Key Points From the Interview
uying just any liquor store can be a risky move, but Devin Wanzor managed to find the proverbial needle in a haystack.
Having recently relocated to Stillwater, Oklahoma, from Tulsa, he was looking to acquire a business. To avoid a three-hour round trip commute back to Tulsa, his only requirement was that it be local.
A few months later, a broker told him about a liquor store for sale just a few minutes from his home. The store was in great condition and it was clear from the numbers that it had performed well. Devin was experienced at reviewing financials, so he felt confident it would continue to do so. In just two weeks, he had the business under LOI.
Compared to the original owners’ approach to management, Devin brought a fresh perspective. One of the first decisions he made was to round up the price of everything in the store to end in either .49 or .99. It was a small change with a big impact: He saw a 1.5% increase in the store’s profits.
The business was doing just under $3M in revenue when Devin acquired it in early 2021. While revenue is down about 3.5% YOY, 2020 was a year of all-time high liquor sales due to COVID-19. Considering 2020 as an outlier, the business is up significantly from 2019.
In this episode, Devin discusses the risk of future liquor sale deregulation, how supply chain issues are impacting inventory, and trends in liquor sales over the last few years. He also talks about why he’d be looking to diversify if he acquired another business.
✳️ Episode highlights with timestamps
Acquisition Entrepreneur: Devin Wanzor
💵 What he acquired: After moving from Tulsa to Stillwater, Oklahoma, with a long commute, Devin was looking to acquire a business. A few months later he heard from a broker about a liquor store for sale that was very close to his house. The previous owners had already done a valuation, and the store was reasonably priced. He had the business under LOI two weeks later and officially acquired the liquor store in January 2021.
💡 Key quote: “If you go start something like this, you're probably going to be there working every hour that it's open because you're starting with zero revenue. When you build something, it's hard to see past how it was when you started out. Whereas for me, I get to come on day one, and I don't have preconceived notions of ‘Well, I'm used to being here 60 hours a week.’ I started out and I did the things that needed to get done, and it didn't take me more than 15 or 20 hours.”
Acquisition Tips From the Episode
Top takeaways from this conversation
👣 Whatever doesn’t kill you...
Before acquiring the liquor store, Devin co-owned and operated a sign manufacturing business. He was on the other end of the acquisition process, having bought three or four other sign manufacturers.
In that position, he worked 100 hours a week in various roles, including sales, accounting, and reception. That lifestyle was a grind, but it helped sharpen his skills and prepare him for running a business with employees.
“If I didn't have the other opportunities to jump into [a business] where I had to do everything, I'm not sure that my abilities and my competence would be where they are today.”
💸 Pricing tweaks for the win
The store’s previous owners had target margins for each different product type and set prices accordingly. Devin, on the other hand, was used to experimenting with pricing from his time in the sign manufacturing business.
He drew on this experience to make one small, but impactful, decision: He changed the price of every SKU, rounding it up to end in either .49 or .99. Not only did this pricing pattern look cleaner on the shelves, but he was able to expand the store’s gross margin by 1.5% with a change that only took about a week to implement.
💭 Mastering self-doubt by avoiding comparison
Going from corporate executive to retail store owner is a big change. When Devin attended an alumni business recognition event at his alma mater, the University of Oklahoma, he had a fleeting moment when he compared himself to others and questioned this professional move.
“There are a lot more moments of comfort: ‘Hey, I'm living the life I want to,’ versus the one where people think ‘Maybe I should be...’ Deep down, I know that I'm doing what I want to be doing. But there are still parts of me that are like, ‘Wow, I'm probably capable of doing more.’”
The doubt dissipates, however, when he gets to walk his kids to school every day, have lunch with his wife, and spend a few afternoons a week playing golf.
Inflection points from the show
[2:15] New town, new opportunity: Devin has always had an entrepreneurial spirit. With a background in commercial banking and sign manufacturing, he was itching for a new business opportunity when he moved to a new town. In a stroke of luck, he discovered there was a liquor store for sale just minutes from his house.
[5:25] Quick decision: Devin had the liquor store under LOI about two weeks after hearing about it. Having experience with a variety of deals meant he was quick about digging into the numbers.
[6:26] The big worry: The only real concern for Devin was the recently changed law that allowed wine to be sold outside of liquor stores. If the law were to be expanded to include hard liquor as well, that would harm the business, as spirits are about 55% of the store’s overall revenue.
[8:58] Taking a gamble: The potential for a regulatory change was an acceptable risk for Devin. He knew there wasn’t one in the works, and that if it ever happened, he’d likely have a multi-year heads-up.
[10:04] Unknown territory: Despite having no experience in the alcohol industry, Devin was confident in his ability to figure it out. In sign manufacturing, he’d worked in eight different states and with multiple Fortune 500 companies. Now, his business was confined to the four walls of the liquor store and relationships with relatively few vendors.
[12:05] Creative offerings: His liquor store currently carries about 5K different products, and Devin says he’s working on expanding the store’s product range without becoming overwhelmed by inventory responsibilities.
[13:08] Post-COVID revenue: The store had $3M in revenue when Devin acquired it in 2020, which was likely the best year ever for the industry due to COVID-19. While the business is down slightly from where it was a year ago, it’s up from the same period in 2019 and ahead of what Devin projected.
[14:15] Dollar signs: The previous owner had target margins for each type of product and set prices accordingly. When Devin took over, he made the call to round all prices up to end in either .49 or .99. In addition to giving a cleaner look to the shelves, the shift increased the business’s gross margin by 1.5%.
[16:23] Fresh supply: There was nothing “wrong” with the business or how the previous owners had run it. The main change Devin effected was to keep inventory levels consistently higher, both to keep the shelves full and to insulate the business from post-pandemic supply chain issues.
[19:12] A light workload: The business currently requires Devin to put in about 15 hours a week, mostly consisting of product ordering and meeting with vendors. He also likes to come in on busy days to interact with customers.
[22:59] The emotional reality of a big move: Having previously been president of a sign manufacturing business, Devin sometimes questions his decision to buy a liquor store. But being able to walk his kids to school and have lunch with his wife reminds him that he’s living the life he wants to live rather than the one others might have expected him to. He has no plans to expand at the moment.
[25:38] Above-average performance: Devin compares his numbers to the conventional wisdom that retail has thin margins. He attributes some of the store’s success to the supportive regulatory environment in his state and his ability to draw quality employees from the nearby college.
[29:26] Incomparable experience: Devin previously ran a much larger business that required him to work long hours and wear various hats. The resulting knowledge and experience made the transition to owning a smaller business seamless.