Before opening your business, it’s important to sit down and write a detailed business plan. This plan will serve as your guide as you start your business, and it helps to get you organized. By defining your target market, the types of products you’ll offer, how your business will operate, menu, suppliers, and projected income and expenses, you’ll have a clear path outlining the steps you need to take to succeed. If you need to apply for financing from a bank or investor, your business plan will be an important part of your application. Multiple sources have also found that taking the time to develop a business plan increases the chance of success.

Related: How to write a restaurant business plan

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a bubble tea business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Finding the perfect business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

The location of your business can greatly contribute to its success. When looking for a storefront, consider the amenities you’ll need and what type of location would be best. Stores in high-traffic retail locations can build awareness of your business and generate valuable walk-in traffic, but they also carry higher rental costs than stores in quieter locations. A store with a drive-through window can also be an advantage, and this convenience can encourage customers to make a purchase.

Related: Choosing a business location

Because a boba shop involves handling food, you will also need to go through food safety & certificate sanitization training and earn proper licensure or certification, as required by your state.  Your shop will be subject to regular inspections, typically from the health department, to ensure proper rules and regulations are being followed.

Your bubble tea business will also likely need to register for general local, state, and federal business registrations such as a sales tax permit, Employer Identification Number, and Occupancy Permit.

Related: Common business licenses, permits, and registrations by state

Finding financing can help you to cover the initial startup costs for your business. If you’re applying for a business loan, you’ll need to have good credit and should plan to invest your own money in 15-25% of the start-up costs.

Related: Finding the money to start a business

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Marketing will help build up your initial customer base, and it’s also key in encouraging new customers to visit your store. Writing a thorough marketing plan can help you to decide how best to promote your business. Potential marketing techniques include being active on social media platforms, online advertising, radio advertising, direct mail, print advertising, and more. You might also want to establish a customer loyalty program, which can encourage customers to return to your store again and again.

Related: Low-cost ideas to market a new business

There are several types of insurance to consider when starting a bubble tea business. A few of these include:
– General liability insurance protects the business against expenses that might occur if a customer is hurt while on the property.
– Commercial property insurance helps to protect a business against damages it could face if its store or equipment were ever damaged in an event like a fire.
– Worker’s compensation insurance can cover expenses like medical bills that could result if an employee were ever injured while working.

Factors like the value of a business’ equipment and how many employees are on staff can affect the cost of insurance policies. Requesting quotes from multiple insurance providers can give you the most accurate idea of how much to budget for insurance costs. When evaluating the quotes, consider how not only the premiums but also how coverage exclusions, coverage limits, and other factors compare.

Related: Types of insurance your business may need

A bubble tea business will need multiple employees to cover all of the shifts and to be able to keep up with the demand during peak operational hours. According to PayScale, cashiers make an average of $10.09 per hour, though their earnings can range from $7.89 to $13.21.

A business’ budget will need to include not only staff salaries but also other staff-related expenses like paid time off and worker’s comp insurance.

Quality and consistency matter to your store’s reputation. While you might design a great-tasting drink, it’s important to ensure that it stays that way. Always taste-test your products and make sure that staff are properly trained in how to prepare them. Then, do spot checks every so often to verify that the drinks are up to your store’s quality. A bad-tasting drink can result in a lost customer and a negative review, so this is an essential part of successfully running your store.

Related: Hiring your first employee

Setting up an accounting system is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business