Every week new vape shops open up in various cities across the USA. In fact, according to InfoGroup USA, over 200 vapor shops have opened in the last 30 days. As the industry grows larger and more competitive, we will definitely see many of these close their doors due to lack of sales.
According to Statistic Brain, 25% of retail businesses fail within the first year. After four years only 53% of retail businesses are still operating. The main reason that businesses fail is, you guessed it, owner incompetence. The main areas of owner incompetence include: emotional pricing (“my house eliquid is so good I can charge $12/15ml”), no knowledge of pricing strategies, lack of bookkeeping experience, and lack of planning (“all I have to do is open a shop and people will show up and buy from me”).

Reasons for 1st Year Failure

Owner Incompetence 46%
Lack of Product Knowledge 46%
Lack of Managerial Experience 30%

Here are five reasons vape shops go out of business:

1. Lack of Business Experience

The e-cigarette industry has an extremely low barrier of entry. Essentially, any schmuck who can rustle up $5,000 or so can open up a vapor store. This results in the industry being filled business owners who do not have the appropriate experience in running a retail business. Prior to opening your new e-cig store, do some research and learn some basic retail strategy. The vape business is much different than any other retail sector but there are many best practices that you can apply to your vape shop.

2. Failure to Take Advice

There are many established vape shops who have carved out a successful existence by being innovative and taking risks. Some new vape shop owners think they have the formula for success and are afraid to change course when things start to go south. When you first open your vape shop it’s important to network with other e-cigarette retailers to share successful strategies and other tips.

3. Being “Friends” With Your Employees

Your employees are paid to do what you tell them. While you want to be friendly with your staff, it’s important for them to know what is expected. For example, if your employees think that you are their best buddy, their performance on the clock will lackluster. Read some articles on how to manage people before you start hiring. Once you understand how to be a good manager you will be able to get the most out of your staff and they will be happy to as instructed. I’ve been to many vape shops where the employees treat new customers as a burden while the owner is present. Imagine how poorly they treat customers when the owner is out!

4. Using Your Business Bank Account as a Personal Bank Account

If nothing else, follow the advice of Scarface and, “don’t get high on your own supply” …of cash. I have a relative who uses her business checking account as her own personal money. She pays her mortgage, store rent, and everything else from that account. She is always coming up short and has to worry about money. The best way to manage your money is to pay yourself a salary that allows you to live comfortably and leave any extra money in the business account. Every 3-4 months pay yourself a quarterly bonus after all expenses are met. This will help you budget better and you won’t be hurting for cash if your store has a slow month.

5. Failing to Listen to Your Customers

Customers are your most valuable asset and not just because they give you money. Your customers give you insight into the latest trends of┬áthe vaping culture. If you want market research simply hang out in your own vape shop and actually listen to what your customers are saying. Don’t think that because you own the shop you have all the answers. Humble yourself enough to take advice from Joe Customer because Joe Customer knows what he wants and if you don’t provide it then your competitors will.