Tobacco Shops Business Plan Sample

Do you want to start Tobacco Shops business plan?

Starting a venture in the tobacco industry can be quite daunting as there are so many competitors present. One of the major blunders you can make when starting a tobacco business is going into the market blindly without any prior research. Like other businesses, a tobacco business launch must also be preceded by a tobacco shop business plan. Similarly, a vape shop will also have a vape shop business plan developed before the business starts. 

Your business plan for investors needs to contain all the relevant and necessary details for starting a tobacco business in the current market. This will help make your case and enable you to gain investors for your venture. Therefore, if you want to learn how to start a tobacco business, you can follow along with this business plan for The Joint, a tobacco shop started by Helen Karl.

Executive Summary

2.1 Business Brief

The Joint will be a tobacco shop venture owned and operated by Helen Karl. The business will provide various tobacco products such as cigarettes, pipes, e-cigs, chewing tobacco, and so on. The business will aim to provide top-quality nicotine products for its customers. 

2.2 How Will the Shop be Managed?

A tobacco outlet business needs to be very well-managed from the ground up. To ensure that everything runs smoothly, Helen developed this sample business plan for a tobacco shop. It will contain all the operations of the tobacco shop pre-planned for efficient management.

This business plan for tobacco shop has been developed by Helen herself after a lot of research. So, if you are looking to learn how to open a tobacco shop, you can get guidance from this sample. You can alternatively hire a business plan consulting service if you are not well-versed in business planning specifics. 

2.3 Customers of Tobacco Shops Company

Our customers will be very specifically targeted to ensure maximum sales. As such, the target customers groups for The Join will be as follows:

• Young Adults
• Chain Smokers
• Recreational Users
• People Trying to Quit

2.4 Business Target

The target of our company is to become a standard model for organic tobacco shops in Florida. We will offer our customers a wide variety of products so that they can choose the options that work best for them.

The financial targets that we want to achieve within the first 3 years of operations are shown below for reference.

Franchise Business Plan

Helps the franchisee get business case approval from the franchisor

Company Summary

3.1 Shop Owner

The Joint will be started by Helen Karl, who completed her MBA three years ago. Afterward, she worked in a vape company for two years before she realized that the market demanded a more versatile, organic product-based company. Therefore, she decided to start working on her idea for The Joint. 

3.2 Company History

3.3 How the Tobacco Shops company will be started

Step1: Refine Your Idea

Just like any other business, opening a tobacco shop also starts with an idea. Though vague and unshaped in the beginning, ideas grow to become the businesses we see. The Joint also started with an idea which Helen then refined till it could take the shape of a comprehensive tobacco store business plan.

Step2: Investigate the Market

The next step to starting a tobacco company is to look at the market, its current trends, and predictions. Helen researched the market, found a gap, and looked into how it could be filled. Just like a video game store business plan, strengthening your idea with market research is a very important step in learning how to start a tobacco company. 

Step3: Plan the Business 

Once Helen knew she had a viable idea for a tobacco store open now, she decided to start planning the different aspects of the business. This is the step where business plans usually start taking shape.  

Step4: Find a Location

Another important aspect of starting a business is to find a suitable place for its physical existence. This can be in the form of an office or store. In this case, Helen rented out a small store in the commercial market so that there would be ample visibility. 

Step5: Marketing

One of the final steps of learning how to open a tobacco store is to learn how to market the business so it attracts the maximum number of customers. For The Joint, Helen decided to invest time in analyzing the market and developing a marketing plan suited to the conditions.

Start-up Expenses
Legal	$101,400
Consultants	$0
Insurance	$25,100
Rent	$30,100
Research and Development	$10,000
Expensed Equipment	$52,200
Signs	$3,400
TOTAL START-UP EXPENSES	$222,200
Start-up Assets	$251,400
Cash Required	$181,000
Start-up Inventory	$35,100
Other Current Assets	$201,000
Long-term Assets	$217,000
TOTAL ASSETS	$885,500
Total Requirements	$1,107,700
START-UP FUNDING
Start-up Expenses to Fund	$222,200
Start-up Assets to Fund	$885,500
TOTAL FUNDING REQUIRED	$1,107,700
Assets
Non-cash Assets from Start-up	$1,172,000
Cash Requirements from Start-up	$105,000
Additional Cash Raised	$50,000
Cash Balance on Starting Date	$30,000
TOTAL ASSETS	$1,357,000
Liabilities and Capital
Liabilities	$18,200
Current Borrowing	$0
Long-term Liabilities	$0
Accounts Payable (Outstanding Bills)	$60,500
Other Current Liabilities (interest-free)	$0
TOTAL LIABILITIES	$78,700
Capital
Planned Investment	$1,107,700
Investor 1	$0
Investor 2	$0
Other	$0
Additional Investment Requirement	$0
TOTAL PLANNED INVESTMENT	$1,107,700
Loss at Start-up (Start-up Expenses)	$170,600
TOTAL CAPITAL	$1,278,300
TOTAL CAPITAL AND LIABILITIES	$1,357,000
Total Funding	$1,107,700

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Services 

The base of any business is its products. If you want to open tobacco shops, you will need to be clear about the products you will be selling to your customers. For instance, for this smoke shop business plan, Helen had to decide what tobacco products her shop would be selling. 

Therefore, if you want to learn how to start a tobacco shop, you can take help from the list of services mentioned here. This smoke shop business plan template contains the list of services that Helen thought would be best to start up her business. She decided to cater to a wide range of services to target most customers. These services are detailed below in this tobacco shop business plan for reference. 

• Cigarettes 

The main product provided by The Joint as per our sample business plan for tobacco shop will be cigarettes. For this product, we will have classic cigarettes as well as flavored ones.

• E-Cigs

There is a lot of popularity among millennial users to use e-cigarettes instead of normal ones. These are one-time products that users can use until they run out, so instead of a pack of cigarettes, customers only have to carry one cigarette. 

• Vapes

Staying with the times, The Joint will also sell vapes as they have become quite popular among young users. They are like e-cigarettes but with a rechargeable battery which means they can last longer. 

• Pipes & Cigars

To cater to our older customer base, we will also manufacture and sell good quality cigars and pipes for important occasions as well as for regular use. 

• Chewing Tobacco

We will also sell chewing tobacco to people who don’t prefer cigarettes and smoke.

Marketing Analysis of Tobacco Shops Company

If you want to open tobacco shops, you must remember that it involves a lot of planning and research. To open a tobacco outlet business, you not only have to manage all the logistics of operations in your smoke shop business plan, but you also have to look at the market. Helen decided to look into all smoke shops open today to find the strategies adopted by them, learn from them, and devise a strategy of her own. 

In this smoke shop business plan sample, Helen used market research and analysis of market trends to arrive at a marketing strategy that would help her business attract customers. Just like the marketing plan in toy shop business plan, this smoke shop business plan outline assessed the market prices with financial goals to set the product prices for The Joint. 

5.1 Market Trends

According to Statista, the export value of tobacco manufactures in tobacco was $843.4 million in 2021, which was an increase from $694.72m in 2020. This means that the demand for tobacco has increased. Therefore, it is possible to tap into the growth rate of the market and develop a tobacco store business plan that learns from the mistakes of suffering companies in the market. 

5.2 Marketing Segmentation

The customers that will be targeted by The Joint as described by its online smoke shop business plan are as follows:

Business Plan for Investors

5.2.1 Young Adults

The primarily targeted customers of The Joint will be young adults who are under a lot of pressure and going through a lot of significant changes in their life. We will offer them products like vapes and e-cigarettes so that they can take the edge off. 

5.2.2 Chain Smokers

Our second group of customers will be people who are already used to smoking and are considered chain smokers. As these people require a constant and regular supply of cigarettes, so we expect them to be one of our most frequent customers. 

5.2.3 Recreational Users

We will also be catering to recreational smokers and tobacco users. The products directed toward these customers will be flavored cigarettes, vapes, pipes, and cigars. 

5.2.4 People Trying to Quit

There are a lot of people who try to decrease their tobacco and cigarette use. These people require toned-down products to decrease their use little by little. Therefore, we will also serve these customers through vapes and e-cigarettes.

Market Analysis
Potential Customers	Growth	Year 1	Year 2	Year 3	Year 4	Year 5	CAGR
Young Adults	40%	50,000	60,000	72,000	86,400	103,680	10.00%
Smokers	35%	40,100	48,120	57,744	69,293	83,151	10.00%
Recreational Users	17%	20,100	24,120	28,944	34,733	41,679	10.00%
Quitters	8%	9,100	10,920	13,104	15,725	18,870	11.00%
Total	100%	119,300	143,160	171,792	206,150	247,380	10%

5.3 Business Target

• To become a versatile tobacco shop in Texas offering different products.
• To set up a standard as an organic tobacco shop that manufactures its products from scratch.
• To become profitable enough to earn $10k/ month by the end of the second year.

5.4 Product Pricing

As our products are organic instead of mass-produced, so they will be a little higher in price as compared to the market baseline. However, our products will offer the luxury of uniqueness that a lot of people prefer.

Marketing Strategy

The market today is filled with tobacco products and businesses. To survive in such a saturated market, you will need to come up not only with products that you will be selling but also with ways to profitably market these products. 

To open a tobacco shop, Helen decided to use her market research to identify gaps and enhance the importance of filling them. Therefore, in her tobacco shop business plan, Helen laid out some marketing strategies to make her business seem more attractive to the customers in the face of the competition. 

If you want to open a business in the tobacco industry, this business plan for a tobacco shop can be a great way to understand the market and how to make your place in it. It will be much more useful to go through this plan instead of an unrelated plan like a business plan for a farmer’s market. 

6.1 Competitive Analysis

• We have multiple options for our customers, thus we can serve the maximum number of needs. 
• We produce organic products that are unique and provide better quality than other mass-produced tobacco products. 
• We provide our customers with the option to get a product customized to their needs. 

6.2 Sales Strategy

• We will advertise specific products to specific target customers. For instance, vapes and flavored cigarettes will be marketed to young adults through social media, while normal cigarettes will be advertised on TV and billboards. 
• We will offer affordable, customizable products to our customers.
• We will regularly send gift packages to our regular customers. 

6.3 Sales Monthly

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6.4 Sales Yearly

6.5 Sales Forecast

Sales Forecast
Unit Sales	Year 1	Year 2	Year 3
Cigarettes	15,000	15,900	16,854
E-Cigs & Vapes	13,500	14,310	15,169
Pipes & Cigars	14,000	14,840	15,730
Chewing Tobacco	10,000	10,600	11,236
TOTAL UNIT SALES	52,500	55,650	58,989
Unit Prices	Year 1	Year 2	Year 3
Cigarettes	$25.00	$29.00	$33.64
E-Cigs & Vapes	$30.00	$34.80	$40.37
Pipes & Cigars	$30.00	$34.80	$40.37
Chewing Tobacco	$50.00	$58.00	$67.28
Sales
Cigarettes	$375,000.00	$461,100.00	$566,968.56
E-Cigs & Vapes	$405,000.00	$497,988.00	$612,326.04
Pipes & Cigars	$420,000.00	$516,432.00	$635,004.79
Chewing Tobacco	$500,000.00	$614,800.00	$755,958.08
TOTAL SALES	$1,700,000.00	$2,090,320.00	$2,570,257.47
Direct Unit Costs	Year 1	Year 2	Year 3
Cigarettes	$8.00	$8.80	$9.24
E-Cigs & Vapes	$12.00	$13.20	$13.86
Pipes & Cigars	$10.00	$11.00	$11.55
Chewing Tobacco	$13.00	$14.30	$15.02
Direct Cost of Sales
Cigarettes	$120,000.00	$139,920.00	$155,730.96
E-Cigs & Vapes	$162,000.00	$188,892.00	$210,236.80
Pipes & Cigars	$140,000.00	$163,240.00	$181,686.12
Chewing Tobacco	$130,000.00	$151,580.00	$168,708.54
Subtotal Direct Cost of Sales	$552,000.00	$643,632.00	$716,362.42

Personnel plan

If you are learning how to start a tobacco business that operates out of a shop, you will need to pay significant attention to your employee selection. For her tobacco shop business plan, Helen decided to list a set of required employees along with a hiring criterion. This kind of information can also be seen in other plans, such as a retail discount store business plan. 

7.1 Company Staff

• 1 Co-Manager to manage the production department
• 8 Production Workers
• 1 Sales Manager
• 1 Accountant
• 1 Receptionist

7.2 Average Salary of Employees

Personnel Plan
	Year 1	Year 2	Year 3
Manager	$30,000	$33,000	$36,300
Production Workers	$245,000	$269,500	$296,450
Sales Manager	$23,500	$25,850	$28,435
Accountant	$23,500	$25,850	$28,435
Receptionist	$23,500	$25,850	$28,435
Total Salaries	$345,500	$380,050	$418,055

Financial Plan

To make sure that her business didn’t end up as a tobacco business for sale like so many others, Helen paid special attention to the financial affairs of the business from the very beginning. 

In her tobacco store business plan, Helen identifies the costs to manage the business along with the revenue earned to set a price for products that balances the expenses out. This allowed her to stay on the ground even if sales didn’t go as planned. 

To make sure that a business survives not only in good times but also in trouble, you should always include a financial plan in your business plan. This stands for every business plan, even a business plan for stationery. 

Following is the financial plan for The Joint:

8.1 Important Assumptions

General Assumptions
	Year 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	8.12%	8.20%	8.26%
Long-term Interest Rate	8.40%	8.44%	8.47%
Tax Rate	24.03%	24.21%	24.60%
Other	0	0	0

 

8.2 Break-even Analysis

Break-Even Analysis
Monthly Units Break-even	5340
Monthly Revenue Break-even	$132,500
Assumptions:
Average Per-Unit Revenue	$231.00
Average Per-Unit Variable Cost	$0.62
Estimated Monthly Fixed Cost	$163,800

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8.3 Projected Profit and Loss

Pro Forma Profit And Loss
	Year 1	Year 2	Year 3
Sales	$1,700,000	$2,090,320	$2,570,257
Direct Cost of Sales	$552,000	$643,632	$716,362
Other	$0	$0	$0
TOTAL COST OF SALES	$552,000	$643,632	$716,362
Gross Margin	$1,148,000	$1,446,688	$1,853,895
Gross Margin %	67.53%	69.21%	72.13%
Expenses
Payroll	$345,500	$380,050	$418,055
Sales and Marketing and Other Expenses	$145,000	$148,000	$156,000
Depreciation	$2,300	$2,350	$2,500
Leased Equipment	$0	$0	$0
Utilities	$2,900	$3,000	$3,100
Insurance	$2,100	$2,100	$2,100
Rent	$2,900	$3,000	$3,200
Payroll Taxes	$24,000	$25,000	$27,000
Other	$0	$0	$0
Total Operating Expenses	$524,700	$563,500	$611,955
Profit Before Interest and Taxes	$623,300	$883,188	$1,241,940
EBITDA	$623,300	$883,188	$1,241,940
Interest Expense	$0	$0	$0
Taxes Incurred	$124,660	$176,638	$248,388
Net Profit	$498,640	$706,550	$993,552
Net Profit/Sales	29.33%	33.80%	38.66%

8.3.1 Profit Monthly

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

Pro Forma Cash Flow
Cash Received	Year 1	Year 2	Year 3
Cash from Operations
Cash Sales	$51,000	$55,080	$59,486
Cash from Receivables	$22,000	$23,760	$25,661
SUBTOTAL CASH FROM OPERATIONS	$73,000	$79,570	$85,936
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
SUBTOTAL CASH RECEIVED	$74,000	$79,000	$85,000
Expenditures	Year 1	Year 2	Year 3
Expenditures from Operations
Cash Spending	$42,000	$42,000	$45,000
Bill Payments	$27,000	$28,000	$31,000
SUBTOTAL SPENT ON OPERATIONS	$69,000	$70,000	$76,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$0	$0	$0
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
SUBTOTAL CASH SPENT	$69,000	$74,520	$80,482
Net Cash Flow	$21,000	$23,000	$25,000
Cash Balance	$27,000	$30,000	$33,000

8.5 Projected Balance Sheet

Pro Forma Balance Sheet
Assets	Year 1	Year 2	Year 3
Current Assets
Cash	$275,000	$308,000	$338,800
Accounts Receivable	$24,000	$26,880	$30,213
Inventory	$4,300	$4,816	$4,900
Other Current Assets	$1,000	$1,000	$1,000
TOTAL CURRENT ASSETS	$282,000	$315,840	$355,004
Long-term Assets
Long-term Assets	$10,000	$10,000	$10,000
Accumulated Depreciation	$19,400	$21,728	$24,444
TOTAL LONG-TERM ASSETS	$24,400	$27,328	$30,744
TOTAL ASSETS	$294,000	$329,280	$370,440
Liabilities and Capital	Year 4	Year 5	Year 6
Current Liabilities
Accounts Payable	$18,700	$20,944	$23,541
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
SUBTOTAL CURRENT LIABILITIES	$19,000	$21,280	$23,919
Long-term Liabilities	$0	$0	$0
TOTAL LIABILITIES	$15,000	$16,800	$18,883
Paid-in Capital	$30,000	$30,000	$31,000
Retained Earnings	$53,000	$57,770	$63,547
Earnings	$193,400	$210,806	$231,887
TOTAL CAPITAL	$285,000	$310,650	$341,715
TOTAL LIABILITIES AND CAPITAL	$300,000	$329,280	$370,440
Net Worth	$293,400	$319,806	$351,787

8.6 Business Ratios

Ratio Analysis
	Year 1	Year 2	Year 3	INDUSTRY PROFILE
Sales Growth	7.25%	8.03%	8.90%	3.00%
Percent of Total Assets
Accounts Receivable	9.21%	10.20%	11.31%	9.80%
Inventory	5.39%	5.97%	6.62%	9.90%
Other Current Assets	2.11%	2.34%	2.59%	2.40%
Total Current Assets	149.80%	151.00%	152.00%	158.00%
Long-term Assets	11.55%	11.60%	11.64%	12.00%
TOTAL ASSETS	100.00%	100.00%	100.00%	100.00%
Current Liabilities	4.90%	4.94%	4.98%	4.34%
Long-term Liabilities	0.00%	0.00%	0.00%	0.00%
Total Liabilities	7.59%	7.65%	7.72%	7.38%
NET WORTH	100.45%	101.25%	102.19%	110.00%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	94.60%	97.15%	99.87%	99.00%
Selling, General & Administrative Expenses	93.56%	96.09%	98.78%	97.80%
Advertising Expenses	1.52%	1.56%	1.60%	1.40%
Profit Before Interest and Taxes	41.50%	42.62%	43.81%	33.90%
Main Ratios
Current	34	35	36	32
Quick	33	33.8	34.645	33
Total Debt to Total Assets	0.18%	0.18%	0.17%	0.40%
Pre-tax Return on Net Worth	74.08%	74.89%	75.00%	75.00%
Pre-tax Return on Assets	96.30%	101.12%	106.17%	111.30%
Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	33.56%	34.60%	35.67%	N.A.
Return on Equity	55.80%	57.53%	59.31%	N.A.
Activity Ratios
Accounts Receivable Turnover	7.7	7.8	7.8	N.A.
Collection Days	100	100	100	N.A.
Inventory Turnover	32.4	34.02	35	N.A.
Accounts Payable Turnover	15.6	16	16.3	N.A.
Payment Days	27	27	27	N.A.
Total Asset Turnover	2.5	2.5	2.6	N.A.
Debt Ratios
Debt to Net Worth	-0.04	-0.03	-0.04	N.A.
Current Liab. to Liab.	1	1	1	N.A.
Liquidity Ratios
Net Working Capital	$244,000	$257,664	$272,093	N.A.
Interest Coverage	0	0	0	N.A.
Additional Ratios
Assets to Sales	0.85	0.87	0.89	N.A.
Current Debt/Total Assets	1%	0%	0%	N.A.
Acid Test	29	29.12	29.16	N.A.
Sales/Net Worth	2.1	2.2	2.2	N.A.
Dividend Payout	0	0	0	N.A.

FAQs

• Is a tobacco shop profitable?

Opening a tobacco shop can be quite profitable if you develop your idea through a strong business plan.

• How much money do tobacco stores make?

Depending on the quality of business management and tobacco shop business plan, tobacco stores can make up to $300,000 a year. 

• How much does it cost to start a cigarette business?

The cost to start a business depends on the scale, business model, and location. You can learn how to start a tobacco business and how much will be the costs through developing a business plan. 

• What is the profit margin of a smoke shop?

The profit margin of a smoke shop depends on tobacco store business plan and details like scale, products, and location.

Download Tobacco Shop Business Plan Sample in pdf