Table of Content

    Do you want to start vape shop business?

    Are you planning on how to open a vape shop? With each passing day, the use of vapor cigarettes has continued to increase. Nowadays, there are exclusive electronic cigarette shops that have mushroomed in cities, towns and neighborhoods. Vaping is a hot trend with statistics showing the industry is projected to grow from $8 billion in 2015 to a massive $47 billion in 2025. Researchers have pointed out electronic cigarettes could be a healthier alternative to traditional cigarette smoking. Since then, a lot of people prefer to inhale vapor from tobacco, marijuana and other substances. Vaping has become a mainstream culture with vaping stores now found in convenience stores and gas stations. It’s definitely a rewarding venture if you have a right business strategy in place.

    Executive Summary

    2.1 The Business

    The Vape shop will be registered using the name Vapehub and will be situated in Arkansas City, Texas. The shop will be owned and managed by Stanley Johnson who is an experienced Quality Assurance Specialist.

    2.2 Management Team

    Stanley Johnson owner and manager of Vapehub is an expert quality assurance specialist who has worked extensively in the cigar manufacturing industry for over 25 years. During his career, Stanley worked for high profile and top cigar brands in the U.S. such as British American Tobacco and Philip Morris International. Considering his extensive industry experience, it wasn’t difficult for him to start a vape shop business.

    2.3 Customer Focus

    Before beginning a vapor shop, it is imperative to have an in-depth understanding of your local cigar market and statistics. Vapehub plans to set up its shop in a strategic location with plenty of foot traffic and sufficient parking space. Customers are anyone who is a vaping enthusiast or keen to quit traditional smoking.

    2.4 Business Target

    Vapehub intends to offer vapor cigars as well as accessories and associated products to a wide range of customers visiting the facility. Vapehub intends to find a creative marketing approach to survive competition and get good market.
    Vape Shop Business Plan - 3 Years Profit Forecast

    Company Summary

    3.1 Company Owner

    Stanley Johnson is an experienced quality assurance specialist with a successful career journey in the cigar industry. Having worked for various bluechip companies across the United States, he has an intricate understanding of the procedures required for opening a vape shop.

    3.2 Aim of Starting the Business

    The modern society is becoming health conscious and because of this reason, the demand for healthier alternatives has gone up. The fact that vaping doesn’t involve inhaling of harmful toxins is the reason why many people are opting to use vaporizers. With the vape trend sweeping across the U.S. Stanley thought it was the right time to start a vape shop to address market needs.

    3.3 How the Business will be Started

    With over twenty years’ experience in the cigar industry, Stanley Johnson enjoys massive experience in the industry. For this reason, he has a keen understanding on what is required to start the business. After carefully studying local vape shop market trends, Stanley has worked closely with experts to come up with a comprehensive financial analysis.
    Vape Shop Business Plan - Startup Cost

    Start-up Expenses  
    Legal $3,000
    Consultants $4,000
    Insurance $24,000
    Rent $15,000
    Research and Development $10,000
    Expensed Equipment $12,000
    Signs $4,000
    TOTAL START-UP EXPENSES $72,000
    Start-up Assets
    Cash Required $140,000
    Start-up Inventory $50,000
    Other Current Assets $22,000
    Long-term Assets $8,000
    TOTAL ASSETS $22,000
    Total Requirements $21,000
    START-UP FUNDING $0
    START-UP FUNDING $80,000
    Start-up Expenses to Fund $30,000
    Start-up Assets to Fund $20,000
    TOTAL FUNDING REQUIRED $0
    Assets $14,000
    Non-cash Assets from Start-up $12,000
    Cash Requirements from Start-up $0
    Additional Cash Raised $42,000
    Cash Balance on Starting Date $18,000
    TOTAL ASSETS $0
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $0
    Planned Investment $0
    Investor 1 $10,000
    Investor 2 $150,000
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $110,000
    Loss at Start-up (Start-up Expenses) $50,000
    TOTAL CAPITAL $60,000
    TOTAL CAPITAL AND LIABILITIES $30,000
    Total Funding $150,000

     

    Services for Customers

    Vape storefronts are primarily aimed at providing offering a wide range of e-cigarette products. Unlike conventional retailers who only sell e-cig products from large big brands, vape shops focus on availing products from smaller brands and customizing them in accordance to customer preferences.

    Vapehub intends to offer a wide variety of e-liquids to cater for the tastes of various types of customers. When planning how to start your own vape shop, you should survey the market and determine what customers are looking for. In this case, Vapehub intends to offer the following products at its Arkansas store:

    • Offer a wide selection of e-cigarette brands which shall be offered in a wide variety of flavors such as chocolate, mint, caramel, menthol and mint among others
    • Sell vaping magazines
    • Offer vaping accessories such as wooden cases, clothing and bags customized for e-liquids
    • Provide a social environment where vapers can sit and enjoy their favorite ecigar as they interact with other vaping enthusiasts.

    How to open vape shop and make it successful depends on the creativity of diversifying consumer products.

    Marketing Analysis of Vape Shop Business

    The vape industry is raking in impressive numbers and for this reason, businesses venturing into the industry are witnessing fast growth and high profitability. However, when coming up with a vape shop business plan, it’s important to do your homework well. With each passing day, new brands of vapor cigarettes continue to emerge. Understanding your local market is key to give you intimate knowledge of local trends. Many vape shops are proliferating to meet the growing demand for e-cigarettes and a creative and customer oriented approach is required.

    5.1 Market Segment

    In order to ensure Vapehub meet’s its obligations, the vape shop will focus on selling different brands and flavors of vapor cigarettes. The aim is to introduce a wide array of flavors that are exclusively associated with Vapehub. A good vape shop business plan sample should adequately identify potential customers for the business. Vapehub will basically reach out to anyone who’s curious and interested in the emerging vaping culture, as well as smokers who wish to ditch smoking cigarettes for vaping. After extensive market research, the vape shop has identified the following customers to patronize the facility.
    Vape Shop Business Plan - Market Segmentation

    5.1.1 Quitters

    One of the biggest markets for Vapehub is Quitters who are individuals trying to quit smoking. The concept of e-cigarettes has been embraced mainly by people who wish to stop smoking traditional cigarettes whose continuous use has been attributed to cause a myriad of health conditions. Researchers seem to agree e-cigarettes are a better alternative considering users don’t need to inhale any smoke while enjoying their favorite cigar.

    Statistics indicate individuals wishing to quit smoking range between 18 years to older people who’ve been smoking for many years. The growth witnessed in the vaping industry has been attributed to an increasing number of quitters who wish to embrace a healthier smoking lifestyle. This business plan template vape shop is designed to focus on reaching out to current smokers in a bid to encourage them to embrace the use of e-cigarettes.

    5.1.2 Social Vapers

    This group consists of customers who’re looking for a social place to unwind and interact with other customers. This group consists of people drawn from various professional and social backgrounds such as career professionals, entrepreneurs, young adults, college students, women and parents who want their kids to quit smoking. Vapehub plans to create a conducive environment for vapers to meet, socialize and exchange ideas on different social issues. The vape shop will have a welcoming and spacious sitting interior space.

    5.1.3 Vape Enthusiasts

    The vaping culture has steadily gained momentum attracting people who wish to smoke e-cigarettes for fun. Today, many people consider vaping a hobby and will always make an effort to visit a vape shop where they can purchase their favorite e-cigarette flavors or brands. With the increasing interest in this hobby, there’s a great market for Vapehub to explore.

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
    Quitters 40% 30,000 32,000 34,000 36,000 38,000
    Social Vapers 35% 25,000 27,000 29,000 31,000 33,000
    Vape Enthusiasts 25% 20,000 22,000 24,000 26,000 28,000
    Total 100% 75,000 81,000              87000 93,000 99,000

    5.2 Business Target

    Everyone wants to become part of the vaping culture and Vapehub has an excellent opportunity to launch its services on the market. Arkansas is a large city and the vape shop intends to set up in a strategic location with high foot traffic. In order to boost revenue, the vape shop plans to offer a diversified product range of e-cigarettes and accessories for its customers. With a good strategy in place, Vapehub hopes to achieve a 15-20% increase in annual sales.

    5.3 Product Pricing

    When planning how to open your own vape shop, it is necessary to do a market study and compare product prices from competitors. Given the increasing number of vaping shops, Vapehub is keen to have competitive pricing in order to stay afloat and compete favorably with other industry players.

    Strategy

    The vaping industry is experiencing rapid growth as the vaping culture becomes more predominant. With more smokers keen on finding a healthy way to enjoy their cigar, the number of vaping shops has drastically increased and there is need for Vapehub to find the best strategy of how to open a vape shop and remain relevant in a fast growing industry.

    6.1 Competitive Analysis

    Vapehub plans to come up with business model that will sustain business operations and ensure customers enjoy superior quality products. There are other vape shops in the city but the business has identified strategies to help it remain ahead of competitors.

    6.2 Sales Strategy

    For the vape shop to attain its sales goals, the following strategies have been identified to help market the business.

    • Organize a grand party for the entire neighborhood to introduce the vape shop to customers. During the event, offer customers free samples of products for them to have a feel of what e-cigarettes offer.
    • Offer product and customer service training sessions to keep staff up to date about the latest vaporizer products available in the vape store. Doing this empowers staff to convince customers why they should spend their money on various e-cigarette brands
    • Embrace SMS text messaging as a way to retain clients and build long-term customer relationships and loyalty
    • Place signage at strategic points within the customer target areas to create awareness and market the vape shop
    • Come up with loyalty plan that see loyal customers enjoy goodies from the vape shop and remain committed clients
    • Advertise the vape shop on local media channels such as radio, newspapers and television
    • Use social media channels such as Facebook, Twitter and Instagram to market the vape shop

    6.3 Sales Forecast

    To achieve its targets, Vapehub has formulated a sales forecast to demonstrate how the vape shop will perform when it starts operations.
    Vape Shop Business Plan - Unit Sales

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    E-cigarette brands 330,000 350,000 380,000
    Vaping magazines 300,000 330,000 360,000
    Vaping accessories 250,000 280,000 310,000
    Social environment 200,000 230,000 260,000
    TOTAL UNIT SALES 1,080,000 1,210,000 1,310,000
    Unit Prices Year 1 Year 2 Year 3
    E-cigarette brands $300.00 $320.00 $340.00
    Vaping magazines $250.00 $270.00 $290.00
    Vaping accessories $200.00 $220.00 $240.00
    Social environment $150.00 $170.00 $190.00
    Sales
    E-cigarette brands $250,000 $270,000 $290,000
    Vaping magazines $220,000 $240,000 $260,000
    Vaping accessories $200,000 $220,000 $240,000
    Social environment $190,000 $210,000 $220,000
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    E-cigarette brands $2.50 $3.00 $3.50
    Vaping magazines $2.00 $2.50 $3.00
    Vaping accessories $1.50 $2.00 $2.50
    Social environment $1.00 $1.50 $2.00
    Direct Cost of Sales
    E-cigarette brands $150,000 $170,000 $190,000
    Vaping magazines $120,000 $140,000 $160,000
    Vaping accessories $100,000 $120,000 $140,000
    Social environment $80,000 $100,000 $120,000
    Subtotal Direct Cost of Sales $315,000 $345,000 $390,000

    Personnel Plan

    Vapehub hopes to employ well trained and experienced personnel to run the operations of the vape shop on a daily basis. How much does it cost to start a vape shop should include a personnel budget to enable the business have an idea how much it will spend on salaries.

    7.1 Personnel Plan

    Vapehub is owned by Stanely Johnson who will also be the manager of the vape shop. As preparations are put in place for the business to open doors to the public, the following staff will be employed in the vape shop.

    Owner/Manager

    2 Marketing Executives

    1 Cashier

    2 Floor staff

    1 Security guard

    Successful applicants will be undergo training to familiarize themselves with vape shop operations to boost productivity and performance.

    7.2 Average Salaries

    Vapehub plans to compensate its members of staff the following salaries within the first three years of operation.

     Personnel Plan      
    Year 1 Year 2 Year 3
    Owner/Manager $50,000 $55,000 $60,000
    2 Sales and Marketing Executive $60,000 $65,000 $70,000
    Floor Assistant $25,000 $30,000 $35,000
    Floor Assistant $25,000 $30,000 $35,000
    1 Cashier $20,000 $25,000 $30,000
    1 Security guard $18,000 $20,000 $22,000
    Total Salaries $198,000 $225,000 $252,000

    Financial Plan

    Vapehub has come up with a detailed financial plan that will guide the operations of the vape shop. Initial capital and business expenses need to be well-defined when starting a vape shop. In this business plan, Stanley Johnson will finance the vape shop business assisted by two investors. A bank loan for business plan will be secured to help finance budget deficiencies.

    8.1 Important Assumptions

    Financial forecast for Vapehub shall be based on the assumptions below.

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 15.00% 17.00% 19.00%
    Long-term Interest Rate 5.00% 5.00% 5.00%
    Tax Rate 12.00% 14.00% 16.00%
    Other 0 0 0

    8.2 Brake-even Analysis

    The Brake-even Analysis for Vapehub is shown in the graph below.
    Vape Shop Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 8000
    Monthly Revenue Break-even $200,000
    Assumptions:
    Average Per-Unit Revenue $250.00
    Average Per-Unit Variable Cost $2.00
    Estimated Monthly Fixed Cost $400,000

    8.3 Projected Profit and Loss

    Profit and Loss information for the vape shop calculated on a monthly and annual basis is shown below.

    Below is important financial data for Vapehub.

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $450,000 $500,000 $550,000
    Direct Cost of Sales $100,000 $120,000 $140,000
    Other $0 $0 $0
    TOTAL COST OF SALES $100,000 $120,000 $140,000
    Gross Margin $400,000 $450,000 $500,000
    Gross Margin % 50.00% 60.00% 70.00%
    Expenses
    Payroll $300,000 $330,000 $360,000
    Sales and Marketing and Other Expenses $6,000 $8,000 $10,000
    Depreciation $5,000 $6,000 $7,000
    Leased Equipment $0 $0 $0
    Utilities $6,000 $7,000 $8,000
    Insurance $2,000 $3,000 $4,000
    Rent $15,000 $18,000 $21,000
    Payroll Taxes $25,000 $30,000 $35,000
    Other $0 $0 $0
    Total Operating Expenses $250,000 $300,000 $350,000
    Profit Before Interest and Taxes $35,000 $40,000 $45,000
    EBITDA $25,000 $30,000 $35,000
    Interest Expense $0 $0 $0
    Taxes Incurred $15,000 $18,000 $21,000
    Net Profit $140,000 $170,000 $200,000
    Net Profit/Sales 25.00% 30.00% 35.00%

    8.3.1 Monthly Profit

    Vape Shop Business Plan - Profit Monthly

    8.3.2 Yearly Profit

    Vape Shop Business Plan - Profit Yearly

    8.3.3 Monthly Gross Margin

    Vape Shop Business Plan - Gross Margin Monthly

    8.3.4 Yearly Gross Margin

    Profit and Loss Analysis for Vapehub is shown below.
    Vape Shop Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Below is a summary of pro forma cash flow, subtotal cash received, subtotal cash spent on operations, subtotal cash spent and subtotal cash from operations.
    Vape Shop Business Plan - Projected Cash Flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $50,000 $60,000 $70,000
    Cash from Receivables $12,000 $14,000 $16,000
    SUBTOTAL CASH FROM OPERATIONS $62,000 $74,000 $86,000
    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 $62,000 $74,000 $86,000
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $35,000 $40,000 $45,000
    Bill Payments $25,000 $30,000 $35,000
    SUBTOTAL SPENT ON OPERATIONS $55,000 $70,000 $80,000
    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 $55,000 $70,000 $80,000
    Net Cash Flow $25,000 $30,000 $35,000
    Cash Balance $30,000 $35,000 $40,000

    8.5 Projected Balance Sheet

    Below is a Projected Balance Sheet for Vapehub that shows assets, capital, liabilities, long term assets and current liabilities.

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $220,000 $240,000 $280,000
    Accounts Receivable $13,000 $15,000 $17,000
    Inventory $5,000 $7,000 $9,000
    Other Current Assets $5,000 $5,000 $5,000
    TOTAL CURRENT ASSETS $243,000 $267,000 $311,000
    Long-term Assets
    Long-term Assets $12,000 $14,000 $16,000
    Accumulated Depreciation $14,000 $16,000 $18,000
    TOTAL LONG-TERM ASSETS $3,000 $4,000 $5,000
    TOTAL ASSETS $240,000 $260,000 $280,000
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $17,000 $19,000 $21,000
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $17,000 $19,000 $21,000
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $17,000 $19,000 $21,000
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $35,000 $40,000 $45,000
    Earnings $120,000 $140,000 $160,000
    TOTAL CAPITAL $240,000 $270,000 $300,000
    TOTAL LIABILITIES AND CAPITAL $200,000 $230,000 $260,000
    Net Worth $300,000 $350,000 $400,000

    8.6 Business Rations

    The following is the Ratio Analysis, Business Ratios and Business Net Worth for the vape shop.

     Ratio Analysis        
    Year 1 Year 2 Year 3 INDUSTRY PROFILE
    Sales Growth 10.00% 25.00% 40.00% 6.00%
    Percent of Total Assets
    Accounts Receivable 8.00% 6.00% 5.00% 12.00%
    Inventory 4.00% 3.00% 2.00% 10.00%
    Other Current Assets 3.00% 2.50% 2.00% 25.00%
    Total Current Assets 120.00% 125.00% 130.00% 50.00%
    Long-term Assets -6.00% -12.00% -20.00% 50.50%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 6.00% 5.00% 4.00% 25.00%
    Long-term Liabilities 0.00% 0.00% 0.00% 24.00%
    Total Liabilities 5.00% 2.00% 1.00% 45.00%
    NET WORTH 85.00% 70.00% 90.00% 30.00%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 72.00% 75.00% 78.00% 0.00%
    Selling, General & Administrative Expenses 65.00% 70.00% 55.00% 70.00%
    Advertising Expenses 4.00% 3.00% 2.00% 3.50%
    Profit Before Interest and Taxes 25.00% 28.00% 31.00% 2.50%
    Main Ratios
    Current 12 16 20 1.4
    Quick 28 32 36 1.5
    Total Debt to Total Assets 4.00% 2.50% 2.00% 60.00%
    Pre-tax Return on Net Worth 70.00% 85.00% 90.00% 3.3.0%
    Pre-tax Return on Assets 65.00% 70.00% 72.00% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 15.00% 20.00% 23.00% N.A.
    Return on Equity 54.00% 58.00% 62.00% N.A.
    Activity Ratios
    Accounts Receivable Turnover 6 8 10 N.A.
    Collection Days 95 100 105 N.A.
    Inventory Turnover 16 19 22 N.A.
    Accounts Payable Turnover 13 16 19 N.A.
    Payment Days 24 24 24 N.A.
    Total Asset Turnover 3.3 3.6 3.9 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.08 -0.04 N.A.
    Current Liab. to Liab. 0 0 0 N.A.
    Liquidity Ratios
    Net Working Capital $230,000 $260,000 $290,000 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 1.2 3.2 4.2 N.A.
    Current Debt/Total Assets 8% 5% 3% N.A.
    Acid Test 28 32 36 N.A.
    Sales/Net Worth 3.5 3 1.5 N.A.
    Dividend Payout 0 0 0 N.A.

    Download Vape Shop Business Plan Sample in pdf

    OGS capital professional writers specialized also in themes such as business plan for discount store, business plan for a toy store, stationery and office supplies business plan, business plan for old corner store, retailing business models, bridal boutique business plan and many others.