Start a smoothie 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 smoothie 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 smoothie business?
The amount you spend to open a smoothie business will depend on whether or not you franchise and which location you choose. From licensing to construction to equipment, smoothie business owners may pay anywhere from $10,000 to $650,000! These upfront costs include any and all of the following:
- Rent/down payment
- Licensing/legal costs
- Hiring costs
If you choose to franchise your location with a well-known national brand, you will pay more in terms of upfront costs. However, you’ll also enjoy free advertising and brand recognition from the moment you open. (People may be more willing to try a Jamba Juice than an independent store.)
What are the ongoing expenses for a smoothie business?
Ongoing expenses for a smoothie bar include the following:
- Employee salaries
- Equipment repair/replacement
Who is the target market?
The target market for a smoothie business typically includes anyone who wants to make their body healthier with ingredients that actually taste good. This can include hard-core fitness fanatics or dieters of course, but there’s a larger target market out there for those who want to live healthier lives. Anyone with high cholesterol or diabetes can supplement an unhealthy diet with smoothies as a means to get more nutrients in their life. It's a substantial opportunity to be a part of a national shift in the public perception of health food. However, smoothies are luxury food items, so owners may want to be careful about targeting lower-class neighborhoods.
How does a smoothie business make money?
Smoothie bars make money by setting profit margins on all of their menu items. The standard rule is to set menu prices at roughly three times what it costs for the raw ingredients, though the exact amount you charge will be based on location as much as this generic recommendation. People are typically willing to pay a premium for fresh, quality ingredients they may not be able to get in their local grocery shops.
How much can you charge customers?
The average price for a smoothie is typically around $5 for a small and $7 for a large. Fruit and yogurt bowls typically sell for around the same prices, while juices are around $4 to $7, depending on the size. Smoothies owners should look at their direct competitors to get a sense of the demand before determining prices.
How much profit can a smoothie business make?
Profits can vary depending on the location of the smoothie business. The average Jamba Juice takes in about $700,000 in annual revenue but considering it can cost up to $600,000 or more to open one, the numbers aren't quite as impressive. However, assuming it costs about $350,000 to run a smoothie store a year after initial start-up costs, owners can enjoy a comfortable profit margin on their business.
How can you make your business more profitable?
Popular smoothies business owners may want to consider opening their own food truck to take to busy areas with lots of thirsty people. They can also consider opening up a sit-down restaurant that serves a wider variety of healthy foods.
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 smoothie 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.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a smoothie 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.
Certificate of Occupancy
A smoothie business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a smoothie business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your smoothie business will be in compliance and able to obtain a CO.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
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.
Learn more about General Liability Insurance.
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.
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 smoothie business
How you market will depend on who you want to cater to. Look for the right angle to appeal to your target demographic before you start trying to get the word out. For example, you may want to choose an online social media strategy aimed at fitness clubs. Or you may want to advertise to corporate workers who are looking for a quick lunch or a mid-afternoon pick-me-up.
How to keep customers coming back
Keep customers coming back by offering sensational tastes that they can’t necessarily recreate at home. Customers are looking for a clean establishment that’s fun and welcoming to visit. Keep looking for ways to impress your customers based on their feedback. Free samples or friendly smiles can be worth their weight in gold.
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 Smoothie 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?
A good smoothie bar owner should be interested and up-to-date on the health foods movement. New research comes out every day about how nutrients interact with our bodies, and an owner will need to be able to keep up with the changes to stay in business. Ideally, an owner will have plenty of experience making their own smoothies at home. They should also be able to pick up on the nuances between their direct competitors, so they can determine how to make a superior product.
What happens during a typical day at a smoothie business?
A typical day for a smoothie bar owner may entail the following tasks:
- Managing employees
- Preparing a budget
- Assisting with customer service
- Quality checking the product
- Researching new menu options
- Maintaining the equipment
- Updating the website
- Ordering supplies
- Negotiating with vendors
What are some skills and experiences that will help you build a successful smoothie business?
It usually helps to have some type of restaurant experience, whether it’s casual, fast-food, or formal. Owners will need to master the logistics of ordering, payroll, and advertising as much as they’ll need to understand which berries are in the highest demand. Much of owning any food establishment will be staying ahead of customer expectations and creating new demand with inventive menu options.
What is the growth potential for a smoothie business?
Growth potential typically depends on where you open, how you market, and what menu items you offer. But smoothie businesses do have major potential, even if there are certain locations that are saturated. Notoriously ‘green’ states like California and Colorado, for instance, have many (many) options for people to choose from. To succeed, owners may want to look at different markets throughout the United States to capitalize on new demographics who haven't been introduced to the taste sensations of gourmet smoothies.
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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 smoothie business?
You may want to consider starting off at a smaller location to get a sense of who is interested in your product. A single kiosk at a mall, for example, may give you the exposure you need without the exorbitant bills of a larger space.
The best way to get started is to do as much research as possible about your competitors, and then use those insights to apply what’s working to your business. You'll also want to improve upon anything that your competitors could be doing better. This can be anything from marketing strategies to flavors to customer service. Look for local or time-specific trends that you might be able to capitalize on. For example, tempting the new year's resolution crowd with a promise of trimming their waistlines.
How and when to build a team
Owners will generally need to hire at least a few team members immediately, even if they’re operating out of a smaller location. Most smoothie bars are open 7 days a week from mid-morning until evening, so it’s necessary to have several people trained and ready to handle the shifts.