Would you rather buy a bottled water company than build one from scratch? Then below are ten crucial factors to consider when buying a bottled water company. People can survive for weeks or even months without food but it is definitely difficult if not impossible to survive for that long without water. Water is so important to the proper functioning of our bodily organs and is required to maintain a good state of health and fitness.
Bottled water companies rake in huge amounts of profits yearly because of the increasing awareness of the disadvantages of drinking unclean water. There have been cases of disease outbreaks and epidemics leading to a high number of deaths with the root cause traced to drinking of unclean water. As many people do not have access to clean drinking water, they have no choice but to resort to buying water that has already been treated and packaged for sale.
Starting a bottled water production company is no small task in terms of financial undertakings. You would need a large amount of capital of up to about $30,000 if you are starting afresh but one good way to beat down this cost is to buy an existing bottled water company. This might help you reduce start-up costs considerably. But what are the things you have to consider before you buy a bottled water company?
10 Crucial Factors to Consider When Buying a Bottled Water Company
1. Government License and Approval
Like I already mentioned, water is critical to our health and well being and bad water might lead to a lot of grave consequences; this is why the government is very strict with regulating this business.
You would need to go through a licensing approval process before you can be allowed to package and sell bottled water. So, if you are thinking of buying a bottled water company, make sure the company has the necessary licenses and approvals in place.
2. Research and Feasibility Studies
Next, you have to carry out an independent research and feasibility studies of the bottled water industry and the area where the company is located. You have to know if the business would be profitable and what the demand for bottled water is like in that area.
You would also need to know if people in that area would be willing to patronize you when you take over the business and the things you can do to make the brand more acceptable in the market.
You also have to be sure that the business is located in a suitable place. For instance, it is estimated that 50% of people living in Africa do not have access to clean water for drinking. This tells you that Africa is a very good place to buy a bottled water company because there is a steady demand for bottled water.
You should also look at the site where the business is to production plant is sited to be sure that it is located in the right place. You cannot have a bottled water plant close to a graveyard or a waste disposal site. These are things you have to take care of in order to avoid run-ins with law enforcement agents. You should also look at it in terms of distribution. Are the roads good enough for distributors and suppliers to have easy access to you?
4. Water source
Next, you have to carefully analyze the source of water. Where is the water coming from? Would you have to buy water or is there a borehole in place that gives you unlimited access to clean water? You also have to analyze the water itself to see if it’s good water. The water must be colorless and without odor or taste.
5. Production capacity
Knowing how many bottles of water you can get daily would help you to plan your finances adequately. You would have an idea of the raw materials you would need monthly and just how much profit can be reasonably expected.
6. Packaging Equipment
You need to make sure that the company has standard packaging equipment in place and that the equipments are in good working condition. Packaging equipments usually comprises of cleaning equipments to clean out the bottles before they are loaded with contents, filling equipment to automatically fill water into the bottles, capping equipments for the covers and also labeling and packaging equipment.
7. Water analysis and treatment facilities
A standard water bottling company must also have a water treatment facility in place that would be used to rid the water of all forms of debris and microorganisms.
Next, you have to study the company to know its market position and who its competitors are. When you know who the competitors are, you would be able to know if the company has what it takes to survive in the market. You would also be able to prepare your own competitive strategies.
9. Cost Effectiveness
You should also find out if it would be more cost-effective to buy an existing bottled water company or start up your own business. This can be done by analyzing the market costs of all the equipment you would be buying from the company and also determine the value and current working state of each equipment.
You don’t want to pay thousands of dollars on a water treatment plant only to discover that you need to replace it two years later without having made enough profit to do that.
10. Brand perception
You also need to know how the public perceives the brand you are about to purchase. If there is a issue with public perception, you may have to spend a lot of money on re-branding and brand management so it is important to ensure that the company you are buying has an existing goodwill and positive brand perception.
Other things to consider in helping you make a decision on whether you should buy a bottled water company or not include the company’s profitability over the past five years, existing legal issues, reasons why the company is selling, existence of customers, the company’s current market share and the future trends and expectations in the bottled water industry.