How to Open a Vape Shop with No Money

Alternative Small Business Funding

If you have dreams and aspirations of owning a vape shop, you probably have many amazing ideas of how to get people in the community knocking on your front door. Your mind is probably filled with marketing strategies, product lists, pricing strategies, competitor research, and more. However, there’s one thing that stands in your way - money. More accurately, a lack of money.

Does a lack of funding mean that you need to put your dreams on hold? Perhaps you’ve already spoken with several banks, and none will grant the vape shop funding loan that you need to transform your dream into a reality. The good news is that there are other solutions, and they’re quickly becoming more reliable. Today, we want to talk about alternative business funding and how you can finally open a vape shop!

Lay the Foundations

Before you get too excited, we first recommend laying the foundations for your business. If your business isn’t built upon strong foundations, it will eventually crumble (to extend the metaphor!). What do we mean by foundations? Firstly, write a business plan. Just because you can’t access traditional bank loans, this doesn’t mean that you don’t need a business plan.

Too often, prospective business owners only create a business plan for the loan application process. However, when done correctly, it acts as a guide for the whole business in the early stages.

Your business plan should include vape shop funding options (more on this today!), competitors, market research, potential product lines, pricing strategies, premises research, and more. Another common misconception is that lenders want to see a dream world where everything goes right and where the business makes millions of dollars within 14 working days…this isn’t true. Instead, they want to see a business owner that has considered the potential problems and challenges too.

No business ever goes from launch to success without problems, and this is why lenders appreciate business owners who tackle the potential challenges head-on. After considering the challenges, you can include potential solutions to overcome them in your business plan. This shows all prospective lenders that you’re to be taken seriously in the market.

When laying the foundations, you should also think about the following:

• Choosing a niche
• Learning about the competition
• Choosing a business model (while some go it alone, others buy into an established franchise)
• Researching products
• Calculating launch costs (including stock, marketing, and staff)
• Selecting a business name
• Launching social media platforms and protecting any intellectual property

Likewise, you’ll also need to invest in business insurance to open a vape shop. As existing vape stores will tell you, insurance costs tend to be higher in this niche compared to others. Although your policy will depend on numerous factors, you can expect to pay more than $700 for the right policies.

Just some coverage to consider include premises liability insurance, general insurance, workers compensation, risk insurance, payment protection insurance, business owner’s policy group insurance, and overhead expense disability insurance.

Alternative Business Funding

If you don’t have money to launch your vape shop and need vape shop funding, this isn’t the ideal position. However, we don’t want you to think that your dream is impossible. In recent times, the industry has welcomed bad credit loans, business startup loans, and other forms of alternative business funding.

Often, people fail to qualify for traditional business loans because they don’t have a good credit history, they lack a credit history entirely, or another reason. In some cases, it’s the drawn-out application process that turns people away from this option. Whatever your reasons, we’re about to uncover some alternative methods of vape shop funding your business.

Peer-to-Peer Lending

With this first option, you essentially borrow money from people online who want to make a profit from loans. Rather than a traditional bank, the money comes from multiple sources online using a peer-to-peer lending platform. You advertise your project and ask for a certain amount, and those interested will let you know.

If you were to choose this option, you don’t have to give away any equity because the lenders make a profit from interest instead. Depending on the lending platform, the terms can vary, so always do your research before signing on the dotted line.

During the initial launch phase, you can use P2P lending to purchase stock, equipment, property, and more. Generally speaking, the terms are flexible, and it allows you to get access to capital quickly.

Crowdfunding

Often, we see these first two terms used interchangeably. However, there’s a very important difference between crowdfunding and P2P lending. With the former, you don’t pay interest on the money. In fact, you don’t need to pay the money back either. Instead, people buy into your business and own a percentage as a result.

Therefore, the method you choose depends on your motivations. If you want to retain 100% ownership of the vape shop, you’ll need P2P lending. Once you repay the loan and interest, the lenders disappear. Alternatively, your lenders never disappear with crowdfunding because they supplied you with funds in return for equity in the business.

Unsecured Business Line of Credit

The first two options offer great ways to get vape shop funding, but they aren’t your only options. Next, we have an unsecured business line of credit and a solution that works in the same way as a personal credit card. With this in mind, the idea is that you can dip into the funds whenever you want. Rather than a loan that you take once, you can keep using the money in an unsecured business line of credit.

Like a personal credit card, you’ll need to make repayments if you want to avoid heavy interest charges. Once paid back, the line of credit remains open to meet running costs and unexpected expenses. Depending on your circumstances, you may get access to a business line of credit within just a few days.

Merchant Cash Advance

If you’ve been operating online for some time and now want to open a vape shop, we have good news because you’ll meet the requirements for a merchant cash advance. Although not the best option if you need startup funds, it could help make the transition from online to the physical world.

Essentially, you ask a lender to supply the business with funds before then repaying in future sales (now you see why you’ll need a few months of experience in the market). Depending on your needs, you can borrow up to $500,000 and not have to worry about repayments in the traditional sense of the term. Instead, you’ll promise a percentage of future sales as repayment.

SBA Loans

One form of business startup loan that has gained attention in recent years has been SBA loans, but you will need experience in a similar business. Otherwise, the Small Business Administration will ask for at least two years of history. Essentially, this works like a traditional business loan, except the SBA guarantees a large portion so that you only need to cover a small percentage.

If you want to purchase real estate, you can borrow up to $10 million. However, you’re not likely to need this much as a business startup loan for a small vape shop. If you don’t qualify for this form of loan, you still have other options. As a bad credit loan, however, this is a great option because the SBA secures most of the borrowed amount.

Equipment Leasing and Financing

An example of these options comes in the shape of equipment financing and leasing. As a new vape shop, you’re likely to need different types of equipment. If this is the case, you can lease from the manufacturer or get the equipment on a finance agreement. How do they work?

Leasing - With this option, you’re essentially borrowing the equipment from the manufacturer. You pay a monthly fee, you get full use of the equipment, but you’ll never own it fully.

Financing - Alternatively, you’ll still make monthly payments with financing, but this is towards owning the equipment. If you fail to meet payments, the equipment is taken back as collateral. If you meet all payments, you’ll become the owner of the equipment at the end of the contract.

Summary

Before anything else, draw up a business plan not just for lenders but as a reference for yourself too. For example, your business plan will cover startup expenses. Without calculating this, you don’t know how much you’ll need to get the vape shop business off the ground. In some cases, new vape shop owners can get everything started with between $20,000 and $30,000. While your needs may differ, we hope you have more confidence in your financial options thanks to alternative business funding.

Even if you do qualify for a traditional bank loan, you might consider alternatives because of the short application and approval processes. If you need help, take the first step by contacting the South Florida Funding Group today!