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How to Start a Smoothie Business

How to Start a Smoothie Business

The smoothie industry has recently undergone steady growth, and an increased focus on healthy yet convenient foods is promising for this industry. If you have a bit of creativity, a taste for good foods, and know how to create delicious smoothies, then starting a smoothie business of your own could be a promising venture. With many business models available, you might start a mobile smoothie business out of a cart or truck or go all-in with a store model.

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 will hold an advantage in bringing in customers.

Industry Summary

According to IBIS World, the juice and smoothie bar industry experienced a steady 1.3% growth from 2015 to 2020. That growth was driven by increased consumer spending and per capita disposable income. The industry could also pivot to changing consumer requests for healthier options like low-sugar drinks and cold-pressed juices. As of 2020, the industry was a $3 billion market with 7,952 businesses employing 77,260 businesses.

IBIS World predicts that the industry will continue to grow from 2020 to 2025. Higher disposable income will mean that consumers are willing to buy higher-priced foods more frequently. Both per capita disposable income and consumer spending are predicted to increase during that five-year period.

 

Industry Trends

Several trends are shaping the smoothie industry, and businesses need to be able to evolve with these trends to stay competitive in the market. Robeks Franchise notes that increased awareness of the obesity epidemic and a desire for healthier eating have prompted consumers to seek healthier eating choices. Because smoothies are quick and portable, they also fit in well with Americans’ busy lifestyles, delivering a healthy alternative to fast food that’s just as convenient.

Food Truck Empire highlights the increasing popularity of organic and green smoothies. Green smoothies containing vegetables like lettuce, kale, and spinach are popular because of their immune system support. Similarly, more consumers are seeking out organic smoothies because of the increased focus on healthy eating.

According to Technavia, smoothie ingredients are also evolving. Incorporating culinary spices and herbs like cilantro, basil, and rosemary has revitalized smoothies for adults. Activated charcoal has become popular for its detoxification properties, and other health boosters like chia seeds and protein are also in-demand. Smoothie bowls, which are thicker smoothies often topped with flowers, seeds, and fruits, are now seen as a meal replacement and give smoothie businesses another way to diversify their menus.

Target Market

The target market for a smoothie business will largely depend on the business’ specialty. A business that focuses on healthy smoothies and protein shakes will market to health-conscious adults and adults who are too busy to stop for a traditional meal in the middle of the day. Smoothie businesses that focus on the indulgent side of smoothies will market to adults and kids looking for a sweet treat.

Checklist for Starting a Smoothie Business

If you’re thinking about starting a smoothie business, it’s important to do your research first. Here is a checklist to help you get started.

Step 1: Write a Business Plan

Before you start your business, you’ll need to sit down and write out a detailed business plan. This plan will help get you organized, and you’ll want to include information on factors like your target market, the types of products you’ll offer, suppliers, menu items, and more. If you need to apply for financing from a bank or investor, this business plan will be an essential element of your application. Multiple sources have also found that taking the time to develop a business plan increases the chance of a business being successful.

Related: How to write a business plan

Step 2: Form a Business Entity

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 smoothie 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 that 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
 

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!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 3: Name the Business

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.

Step 4: Select Your Location

Your smoothie business’s location can be a key aspect of its success. If you’re building a brick-and-mortar business, you’ll want to carefully consider where you position your store. A leased space in a high foot traffic retail area or shopping mall can bring in lots of walk-in traffic, but these spaces tend to cost more, too. A store with a drive-through window can be particularly valuable, especially if you’re marketing to busy customers who seek out smoothies for their convenience or as a meal replacement.

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 5: Register for 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: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Starting a smoothie business can require a significant initial investment, but finding financing can help to cover those initial costs. If you’re applying for a small business loan, you’ll need to have good credit. You should also plan to invest your own money in 15-25% of the start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

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.

Step 8: Get Your Marketing Plan in Place

You’ll need to rely on marketing to build up your initial customer base and continue bringing in new customers, and a detailed marketing plan can help you determine the steps you’ll need to take. Potential marketing techniques include social media marketing on Facebook, Instagram, and Pinterest showing off your creations, digital marketing on Google and Yelp, radio advertising, direct mail, print advertising, and more. Establishing a customer loyalty program can also encourage repeat customers.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a smoothie business. A few of these include:
– General liability insurance protects the business against expenses that it might face if a customer is ever hurt while on the property.
– Commercial property insurance helps cover potential damages a business might face if its equipment or building were damaged in an event like a fire.
– Worker’s compensation insurance helps to pay for expenses that a business would face if an employee were hurt on the job.

The cost to insure a smoothie business depends on many factors like the value of a business’ equipment and how many employees are on staff. To get the most accurate idea of what to budget for insurance, request quotes from multiple insurance providers. When evaluating the quotes, consider not only the differences in premiums but also how coverage exclusions, coverage limits, and other factors compare.

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

Step 10: Hire Employees

Most smoothie businesses will need multiple employees to cover all shifts and responsibilities. According to PayScale, cashiers make an average of $10.09 per hour, though that can range from $7.89 to $13.21.

In addition to staff salaries, a shop’s budget will need to cover related costs like paid time off and worker’s comp insurance.

Related: Hiring your first employee

Step 11: Set up an Accounting System

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

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a smoothie business?

The cost to start a smoothie business will vary widely depending on the business model. Starting a mobile smoothie bar out of a truck can cost less than establishing a brick-and-mortar location. The size of the business’ space will also affect your startup costs. Plan to budget $50,000 at the minimum to start your business.

Some common startup costs for a smoothie business include:
– Food truck, kiosk, or renovation costs for a store
– Equipment including commercial blenders, sinks, ice machines, freezers, refrigerators, cash registers or – Point of Sale (POS) system, etc.
– Inventory of ingredients
– Counters, prep area, storage, and seating for customers
– Signage
– Working capital to cover the first few months of labor costs, rent, utilities, etc.

How much can a smoothie business owner make?

Many factors will determine a smoothie business’s profits, including its size, location, specialty, and profit margins. According to Food Truck Empire, smoothie shop profits typically range from $250,00 to $800 in revenue per location.

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, 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.

Are there grants to start a smoothie business?

It’s extremely rare to find a grant to start a smoothie business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

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