he can start by selling small batches of cigarettes by opening a stall in the market. What is good about this model of running your own business? There is no need to invest money in renting a trade pavilion, as well as utility rooms for storing goods. The tent unfolds and assembles fairly quickly, is compact, and cigarettes only take up a few boxes. The profit from retail sales of tobacco products fully justifies the minimum investment at the start.
- Warehouse. Wholesale trade in cigarettes is possible only if there are appropriate agreements with tobacco product manufacturers, as well as large trading companies. As for the return on investment when doing business using this model, it directly depends on the volume of products sold. To become a wholesale seller, you must initially have a sufficiently large amount for a one-time purchase of a large batch of cigarettes. You should also find reliable suppliers who will ensure uninterrupted supply of goods. It is imperative to offer interesting selling prices for small wholesalers and retail outlets, which will make up the bulk of regular customers.
- Installation of vending machines. Such equipment for the sale of tobacco products is widely used in many countries around the world. To install a machine, it is necessary to coordinate this business model with local governments. Its cost fluctuates around 230-250 thousand rubles. Such equipment cannot be installed everywhere, since the machines cannot determine the age of the person who wants to purchase cigarettes. Since their vacation is allowed to persons who have reached the age of 18, installation can only be permitted in those places where minors are not allowed.
If an entrepreneur wants to open a tobacco store from scratch, you need to know that at the start you will need a lot of money to purchase and renovate the premises, purchase equipment and the first batch of goods. In addition, there is a big risk of waiting a long time for the return on the initial investment, especially if the location is chosen incorrectly.
Opening a small tobacco shop or trade tent will be the best solution that will minimize risks and quickly recoup the investment.
Business registration
To officially engage in business activity, it must be registered with the tax service. A businessman has two options - to register an individual entrepreneurship or LLC with the Federal Tax Service.
In the first case, cigarette trading will be preferable for individual entrepreneurs, since small business representatives pay taxes to the state according to a simplified scheme. When opening an LLC, there is one peculiarity: if the enterprise goes bankrupt, liability for monetary obligations will be limited only to the amount of the businessman’s deposits.
As practice shows, registration does not require collecting a large number of documents and going through complex procedures for obtaining permits (as is the case with entrepreneurs who, for example, decided to open a pizzeria from scratch or such a popular attraction as a wind tunnel). To open a kiosk, you will need to conclude agreements with regulatory organizations - the sanitary and epidemiological station, the fire inspectorate and Rospotrebnadzor.
Selection of premises
It’s easy to guess that purchasing a MAF (stall, kiosk) or renting one will not be difficult. But finding the right profitable location for the sale of cigarettes as a business to develop successfully is not an easy task. First of all, the search depends on the size of the locality and the number of inhabitants in it.
It is quite difficult to compete in large cities, since they have numerous retail chains selling tobacco products. Nevertheless, there is a way out of this situation: a place for a cigarette kiosk should be looked for in areas remote from the center, near the metro, public transport stops and markets.
The situation is completely different in small towns, where there is a shortage of tobacco trade pavilions. Even in the center you can rent a room or kiosk for selling cigarettes at a relatively low price. To compete with other entrepreneurs, you should offer customers a wide range of tobacco products, as well as a high level of service.
Important: there are some legal provisions in accordance with which a trade pavilion selling tobacco products must be located. It is prohibited to place kiosks near medical institutions, kindergartens, sports facilities and educational institutions.
Equipment purchase
How to equip a trade pavilion selling tobacco products and cigarettes? Definitely, this will not require large financial investments, as, for example, is the case with the purchase of expensive equipment for production. The kiosk will need to install a cash register, a chair and a small table for the seller.
You will definitely need a small safe where the proceeds will be stored. Please note that the windows of a retail store must be equipped in a special way: they must be equipped with transparent shelves of small dimensions on which cigarettes and other goods can be placed.
For safety reasons, it is recommended to equip the sales stall with bars. They will protect the display case from hooligans at night, especially if 24-hour operation is expected. When choosing equipment for selling cigarettes, you should not forget to install narrow shelving or a compact cabinet for storing products inside the kiosk.
The total cost of equipment for equipping the kiosk is about 52 thousand rubles:
- glass shelves - 5 thousand;
- cash register – 10 thousand;
- furniture and shelving – 20 thousand;
- safe – 10 thousand;
- installation and purchase of gratings – 7 thousand.
There may be additional costs for the purchase and installation of alarms, lighting and heaters. An entrepreneur will have to spend about 20 thousand rubles for these needs.
Recruiting staff
Before you invite people to the sales position, you should decide on the kiosk's operating hours. It directly depends on the location of the outlet. For example, if a stall is installed near 24-hour entertainment venues (nightclubs, bars, restaurants), then it must work in two shifts (day and night). With this mode of operation, 4 sales people will be required.
If a tobacco stall is installed in a residential area, it is advisable to set its working hours from 7 a.m. to 7 p.m. In this case, you will need 2 sales people who will work in shifts. As for their remuneration, it amounts to about 8-12 thousand rubles. Please note that these amounts can be significantly higher in metropolitan areas.
As a rule, there are no problems finding personnel to work in a kiosk selling cigarettes. To motivate employees to perform their duties efficiently, the owner of a tobacco shop can make a small bet and charge a percentage of sales.
The seller does not need to have special education or experience in trading. You can train a person to operate a cash register very quickly, and many applicants will already have such experience.
The main requirements for the seller are a friendly attitude towards customers and excellent knowledge of the assortment of the outlet. The seller is also obliged to know the rules for selling tobacco products and not violate the provisions of current legislation.
Supplier search
One of the most important issues that an entrepreneur must resolve is finding reliable suppliers of cigarettes for his kiosk or shop. Without this component, tobacco sales will not bring the desired results.
Imagine that you already have regular customers who buy their favorite cigarettes every day and bring in a stable profit. If customers' favorite types of cigarettes are not presented in the store, they will find another tobacco shop, and you will lose a stable income.
Important: cigarette packages have a recommended selling price. This means that a businessman cannot change the price of a product in order to increase his earnings. For this reason, it is important to find suppliers who will offer the minimum selling price for tobacco products.
When searching for a supplier, it wouldn’t hurt to visit trading companies that distribute cigarettes in the city. As a rule, special prices are set for buyers for certain volumes of purchased goods (wholesale and small wholesale).
It is also necessary to know all the wholesalers who sell tobacco products and their selling prices for cigarettes. If there is a failure in the supply of products or popular tobacco products are not delivered to the kiosk, you can always purchase them yourself and deliver them to your outlet.
It is imperative to ask the potential supplier to confirm the availability of quality certificates. It is not recommended to purchase original and rare types of cigarettes “for testing”. They will most likely be unclaimed buyers, and the money invested in their purchase will not be returned soon.
Search for sales channels
If you plan to open a wholesale outlet, its main buyers will be small retail stores, kiosks, as well as visiting consumers (mainly from the settlements of the region) who purchase small and large quantities of tobacco and cigarettes. If there is a trade stall at the market, the main buyers will be random passers-by. In a tobacco kiosk located in a residential area, the majority of consumers will be its residents.
Important: in order to establish sales channels and attract the attention of buyers, it doesn’t hurt to create an attractive exterior for the tobacco shop and come up with an original name for it.
It is also important to follow a few simple rules that will allow you to attract new customers and not lose regular customers. To do this you will need:
- place a bright price tag on each pack of cigarettes in the display window;
- offer customers the opportunity to buy cool (summer) and hot (winter) drinks;
- purchase high-quality disposable tableware for preparing drinks;
- release the products of the stall (kiosk) in branded packaging with the company logo.
The last point must be observed for the reason that in the competition for potential clients, under the same conditions, the one who offers better service wins.
New products from well-known tobacco brands are constantly appearing on the tobacco market. Many people prefer to change cigarettes quite often. If regular customers ask about new types of tobacco products, it is worth purchasing a small batch. In this way, you can not only expand the product range, but also increase sales.
Financial plan
Before opening a tobacco retail outlet, you need to decide on the size of the upcoming expenses and calculate the payback period. If you have no experience in this area, you can invest a minimum when opening.
Minimum equipment for opening
Start-up costs:
- showcases – 15,000 rubles;
- cabinet for storing inventory – 10,000 rubles;
- cash register – 20,000 rubles
- seller’s workplace – 10,000 rubles;
- safe – 10,000 rubles;
- sign – 25,000 rubles;
- rent from 15,000 rubles;
- salary – 20,000 rubles;
- miscellaneous – 10,000 rubles.
In total, you will need 90,000 investments and 45,000 monthly.
To begin with, the range of cigarettes must consist of at least 100 items. It is advisable to have two blocks in stock, which, with an average price of about 70 rubles, will require an investment of 140 thousand. Another 20% of this amount will go towards the purchase of lighters, vapes, and hookahs.
Note! You can start working with a widely demanded assortment, and expand it after some time, when the outlet has developed a little.
At first, sales volume will be about 100 packs per day with an average price of 100 rubles. With a markup of 15%, this is 1,500 rubles. The sale of the rest of the assortment will bring the same amount due to a higher markup. Total 90,000 per month.
The initial costs will be recouped in two months. Of course, this calculation should be carried out individually for each point, but if you do not make designer renovations or buy exclusive equipment, then such a business will pay off fairly quickly.
Possible risks
In any field of activity there is a possibility that the business will not work. To minimize possible risks, you should follow simple rules:
- A person can make a detour of 200-300 meters for a pack of his favorite cigarettes; if they are not available several times, the client is lost forever. Therefore, it is necessary to carefully monitor the assortment.
- A large number of competitors or an impassable place. When choosing a room, you should pay special attention to this.
- Selling goods to minors can result in large fines and reduce profits to zero.
- Selling counterfeit goods will also cause a lot of trouble with the law; all the money will be spent on fines or kickbacks.
Selecting premises, purchasing goods and recruiting personnel
The main question is where and how best to open a tobacco store from scratch? It is advisable to choose a place for it that is passable and crowded. It is important to understand that cigarettes are bought either along with groceries at the store checkout, or when the pack is finished. Moreover, in the second case, the nearest point is selected. Therefore, most purchases at a tobacco kiosk are spontaneous. So, the more people pass by the counter, the greater the final revenue will be.
When choosing a premises, you should remember that selling cigarettes is allowed only in shops and pavilions. It is prohibited to sell cigarettes in medical and rehabilitation centers, in premises where authorities are located, in the subway, airports, and train stations. There is also a ban on trading this type of product within a radius of 100 meters from educational institutions. To avoid problems with the law, all these requirements must be taken into account.
You won’t be able to purchase goods from manufacturers - they don’t work with small clients. The purchase of goods will have to be done from wholesale resellers. Here it is important to independently compare the selling prices of different suppliers, their working conditions and how much discount you can get for volume.
You should also pay attention to the provision of all documents by the cigarette wholesaler. The shelf life for this product is not limited, but there is a guaranteed shelf life of 12 months - after this you cannot make claims to suppliers.
To work in a tobacco store, it is recommended to have two salespeople working in shifts. If work is provided around the clock, then three. When hiring, you should not pay attention to the education of the future seller. The main thing is a neat appearance and the ability to communicate culturally with customers. Each employee must be explained that if there is any doubt about the age of the buyer, selling him cigarettes without presenting a passport is strictly prohibited.
Important! The Code of Administrative Offenses provides for significant fines for the sale of cigarettes to minors.
What cigarettes to sell at a tobacco kiosk
Statistics show that most buyers prefer standard cigarettes in the mid-price segment. These people make up about 80% of your potential clients. That is why buying a large number of elite cigarettes is impractical.
In addition, people who prefer expensive cigarettes rarely buy them in markets or from the metro. It is necessary to check the licenses and certificates of the supplier in order to insure yourself against troubles.
Arguments in favor of opening a tobacco business
- When the client gets what he wants, the business is doomed to success. Tobacco products are a product that will always be bought. It is also important that this product cannot deteriorate and is perfectly stored and easy to transport.
- Due to the fact that there are so many suppliers in this market, an entrepreneur will not have problems finding them.
- Fast and high return on investment in the tobacco business. Therefore, after the initial investment, a high and, most importantly, fairly stable income will be received very soon.
Cigarette selling business - pros and cons
Before starting a cigarette business, a novice entrepreneur needs to know about the advantages of running it, possible risks and negative aspects. Not so long ago, most goods were sold in kiosks that could be found literally at every turn. Today the situation has changed somewhat and people prefer to purchase goods and food in stores and supermarkets. However, tobacco stalls still thrive today. This is due to the fact that cigarettes are the product that every smoker wants to buy without wasting their time in long lines.
Let's consider the main advantages of the tobacco business, which allow novice entrepreneurs to choose this type of activity. These include:
- great demand for tobacco products;
- the ability to conduct business in a small trading pavilion (significant savings on rent);
- no need to maintain a large number of employees;
- the ability to conduct trade with a minimum set of equipment;
- long shelf life of tobacco products;
- quick return on initial investment.
As for the negative aspects of running a business selling tobacco products, it should be noted that opening an enterprise will require a considerable amount. First of all, the bulk of the costs will go towards purchasing the first batch of goods.
The high degree of competition should also be highlighted. It is easily explained by the demand for tobacco products. For this reason, in places with high foot traffic, there are quite a lot of kiosks that sell cigarettes. Therefore, in order to ensure sales, the trade pavilion should be located where there are a minimum number of points selling cigarettes (ideally, none).
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