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 step guide to starting your water delivery 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 water delivery business?
Costs will range, depending on the size and scope of the operation you are starting.
For most water delivery businesses, they start small as a subsidiary of a larger water bottling corporation. You will need to buy in to a water distributor, much like other franchised businesses.These costs can vary but are usually reasonable for entrepreneurs just starting out, as it is in the water company’s best interest to have as many smaller delivery businesses distributing their product. You will also need to:
- Purchase a business license and insurance
- Buy or lease a couple delivery trucks or vans
- rent a storage space for inventory
- initial advertisement and marketing blitz to build an name and, ultimately, a reputation
What are the ongoing expenses for a water delivery business?
Moving forward, your operational costs will include fleet maintenance, rental costs for business or storage space, employee salaries, and repair and replacement of water coolers.
Who is the target market?
Typically, the target market will split between commercial operations, such as retail businesses, restaurants and cafes, office buildings and complexes and businesses with laborers working in outside or hot conditions or residential customers who prefer bottled water to other residential options. All of these customers have the same needs in common though, as they want fresh, clean water to be available 24/7.
How does a water delivery business make money?
Customers buy monthly shipments of water, rent or buy water coolers and dispersion devices, and place special orders for water for one-off parties, large gatherings, and celebrations, such as weddings or corporate seminars.
How much can you charge customers?
Water is not incredibly expensive, so your earning comes from the contracts you’re able to agree upon with customers. Annual contracts for delivery ensure your business will garner revenue monthly. Typically, a business will want three to six 5 gallon bottles per month, depending on the size of their business. This will average around about $50 per monthly delivery. Larger businesses will want more accordingly and you may want to develop a sliding scale of employee/water ratios, with pricing in the favor of the customer, as the orders become larger. As mentioned previously, make sure you research what other delivery companies are charging and look to align with those figures.
How much profit can a water delivery business make?
Bottled water, as an industry, is more and more lucrative, especially considering the low overhead costs of extracting and bottling a natural resource. On average, the bottled water industry is making billions of dollars annually and is one of the fastest growing divisions of the beverage industry in the world. This is good news for water delivery businesses. A successful, medium sized delivery service will see annual profits in the $85,000 - 150,000 range.
How can you make your business more profitable?
When looking to expand your business, think outside the box, or jug, as it is. Promote the idea of a greener option; move away from the individual-sized water bottles and move customers towards the 5 gallon, refillable bottles. More and more customers are starting to realize the multitude of benefits from reducing plastic waste and reusing the larger containers. You may also want to promote the water cooler rental and purchase options more strongly. Water coolers aren’t just for office buildings anymore. Finally, consider offering the options of personalizing the labels on water bottles, large jugs and even water coolers. With today’s wrap services, virtually any logo or design can be placed on these products.
What will you name your business?
Choosing the right name is very important. 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 water delivery business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a water delivery 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 water delivery business is generally run out of a warehouse in which the water is stored. 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 water delivery business 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 water delivery business will be in compliance and able to obtain a CO.
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 water delivery business
Since the product itself is already well-known, customers will choose based on personal preference and taste, for the most part. This means your job becomes convincing them that you offer the best delivery services. Look for ways to make your business stand out from the crowd. Catchy slogans, mascots, bulk pricing, and regularly offered pricing specials can all be methods for gaining favorable approval from customers.
You will also want to explore your options for pushing your message either through social media and online content or through more traditional methods, such as billboards, signage and posters, flyers, or advertisements in newspapers and publications. Again, consider your target audience and promote where and how they communicate and live.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Your reputation for professionalism and quality service will be a key to your return clientele. Make sure your customers know you appreciate them and give specials or incentives now and then to remind them of your stellar business relationship.
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 Water Delivery Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Virtually anyone can break into this industry, as the product almost always sells itself. If you are able to easily talk with customers, have the ability to lift heavy weights and can drive commercial trucks, you are exactly what this industry is looking for. Additionally, having retail or small business experience will give you a leg up on the competition.
What happens during a typical day at a water delivery business?
As the name implies, most of the day to day activities focus on water deliveries. Whether residential or commercial, you will be meeting customers and re-stocking their water supplies.
In addition, you will:
- restock your own inventory
- repair or replace customer water coolers
- communicate and network with your water distribution parent company
- develop marketing and advertising strategies
- train new employees for working in the field or in the office
What are some skills and experiences that will help you build a successful water delivery business?
Much of the business of water delivery revolves around interactions with the customers. If you are comfortable talking to different individuals on a day to day basis, often in person or over the phone, you will enjoy the business. One must also be able to manage a small or growing business and be able to physically load and deliver some of the water bottles, at least initially, while starting up your business.
What is the growth potential for a water delivery business?
Clean water is quickly becoming an increasingly valuable commodity, with need and availability always driving prices higher. Therefore, the growth potential is quite expansive. There is always a danger of over saturation in a market but, since water is vital to survival, this seems unlikely in the near future.
TRUiC's YouTube Channel
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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 water delivery business?
When just starting out, look to secure some annual contracts with some sizable businesses. The regular income will help to pad your investment. Look for residential customers, as well, although the larger parts of your business will usually be derived from commercial operations looking for clean, cold water for employees.
Consider these points, as well:
- Will you supply more than one kind of water? i.e. spring, purified, or distilled
- Do you service and/or sell water coolers?
- How large of a delivery range will you operate within?
- Will you deliver large and medium (1.5-5 gallon) bottles, small individual drinking bottles, or a mixture of all sizes?
- Make sure you research the market you’re trying to break into and look for areas which need greater attention or are underrepresented with current water delivery services.
How and when to build a team
Building a team will rely on how fast your business grows. To start out, you will only need a few employees to handle inventory and invoices, deliveries and maintenance. You will most likely be able to manage much of the work with a two or three person team, in the beginning. And, when you do add employees, maximize your money by choosing individuals with an array of skills and abilities, so you will all be able to help out wherever needed.