Start a bottled water business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. 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.
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 are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
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.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your bottled water business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
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
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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.
Here is another link containing descriptions of federal bottled water regulations.
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.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a bottled water business
Marketing and distribution is key in this business. Your target market should be grocers, vending machine companies and operators, stadiums, event locations, and other large-scale commercial enterprises and operations that need high volume bottled water supplies.
How to keep customers coming back
Make sure you deliver on your promises and be competitive on your pricing. This is a highly commoditized industry. Often, it’s the business that meets deadlines and has the lowest (or at least competitive) pricing that wins.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Bottled Water Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a bottled water business?
Spend time finding a sustainable water source for your operation. Your water source will greatly influence your profits. If you find a source that costs $3 to $5 per 1,000 liters, this is going to result in a higher profit than if you’re paying the same amount for 100 liters of water.
How and when to build a team
You must begin building a team immediately. A bottled water company cannot operate as a solo or one-person company. You will need at least 20 to 50 employees to start, and you should scale up within the first 3 years to at least 50 to 100 employees, or more.