Obtaining a liquor license in Colorado and operating a profitable store is challenging at best and the more you can work with your clients to understand the ins and outs, the smoother the entire process will be. A few helpful things to a prospective client should know are:
1. Their business must be registered with the Secretary of State BEFORE applying for the liquor license. All other licenses, permits, requirements (sales, general business, department of health for food service, etc.) must be in place prior to applying for the liquor license.
2. If the liquor business desired is a new venture (no previous liquor license), make sure they check the zoning regulations and permits, if required.
3. A minimum of 90 days to secure a liquor license is average (that is if all requirements are completed and forms are accurate.
4. Your client needs to not only purchase the business and the initial inventory, they need to have a significant cash “reserve” because:
a) Liquor cannot be used as collateral against a loan.
b) For at least the first 90 days of operation all liquor purchases will be C.O.D.
c) All distributors require a personal guarantee on credit purchases.
d) All product invoices must be paid before the 30th day or no further orders for product can be placed. Beer distributors have much shorter credit day terms.
e) A liquor store owner should expect to turn over their inventory at least six times a year. Do the math – for example, $150,000 initial inventory turning 6 times…… a million dollar product purchase requirement is not for those with slim resources.
5. Purchase pricing is based on volume. The more an owner can buy at one time the better the deal and discounted deals aren’t offered every week. Bridge buying is common.
6. Credit card processing fees are a significant cost of doing business, second only to employee costs.
7. A liquor store that desires to offer “tastings” to its customers are required to apply for a permit separate and distinct from their liquor license.
8. Trust yet verify! You prospective buyer should compare product sales receipts and banking documents against product purchases. All licensees are required to keep product invoices for a period of 7 years.
9. More and more licensing agencies encourage buyers to take a responsible sales course prior to their liquor license hearing. Colorado expects licensees to do everything possible to prevent sales to underage, visibly intoxicated and third party purchasers (those who purchase for minors). Penalties are steep and short term business closures are not uncommon. CLBA offers such a program.
10. CLBA is just a phone call away for all your buying/selling questions.
Colorado Licensed Beverage Association
www.myclba.com PO Box 731, Henderson, CO 80640
Jeanne M. McEvoy, is the President and CEO of the Colorado Licensed Beverage Association.(CLBA). The CLBA is the preeminent trade association for independent retail beverage alcohol license holders across Colorado. Their members operate family-owned businesses that assure the responsible sale and enjoyment of beverage alcohol products by adults. To learn more about CLBA, visit their website at: http://myclba.com.