How to Start a Bottled Water Business

Start a bottled water business by following these 10 steps:

1. Plan your Bottled Water Business
2. Form your Bottled Water Business into a Legal Entity
3. Register your Bottled Water Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Bottled Water Business
6. Get the Necessary Permits & Licenses for your Bottled Water Business
7. Get Bottled Water Business Insurance
8. Define your Bottled Water Business Brand
9. Create your Bottled Water Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your bottled water business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Bottled Water Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a bottled water business?

Costs for starting a water treatment plant include storage tanks, filling machines, water treatment machines, filters, conveyors, sealers, water sterilizers, water dispensers, bottle loaders, trucks, and employees to work in the plant.

Startup costs can range from $500,000 to $750,000 for a “bare bones” plant. However, some plants may require more capital, up to $1.5 million, or more, depending on the size of your operation.

You will also need a license from the U.S. Food And Drug Administration (FDA). You will also need a permit from your state health department.

Finally, you’ll need a dedicated bottle supplier, a water source, and employees to run your plant. This is a very labor-intensive job.

What are the ongoing expenses for a bottled water business?

Ongoing expenses are extensive. Maintenance on the plant can cost tens of thousands of dollars every year for a small plant, and as much (or more) every month for a medium to large-scale bottled water plant.

Utility costs can also be high, due to the process of purifying and bottling water.

Labor costs are also high, as most employees expect a full-time salary, plus benefits. Liability insurance, health insurance, unemployment insurance, 401(k) matching and administrative services, and worker’s compensation insurance can run tens of thousands of dollars per month.

Who is the target market?

Customers are usually commercial enterprises like local grocery stores. However, some small companies do sell directly to consumers or to businesses.

How does a bottled water business make money?

A bottled water business makes money by charging customers for processing and bottling potable water.

How much can you charge customers?

Bottled water has a high markup. If you are selling to grocery stores, you may be able to charge $1 to $2 per bottle, or a flat rate per truckload or pallet. Most companies make arrangements for regular shipments to establish themselves as “anchor customers.” You may or may not sell your products for a lower price to get these deals, but will generally increase revenue as a result.

How much profit can a bottled water business make?

Profits can range between 100% and 500%, or more.

How can you make your business more profitable?

Your business can become even more profitable by entering niche markets such as flavored bottled water, sparkling water, spring water, and mineral water. Some companies have specialty lines of water, which include flavored mineral water, flavored sparkling water, and sports drinks.

Finally, consider offering designer waters, seltzer waters and club soda, and flavored soda.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your bottled water business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

The Food and Drug Administration (FDA) regulates bottled water. FDA regulations for bottled water include Good Manufacturing Practices (GMPs), standards of identity and labeling requirements.

A detailed description of regulation, licensing and labeling requirements can be found here.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a bottled water business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

This business is perfect for individuals who are passionate about their health or are health conscious and want to run a business that promotes a healthy lifestyle.

What happens during a typical day at a bottled water business?

The day-to-day operations of a plant depend largely on the type of plant you run.

There are many different ways to process bottled water. Spring water is one of the most common. It comes from an underground formation and flows naturally to the earth's surface. Purified drinking water is one that is processed to remove chlorine and other contaminants. Unless your plant processes public sources of water, like municipal drinking water, you are not usually required to disclose where you sourced it.

Natural sparkling water is naturally carbonated water from a spring or well. Mineral water comes from a spring and contains dissolved minerals like magnesium, calcium, sodium, potassium, and silica and bicarbonates. Finally, seltzer water is an FDA-regulated soft drink product.

The day-to-day operations include bringing in water from an outside source and bottling it. During this process, there are many intermediary steps, including sanitising containers, preparing bottles preparing and filtering the water, and setting up packaging protocols to ensure that the water is ready to be shipped.

What are some skills and experiences that will help you build a successful bottled water business?

You will need business experience, contacts in the industry, and a working understanding of how water is purified. No degrees are necessary but you may need special permitting and licensing from the government. Most owners and managers of a bottled water business have extensive management experience, especially in a related industry.

What is the growth potential for a bottled water business?

Growth potential is virtually unlimited. Companies like Nestle own massive water processing and treatment plants where they produce bottled water for countless grocery stores and make billions in profits every year.

Most bottled water plants start life as small or medium-sized plants.

You can grow your business at a rapid pace by taking on outside financing from a bank or venture capital firm. Or, you can grow more organically from sales profits. Growing through leverage (bank loans) has its advantages. For example, your profits are likely to climb quickly on momentum. This can shortcut the time it takes you to grow and meet your revenue growth targets. However, it can also saddle you with creditors who want to see target revenue and profit targets that are too optimistic.

Growing organically is prevents this from happening, but it also slows growth and might prevent you from growing beyond a certain size.