You need a minimum of $146,500 to open a medium scale hookah bar business (medium scale). Here are the key areas you will spend your startup capital.
One of the major areas you should mindful of when considering starting a hookah bar is the total cost for setting up the business.
However, starting up a hookah bar business may not require pretty huge startup capital, it also needs a significant investment capital, solid planning, and attention to detail in order to keep your business profitable.
From our market survey and feasibility studies, we have been able to come up with a detailed budget of opening a standard and one stop hookah bar in the united states of America and here are the key areas where you are expected to spend your startup capital on:
Estimated Cost Breakdown for Opening a Hookah Lounge
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services totaling – $1,200.
- Marketing promotion expenses for the grand opening of the dance studio in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The cost of accounting software, CRM software and Payroll Software – $1,500
- The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of – $35,600.
- The cost for shop / facility remodeling – $25,000.
- Other start-up expenses including stationery – $500
- Phone and utility deposits – ($2,500)
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
- The cost for start-up inventory (traditional shisha, herbal shisha, assorted tobaccos, assorted cigars and alcoholic drinks and non-alcoholic drinks) – $16,027
- Storage hardware (bins, utensil rack, shelves, glasses case) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $6,000
- The cost for serving area equipment (glasses, flatware) – $3,000
- The cost for store equipment (cash register, security, ventilation, signage) – $3,150
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $8,000.
- The cost of launching a website – $600
- The cost for our grand opening party – $3,000
- Miscellaneous – $2,500
From the rough estimate as listed above, you would need a minimum of one hundred and forty – six thousand five hundred USD ($146,500) to establish a medium – scale but standard hookah bar business in any city in the United States of America.
Despite the regulatory challenges that come with opening a hookah lounge in the United States, entrepreneurs still find this line of business profitable and worthwhile. The fact that the hookah lounge business is still legal makes it one of the businesses that can be started in the United States.
So, if you are cool with starting a hookah lounge business, here are 10 key factors that can influence the overall cost of opening a hookah lounge.
Factors That Influence the Cost of Opening a Hookah Lounge
Your Choice of Location of the Hookah Lounge
Location is key to any business you want to start and different locations come with different cost implications. For example, the rent of facilities in the same city but in different locations may differ.
In highbrow areas or thriving business districts, rents are usually on the high side when compared to the outskirts of the cities or areas predominantly occupied by low-income earners or people with low purchasing power. In essence, your choice of location for your new hookah lounge will influence the overall cost of opening the business.
If you are targeting a thriving business district, then you must be ready to spend more to get your hookah lounge up and running.
2. The Size of the Hookah Lounge
The size of the hookah lounge is yet another major factor that will greatly influence the cost of starting the business. It is a fact that size is key when it comes to the amount you are to spend on anything. The maxim that, ‘the bigger the size, the higher the price’ holds true across the board.
Please note that if you want your customers to enjoy visiting your hookah lounge, you must make sure you rent a lounge facility that is spacious and airy. In essence, if you are looking to open a hookah lounge, then you must be ready to spend money to get a spacious facility that can accommodate the number of customers you want
The Cost of Rent or Lease
Another factor that will influence the cost of opening a hookah lounge is the cost of rent or lease. Except you want to operate a mobile hookah lounge, you are expected to create a budget for rent or lease. The cost of renting a facility doesn’t come cheap and it is one of the reasons why some entrepreneurs have not started their businesses.
For example, if you plan to open your hookah lounge in a city like Dallas, Texas, then you should budget to pay between $10,000 to $30,000 per year for a small but standard facility that will occupy a minimum of 10 to 20 clients per time.
The Cost of Renovating the Facility
Most often than not, when you rent a new facility, there is always a need to renovate the facility. Even if the landlord renovated the facility before leasing or renting it out, it might not be to your taste. Hence, you are expected to make the place look good and appealing to potential customers and this doesn’t come cheap.
Part of what you should budget for that will in the long run influence the overall cost of starting your hookah lounge business. This cost could include the cost of painting, changing the water closet, changing the locks and keys, changing the nets, and even changing the flooring and chimney et al.
The Cost of Furnishing and Equipping
Another cost that will definitely influence the cost of starting a hookah lounge is the cost of furnishing and equipping the hookah lounge. Interestingly, without furnishing and equipping your hookah lounge, no one will patronize you and you won’t be able to carry out your services.
Basically, you are expected to budget for hookahs, shishas, hookah trays, hookah tongs, hookah hoses, and hookah bowls. You are expected to also budget for chairs and tables, computers, flat-screen televisions, sound systems, and security gadgets (CCTV et al). No doubt, the cost of all these items will be significant in your overall budget.
The Cost of Hiring and Training Your Staff
Irrespective of the size of the hookah lounge you want to open; at least you should have a minimum of two or three employees to start the business with.
No doubt, you may decide to occupy more than one role as the boss of the business especially when you are starting the business on a shoestring budget, but there are certain aspects of the business you may not be able to handle hence you need to hire some key employees.
With that in mind, it will be safe to say that the cost of hiring and training your staff is one of the factors that will to a large extent add up to the overall cost of opening a hookah lounge.
The Cost of Obtaining Licenses and Permits
You cannot open a tobacco-related business in the United States without obtaining some mandatory licenses and permits. Trust me, the cost of obtaining the required licenses and permits for a hookah lounge business doesn’t come cheap.
In essence, another factor that will influence the cost of opening your hookah lounge is the amount required to apply and obtain the needed licenses and permits. In this regard, you should budget for the cost of obtaining your business license, building and zoning permit, fire department permit, sales tax permit, music license, tobacco retailer license, permit, and lastly signage permit.
The Cost of Marketing, Branding, and Promoting the Business
If you plan to open a new hookah lounge business, then you must make provisions in your budget that will take care of your marketing, branding, and promotion. The budget for marketing, branding, and promoting the hookah lounge business may vary depending on what the owner of the business wants to achieve.
For example, if the owner of the hookah lounge wants to throw a launch party as a way of announcing the entrance of the business into the community, then the owner of the business must be prepared to spend a minimum of $2,000. With that budget, you should be able to announce your presence in your community with a bang.
The Cost of the Insurance
Another factor that will influence the cost of starting a hookah lounge business is no doubt the cost of purchasing the required insurance policy covers. Interestingly, in the United States and of course, in most countries of the world, it is illegal to start a business without having the required insurance policy covers in place.
You are expected to have at least general liability insurance, property insurance, and workers’ compensation insurance. This insurance policy covers cost money and they will add to the budget you are expected to spend when opening your hookah lounge.
The Cost of Inventory and Ongoing Expenditures
Finally, the cost of starting a hookah lounge is the cost of your inventory and ongoing expenditures. Before you can successfully open a hookah lounge, you are expected to have a budget for inventories such as hookahs, charcoals, shisha tobacco, drinks, and snacks.
You can also make provisions for ongoing expenditures such as payment of utilities, salaries of your staff, maintenance, and repairs, and payment of tax and insurance.
Please note that this is a rough estimate and we usually advise our readers who are interested in opening a hookah bar to go to the market or directly contact sellers of the items they would need to get the real time prices of these items. The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.