How to start an off-licence

Alcohol revenue in the UK currently equates to over £51bn, which is expected to grow annually by 6.79% (CAGR), making it big business.

Combined with the upward trend of urban expansion throughout the UK and off-licence revenue in the next five years expected to rise, there is a potential market for off-licences, and now could be the right time to consider opening one.

As with any potential business, prospective start-up owners should undergo thorough research and planning before setting up an off-licence and seek professional advice.

Our guide offers the guidance you need to get an off-licence up and running.

What is an off-licence?

An off-licence sells alcoholic beverages for consumption off the premises.

There are several ways to operate an off-licence, including:

• small shops which are independently owned and run and are often conveniently located in towns and cities; some off-licences are within newsagents and are sometimes referred to as corner shops
• an off-licence franchise; chains such as Bargain Booze and The Wine Rack are examples of franchise off-licences
• breweries and microbreweries can also operate as an off-licence by selling their beverages to customers and third parties for consumption off-site
• online off-licences, which are simply e-commerce businesses that sell alcoholic beverages online for delivery to customers.

Set up options

There are several ways to set up an off-licence, and all have benefits and drawbacks.

1. Buy a premise and set up an off-licence

One approach is to buy the premises and set up an independent off-license, where you’ll have complete control over your business and its running, such as the brand, the products you sell, and the marketing strategies.

Plus, all profits are your own.

However, this approach requires time and money to secure the right location, obtain the necessary licences, purchase inventory, hire staff, and set up the shop.

2. Buying an existing off-licence

You can purchase an established off-licence that is still actively trading, allowing you to take on an established business.

The shop, inventory, suppliers, and customer base may all be readily available, which can give you a head start on your business.

When considering this option, it’s essential to assess the previous owner’s success, the off-licence location, reputation, and the reason the existing owner wants to sell.

If these aspects are negative, you may want to reconsider the area or do additional work to understand what is needed to transform the off-licence into a viable business.

3. Become a franchisee

This approach entails buying an off-licence from an established franchise.

Business owners are likely to receive support when operating under an established brand name and are typically provided with training and marketing advice from the franchisor.

However, it’s important to remember with this method franchisors will likely charge fees that may reduce your profit.

In addition, you could have less creative freedom, as the franchisor could decide all significant decisions involving the interior design of the building and the type of products you sell.

Read our guide on how to buy a franchise.

What licences do you need?

As alcohol sales are subject to strict regulations with the Licensing Act 2003, physical and online off-licences must acquire a premises licence.

There’s also the need for a personal licence – premises licensed to sell alcohol must have a designated premises supervisor, who holds a personal licence.

To obtain a licence, business owners need to contact their local authority and demonstrate compliance with the regulations, which include the following:

• the opening hours during which alcohol can be purchased
• whether customers are legally allowed to buy alcohol
• understanding the correct policies to enact which promote responsible drinking.

What skills and qualifications do you need to start an off-licence?

Many entrepreneurs have successfully started and developed a business without previous qualifications, relying solely on their skills and experience.

However, if it’s your first time setting up your own business, you may need some business skills to ensure you have everything covered.

Alternatively, you can study business fundamentals by investing in business books, taking a free Open University course with the help of Learn with Start Up Loans, or finding a business mentor.

Read our guide to learn if you have the skills to launch a business.

Create a business plan

A business plan helps you research market demand, understand the competition, and determine what products you will sell.

Some of the key factors you may want to consider in your plan are:

• market demand, as it’s essential to know the current customer base and to determine if there is a demand for off-licences in the area
• how far is the next off-licence, what is the overlap with customers, and how will customers discover and visit your store, such as predicted level of footfall or issues such as car parking or public transport
• the forecasting costs; it’s a good idea to estimate your cash flow and the basic operating expenses to work out your revenue projections.

You may need to alter your plan as you proceed but having a business plan in place can help you overcome any unforeseen problems.

Read our guide on how to write a business plan.

Steps to take to start your off-licence business

Location

Determining the location of your off-licence is one of the first steps in starting your business.

For example, will it be a physical shop or an e-commerce store?

Is it a part of a newsagent or an independent shop?

Conduct market research on your chosen area to assess demand for an off-licence.

Read our guide on how to find the best shop location.

Naming and registering your business

All new businesses need to be officially incorporated and registered, though your business can open and operate as many off-licences as part of the same company once it has been incorporated.

For an off-licence, you will also need to acquire the appropriate licences.

Start-up costs

Before starting, ensure you have defined your pricing strategy, insurance costs, revenue estimates, set-up costs, operations costs, and cash flow predictions.

Start-Up Loans can help you get started by providing loans of up to £25,000 alongside free mentoring for a year, which can offer support to grow your off-licence.

Sourcing products

You should consider what you want to stock and sell; for example, will your off-licence sell foods, non-food, and tobacco products, too?

You may need to apply for and obtain specific licences depending on what you sell, such as food or tobacco.

Once you’ve established this, it’s time to find the appropriate suppliers for your business.

Pricing and promotion

Ensure you have customer marketing strategies, such as how you will attract and retain customers.

Will you offer any introductory offers and loyalty schemes to entice customers to your shop?

Learn more about how you can price your products with our guide to pricing strategy.

Marketing

You can promote your off-licence in local newspapers or social media platforms or list your shop on online directories, which will put your off-licence on the map, making it noticeable to prospective customers.

Consider offering promotions to tempt shoppers but remember that you need to ensure that customers drink responsibly and you don’t promote irresponsible consumption of alcohol or anything that could be seen as advertising to minors.

Read our helpful guides on promoting your business on social media platforms:

• Twitter
• Instagram
• TikTok
• Facebook
• YouTube
• LinkedIn.