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How To Start A Smoothie Business

How To Start A Smoothie Business

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How To Start A Smoothie Business

How To Start A Smoothie Business

Smoothies are a popular and delicious way to get your daily dose of fruits, vegetables, and other nutrients. If you’re passionate about health and wellness and are looking to start a business, opening a smoothie shop may be the perfect option. A smoothie business allows you to promote nutritious drinks while tapping into the growing smoothie trend.

This guide will provide an overview of the smoothie industry, the key steps to launching your own smoothie business, and answers to common questions. Read on to learn if starting a smoothie shop is right for you!

Business Overview

Smoothie businesses offer fresh-made beverages that are convenient and often healthier than other fast food options available. A business may specialize in healthy smoothies or may opt to focus on more decadent smoothie drinks. Most businesses blend ingredients such as ice cream, acai bowls, yogurt, fresh produce, etc., right in front of the customer, offering a custom-made product with prompt service.

Smoothie businesses may follow a more traditional retail store model, but others are branching out from the brick-and-mortar storefront. A business might secure a location in a food court in a mall, while smoothie carts and food trucks have the advantage of being able to move about frequently.

There is lots of competition in the smoothie industry, both from cafes and restaurants that offer smoothies and from pre-made products that are available for purchase in stores. This means that it’s essential to put plenty of thought into a business’ specialty and how to establish its products as unique and preferable to competitors. To do this, look at what competitors are offering and, more importantly, what they aren’t offering. By identifying a niche in the smoothie market, a business can differentiate itself from competitors and hold an advantage in bringing in customers.

Industry Summary

The smoothie industry falls into the broader juice and smoothie bar sector. Industry revenue has grown steadily over the past five years, with revenue rising at an annualized rate of 1.1% to reach $2.7 billion in 2023. Major companies include chains like Jamba Juice, Smoothie King, and Planet Smoothies. However, many smoothie businesses are local, independently owned shops.

The industry relies heavily on consumer preferences and spending trends. As health consciousness rises, more consumers are seeking out smoothies as nutritious meal replacements and snacks. This presents an opportunity for new smoothie businesses.

Checklist To Start A Smoothie Business

Expanding health consciousness and rising demand for nutritious drinks make the smoothie sector an appealing business opportunity, but launching a successful smoothie shop takes more than mixing up fresh fruit and vegetables. Here are some of the key steps to consider before starting a smoothie business:

Step 1: Assess the Market

When you think of starting a smoothie business, the first step is to find out if people are interested in buying your delicious smoothies. Checking if people are interested isn’t tough but is very helpful. It will give you a good idea about whether your smoothie business is a good idea or not. By checking the demand first, you avoid making mistakes and you have a better chance to make your business successful by hearing what customers really want.

Here’s a few ways you can find out if people might like to have a new smoothie place around:

Social media polls: Platforms like Instagram, Facebook, and Twitter allow you to conduct polls. You can ask questions related to your business idea and get instant feedback from a wide audience.

Competitor analysis: Look at similar businesses in your area. Do they seem successful? Are they crowded? What do customer reviews say? This can give you an idea of how well a smoothie business might do in that area.

Local market research: Visit local gyms, health clubs, and other places where your potential customers might be. Ask them directly about their interest in a new smoothie business. This can provide valuable insights into your local market.

Step 2: Write a Business Plan

After getting a better understanding of the interest in a new smoothie business and what customers are looking for, the next step is writing a business plan. A business plan is an essential tool for any entrepreneur, including those in the smoothie business. It serves as a roadmap, guiding you through the various stages of your business.

Besides helping you stay on the right path, if you need funding to launch, it shows lenders that you have thought things through and are ready to build a successful business.

A few sections that I would recommend working on include:

  • Market analysis: This section provides an overview of your target market and demonstrates why your smoothie business will succeed. Lenders are interested in this section because it shows that you understand your market and have a strategy to capture it. Include data on market trends, customer demographics, and competitor analysis. Explain how your smoothie business fits into this landscape and what sets it apart.
  • Management team: The management team section illustrates who’s running the show. Lenders often consider the team behind a business as a significant determinant of its potential success. Highlight the skills, experiences, and qualifications of the owner(s) and any key team members.
  • Location: For a smoothie business, location is key. Lenders will want to see that you’ve chosen a location that maximizes visibility and foot traffic, such as near gyms, offices, or schools. Discuss why your chosen location is optimal for reaching your target customers.
  • Financial projections: In this section, provide detailed forecasts of revenue, expenses, and profitability. Lenders will scrutinize this section to assess whether your business will be able to repay the loan. Ensure your projections are reasonable, well-reasoned, and based on solid data.

Before you present your plan, it’s a good idea to have someone experienced, like another business owner or an accountant, review it. They can offer feedback and point out any areas that might need a bit more thought or a better explanation.

Related: How to write a business plan

Step 3: Source Funding

Starting a business comes with its share of hurdles, and funding tops the list for many entrepreneurs.

Starting with what you have in your savings is the most straightforward way. It’s money that you can access easily without the need for approvals or facing interest rates. However, personal savings alone may not be enough to cover all startup costs, and other sources become necessary. Let’s explore the most common outside funding sources:

Bank loans: Banks are the go-to option for many new business owners. Usually, lenders expect you to bring at least 15% of your personal funds to the table. It’s not just about the money, though; a good credit score and having something for collateral (like your house or car) are often necessary as well. And if the bank finds lending to you a bit too risky, they might opt for a Small Business Administration (SBA) loan guarantee to secure the loan.

Friends and family: Borrowing from friends and family is another option. However, it’s important to treat these arrangements professionally. To avoid misunderstandings or strained relationships, put all agreements in writing and clearly outline the terms of repayment.

Microloans: If your funding needs are relatively low or traditional credit isn’t available, microloans could be a good fit. These are small loans, typically less than $50,000, provided by non-profit organizations or specialized lenders. Some microloan providers also offer business training in addition to funding, which can be a great bonus for new entrepreneurs.

Local investors: Local investors can be a potential source of funding, especially if they have an interest in your industry or in supporting local businesses. However, securing investment can be challenging, as many investors are looking for high-growth, scalable businesses. It’s essential to present a strong business plan and demonstrate the potential returns on their investment.

Related: Finding the money to start a business

Step 4: Register the Business

Selecting a business structure: Choosing the right business structure is like setting the foundation for your smoothie business. Here, we have four primary structures to consider:

  • Sole proprietorship: This is the simplest form and usually the least expensive to set up. It essentially means you and the business are the same legally. While it does allow complete control, it does not offer personal liability protection.
  • General partnership: This is where two or more people share the ownership, financial obligations, and operational roles. It’s somewhat similar to a sole proprietorship but accommodates multiple individuals.
  • Corporation: Setting your business up as a corporation means it becomes a separate entity. This structure provides protection against personal liability but comes with more compliance requirements and complexity.
  • Limited Liability Company (LLC): An LLC offers a blend of the protective features of a corporation and the operational flexibility found in sole proprietorships and partnerships.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Because a smoothie business involves handling food, you will also need to complete safe food handling training and earn proper licensure or certification, as required by your state. There are also a number of regulations that will need to be followed by your local health department in addition to regular inspections.

Your smoothie business will also need to obtain general local, state, and federal business registrations such as a local business license, sales tax permit, Employer Identification Number, and Occupancy Permit.

Related: State guides for general business licensing

Step 5: Select Your Location

After tackling the initial steps of securing funding and registering your business, the next stage is to acquire and set up a suitable location for your smoothie business. This step begins to bring all your planning into reality, transforming your vision into something tangible where customers can experience your unique offerings.

The property you choose can be a traditional storefront or a mobile setup like a kiosk or truck, depending on your business model and the target market identified in your business plan. For instance, a storefront in a busy commercial area might be ideal if you’re targeting office workers. A mobile kiosk or truck could be more suitable if you’re aiming to serve gym goers, events, or festivals. Whatever the location, it should be easily accessible to your demographic. Consider factors like foot traffic, parking availability, and proximity to complementary businesses (like gyms or health food stores).

A store with a drive-through window can be particularly valuable, especially if you’re marketing to busy customers seeking smoothies for convenience or as a meal replacement.

Before signing any contracts to acquire a property, ensure your funding is fully secured. Delays or denials in funding could lead to financial strain. Another note, is that before finalizing the property, verify that it’s zoned for your type of business. Zoning laws vary by location, so you need to confirm with your local zoning office or city hall that your intended use is permitted in the chosen location.

If you’re planning to operate your business out of a truck, you’ll still want to put some consideration into the area that’s best for your marketing. Doing some market research into the area and any competing businesses can help you decide which location will give your business the best chance of success.

Related: Choosing a business location

Step 6: Source Equipment & Suppliers

Now that your financial foundation is set, the business is legally recognized, and the location is coming together, it’s time to dive into the practical side of things – getting the right equipment and setting up accounts with suppliers.

The equipment you need will largely depend on the size of your smoothie business and the variety of smoothies you plan to offer. Some essential pieces include a commercial blender, refrigeration units, a point-of-sale (POS) system, and utensils and glassware. You may also need items like a sink, dishwasher, and ice machine.

I would recommend working with your local health department before finalizing the layout of your space and purchasing equipment. This way, you know in advance whether your plans will pass code.

You’ll also need a reliable source of high-quality fruits, vegetables, and other fresh ingredients. Local suppliers can often provide fresher produce and may be able to offer more flexible delivery options. Plus, promoting local sourcing can be a selling point for your business. On the other hand, national suppliers can often offer a wider variety of products and may have lower prices due to their larger scale. They can be a good option for non-seasonal or exotic ingredients that aren’t available locally.

Step 7: Hire Staff

As the owner of a smoothie business, hiring the right team is crucial for your operation. From friendly cashiers to skilled smoothie makers, each role plays a significant part in delivering the quality service your customers expect.

Before you start the hiring process, there are some legal requirements you need to take care of as an employer:

Obtaining an EIN: An Employer Identification Number (EIN) is a unique number assigned by the IRS that you’ll use when reporting taxes and other documents to the IRS.

Employment eligibility: You must verify that each new employee is legally eligible to work in the United States. This usually involves completing an I-9 form and verifying the employee’s documentation.

State reporting: Each state has different requirements for reporting new hires, so check with your state’s labor department to ensure you’re in compliance.

Worker’s compensation: Most states require businesses to carry worker’s compensation insurance, which provides benefits to employees who suffer work-related injuries or illnesses.

Labor laws: Make sure you’re familiar with both federal and state labor laws, which cover things like minimum wage, overtime pay, and rest breaks.

Related: Hiring your first employee

Step 8: Get Your Marketing Plan in Place

With the launch of your business getting very close, it’s time to turn your attention to letting people know about your smoothie shop. Depending on your target market, there are many ways to go about this. A few popular options include:

Developing partnerships with local gyms, health clubs, or yoga studios can be a great way to get the word out about your business. Offering discounts to the members of such establishments could draw in health-conscious individuals who are likely to become regular customers.

It’s also important to establish a strong online presence. Be found online by creating a professional looking website and claim your business on relevant online business directories such as Google Business Profile, Yelp, and TripAdvisor. This will help improve your business’s visibility in search results and allow you to engage directly with customers by responding to reviews and updating important information like hours and menu items.

In addition, consider maintaining active social media profiles where you can share updates, special offers, and engaging content related to your smoothie business.

Joining the local Chamber of Commerce can open avenues to network with other business owners and get involved in community events, which would enhance the business’s visibility in the locality.

Another strategy is to offer discounts. For instance, you could offer a discount for customers who bring a friend or provide a loyalty card that gives a free smoothie after a certain number of purchases.

Related: Low-cost ideas to market a new business

Step 9: Prepare to Open!

As you finalize your preparations to launch your smoothie business, there are several important steps that are probably left. Each business will have different needs, but here are some of the common tasks to wrap up:

Business insurance: Protecting your business with the appropriate insurance policies is essential. This could include general liability, property, and workers’ compensation insurance.

Related: What types of insurance does a smoothie business need?

Cost out your recipes: Knowing exactly how much each smoothie costs to make is the first step in setting your prices. This includes the cost of all ingredients, as well as indirect costs such as labor, utilities, and waste. Larger ingredient suppliers often assist in costing out recipes, so don’t hesitate to seek their help.

Create a menu: Avoid cluttered menus that make ordering confusing. Keep it simple. Also, consider the availability of ingredients in different seasons. Offering seasonal menus can ensure the freshness of your smoothies and pique your customers’ interest by providing them with something new now and then.

Bookkeeping: Establish a robust bookkeeping system from the start by using software like Wave Accounting (FREE) or Quickbooks or hiring an accountant. This will help track income, expenses, and profitability, making tax time much easier.

Bank account: Opening a business bank account is necessary to keep your company finances separate from your personal ones.

Accepting credit cards: Credit card processing is a must for most businesses today. Services like Square or Stripe offer easy-to-use options.

Grand opening: Plan a special event for your grand opening. This could involve offering special promotions, inviting local influencers, or hosting a community event.

Greg’s Tip: Focus on quality over quantity. Using fresh and high-quality ingredients will not only make your smoothies taste better but will also attract a dedicated customer base who appreciate a good, healthy product.

Greg's Business Tip

Common Questions When Starting A Smoothie Business

How much does it cost to start a smoothie business?

The total costs to start a smoothie business can range from $50,000 to $250,000, depending on the size and scale you want to operate.

Here’s a general breakdown of the major start-up costs involved:

Location: The initial rent deposit for a small smoothie kiosk or shop can be $3,000-$5,000. For a larger standalone cafe, the deposit may be $10,000-$20,000. Ensure your location gets good foot traffic.

Equipment: Equipment like a commercial blender, refrigerator, juice press, and point-of-sale system can cost $5,000-$15,000. Go for durable, high-quality equipment even if it costs more upfront.

Buildout/renovation: You may need $5,000-$10,000 in buildout costs for a simple smoothie bar. Buildouts can run $30,000-$60,000 for a full-service cafe, depending on permits, construction, etc.

Initial supplies: The inventory, ingredients, and supplies to stock your shop will cost about $3,000-$5,000. Focus on quality produce, superfoods, and bases.

Licenses & permits: Required health permits, business licenses, and food handling certificates will likely cost $1,000-$3,000.

Insurance: General liability insurance for a small operation can be $1,000-$2,000 annually.

Marketing: Initial marketing, like printing menus, promotional signage, and launch promotions, may cost about $1,000-$3,000.

Keep in mind that these are rough estimates, and actual costs can vary based on a variety of factors including location, size of the business, and specific business model. It’s always best to do your own detailed financial planning to ensure you’re prepared for all potential expenses.

How much can a smoothie business owner make?

According to industry reports, some smoothie bars can achieve a gross profit margin of 65%, which is considered one of the highest in the industry.

For illustrative purposes, let’s consider a smoothie business that makes 100 sales per day at $6 per sale. This would result in a daily revenue of $600. If we take a month as 30 days, the monthly revenue would be $18,000, and the annual revenue would be $216,000.

Assuming a profit margin of 20% (a conservative estimate based on industry standards), the smoothie shop would generate a profit of $120 per day, $3,600 per month, or $43,200 per year. If the profit margin were to reach up to 35% (the higher end), these figures would increase to $210 per day, $6,300 per month, or $75,600 per year.

However, these numbers are purely hypothetical and actual profits may vary significantly depending on various factors such as location, competition, operational costs, and management efficiency.

What skills are needed to run a smoothie business?

While you won’t need a business degree to start a smoothie business, certain skills and experiences are helpful.

Food service experience: Previous experience in the food service industry and knowledge of safe food handling procedures will leave a business owner well-prepared to run a smoothie business.

Awareness of smoothie and health trends: An awareness of current market trends will help a business owner make strategic decisions and offer products that are in demand.

Creativity: A healthy dose of creativity will be helpful when identifying a business’ specialty and coming up with unique and tasty smoothie recipes.

Management experience: Experience in hiring, training, and managing employees will be advantageous in helping a business owner put together a good team of staff.

Customer service skills: Experience providing customer service is ideal since providing a memorable customer experience can ensure that customers return.

Multitasking abilities: Running a smoothie business is full of responsibilities. To be successful, a business owner will need to be able to multitask and set priorities.

What is the NAICS code for a smoothie business?

The NAICS code for a smoothie business is 722515.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Additional Resources
National Juice Bar Association

How To Start A Smoothie Business

How To Start A Smoothie Business

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