HOW TO START A BOTTLED WATER BUSINESS
Bottled water businesses deal in the bottling and distributing of drinking water to consumers. Whether purified, distilled, or natural spring water, your bottled water business will supply your customers with ample hydration. Taking the steps to start your own bottled water business can be a satisfying experience that allows you to make money while also helping your customers achieve a healthy lifestyle.
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 much can you charge customers?
- 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 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.
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 issued
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!
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
- LLC Taxes
- Sole Proprietorship vs LLC
- LLC vs Corporation
- LLC vs S Corp
- How to Start an S Corp
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.
Additionally, learning how to build business credit can help you get credit cards and other financings in your business’s name (instead of yours), better interest rates, higher lines of credit, and more.
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.
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.
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: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.