How To Open a Cigar Shop in 5 Steps

Shelves full of fine cigars, tobacco aficionados sharing great conversation, and money flowing into the cash register

Does this sound like a dream come true?

Then it’s time to turn your passion for cigars into a profitable small business. To help you on your journey, we’ve created this quick guide on how to open a cigar shop in five simple steps — from making a plan to opening your doors for the very first time. 

Let’s get started! 

1. Create a Cigar Shop Business Plan

Opening a successful cigar shop requires patience and careful planning — which is why we recommend starting your business plan six to 12 months in advance of your projected grand opening date. 

Let’s take a closer look at what to do during this phase. 

Understand Your Startup Costs

Financial planning is crucial for cigar shop profitability, so we recommend starting with your estimated startup costs. Here are five expenses to expect: 

• Administrative costs like filing paperwork, securing your tobacco license, and getting insurance will cost between $550 and $1,700.
• Securing a location and renovating your shop’s interior will cost a few thousand dollars. 
• Purchasing initial inventory for your cigar shop will cost between $10,000 and $50,000 for larger stores. 
• Point of sale (POS) hardware for your shop’s checkout counters will cost upwards of $1,000. 
• Hiring and paying a team of two to run your store will cost upwards of $3,000/month. 

In total, we recommend setting aside between $50,000 and $200,000 to get your cigar shop up and running. 

Don’t forget to calculate your shop’s projected revenue to ensure you’ll outearn these expenses and turn a profit. 

Do Market Research

Market research helps you discover who your customers and competitors are. 

First, dig into your city’s demographic data. For example, are your potential customers young and on a budget, or do they have disposable income to spend on fine cigars? 

Then, visit other local smoke shops. Take note of their product selection, pricing, and what they’re doing well. 

These insights will help you make informed decisions to appeal to your target market and set yourself apart from other smoke shops in your area. 

Research Tobacco Industry Regulations

The tobacco industry is tightly regulated, and failing to comply with these laws can hurt your reputation, threaten your tobacco license, and even lead to the closure of your cigar shop. 

Research federal, state, and local laws regarding tobacco sales, paying close attention to age restrictions, marketing guidelines, and health warning requirements. 

2. Make It Official

Now that you have a plan, let’s take some concrete steps to open your cigar shop. 

Apply for a Tobacco License

First, start your tobacco license application. This can be a lengthy process, so we recommend starting as early as possible to avoid delays. 

Some states and cities also require you to get a general retail business permit, so make sure to do your research before setting a grand opening date! 

Form a Legal Entity

Now, it’s time to decide on a legal structure for your business. 

You have several options — including a sole proprietorship, partnership, corporation, or limited liability company (LLC). Most cigar shop owners opt for a sole proprietorship or LLC since they have the simplest setup while still offering some financial protections. 

Find the Perfect Location

The next concrete step is to find a location for your business. An ideal location is easily accessible, highly visible, and located far away from your competitors. 

Before settling on a place, check your area’s zoning laws for any restrictions on businesses like tobacco shops and liquor stores. 

3. Design Your Cigar Shop

You’ve done the paperwork and found the perfect location — now it’s time to turn it into your dream cigar shop. 

Create the Right Atmosphere

Want to win over customers from the moment they walk into your cigar shop? Create an inviting, memorable shopping environment. 

Invest in comfortable lighting, high-quality speakers for music, and adequate signage to help shoppers find exactly what they’re looking for. Take your interior to the next level with decor like neon signs or vintage tobacco ads. 

Purchase Shelving and Humidors

Displaying cigars can be tricky, so you need specialized shelving and storage solutions. 

Purchase cigar-specific shelves to house cigar cases, and invest in a few humidors to protect your most delicate options. 

Pro tip: Don’t forget to label your cigars for easier browsing! Simply look for a POS system that allows you to generate and print custom barcode labels sized for individual cigars. 

Invest in Essential Equipment

Next, deck out your checkout counter with essential POS software and hardware. 

Look for a tobacco-specific solution with features like carton-pack inventory tracking, tobacco scan data collection, and built-in age verification. If you’re hoping to sell trending products like CBD and delta-8, you’ll need a POS system that includes high-risk payment processing. 

For quicker checkouts and more accurate age verification, make sure your POS hardware comes with an ID verification scanner. 

4. Stock Your Shelves

You’ve installed your shelves — now it’s time to fill them with the perfect selection of cigars. Let’s dive into our top cigar shop inventory tips. 

Curate Your Cigar Selection

Offer a wide range of cigars to cater to tobacco beginners and discerning connoisseurs. Carry multiple brands at different prices — allowing shoppers to buy full cases or create their own bundle of individual cigars to try. 

Make sure to choose vendors you can trust to deliver high-quality products on time. We also recommend relying on vendors that offer tobacco scan data rebates, giving you the option to save money on inventory in exchange for your shop’s sales data. 

Master the Art of Inventory Management

The best cigar selection means nothing if you can’t keep your customers’ favorites in stock. 

Make a plan to monitor your inventory levels and restock before you run out of your bestsellers. While you can manage your stock manually, we recommend relying on a POS system with built-in inventory features. 

This powerful tool tracks your stock levels in real time, notifies you when you’re running low on certain cigars, and automatically generates purchase orders to replace low-stock items. 

5. Attract Customers

Your final step in learning how to open a cigar shop is to become a marketing expert. Let’s look at our two top tips to help you attract and retain customers. 

Offer Promotions

Want to make sure your grand opening is a huge hit? Offer an exciting new customer promotion. 

Consider creating bundles of your best cigars, offering mix and match deals, or launching a storewide discount to bring in your first sales. Even after your grand opening, continue rotating your promotions to ensure shoppers always have a reason to stop by your cigar shop and try out new smokes. 

Your POS system should make it a breeze to schedule these promotions, ensuring quick, accurate checkouts. 

Launch a Loyalty Program

Our final tip is to launch a customer loyalty program for your cigar shop. 

From day one, this will help you build a relationship with customers and secure repeat sales — which are critical for your store’s long-term success. 

Simply look for a POS system that includes a built-in loyalty program. From there, you can customize your rewards structure, easily sign new members up at checkout, manage customers’ points, and apply discounts. 

Set Your Cigar Shop Up for Success With Cigars POS

We’ve covered how to open a cigar shop, so now it’s time to take the first steps on your small business journey. 

Opening a new store is no easy feat, but you don’t have to do it alone. 

Cigars POS, our all-in-one, industry-specific POS solution, includes all the features you need to launch, manage, and grow your cigar shop — including cigar label printing, tobacco inventory management, built-in age verification, tobacco scan data reporting, and more. 

Plus, our team of smoke shop experts is available 24/7 to help you on your small business journey. 

Schedule your live, personalized demo of Cigars POS today!