A lot of people wonder how to start a Kombucha business because, well, it is one of the fastest growing sub-segments of beverage production in recent times. And what's more, it is still growing with unbelievable scale and profit potential.
But how exactly do you start a Kombucha business? You start a kombucha business by charting out an extensive business plan, obtaining all necessary equipment, going through with the actual brewing, and of course marketing your final beverage in the most effective way possible.
Quick tip: An LLC is the best company structure for MOST Kombucha businesses. If you are ready to start your new company, we recommend you go with either ZenBusiness ($49) or IncFile ($0) to get your business structure set up correctly:
We also have a complete breakdown of the 7 best LLC services available in case you wanted to review your options.
In case all of these seem vague, don't worry, below is a more detailed, step-by-step guide on starting your kombucha business. We go over the legal areas of establishing your business, necessary equipment needed for a smooth operation, and profit potential and costs of scaling your business.
Why You Should Start a Kombucha Business
As mentioned above, kombucha is one of the fastest growing groups of beverage production in recent times. Not only has it greatly picked up in terms of market share over the years, it also has great potential regarding what's to come.
For instance, it is estimated that by 2026, the market size of kombucha business will hit $6.2 billion dollars.
Add these with the fact that it really doesn't take too much to begin the business, you start to get a clearer picture as to why it would be almost criminal to not start a Kombucha business if you can.
Step 1: Planning Your Business
The fact that you're going to be running a Kombucha business, no matter the size and scale, does not indicate that you would not have to chart a business course. You chart a business plan for your kombucha business just as you would for an Etsy business, or a used-car business.
In short, regardless of whichever industry you choose to enter, and which avenue and marketing strategy you choose to employ, planning is the key to success.
And what's more? It is also your means of defense against failure. There is nothing that spells doom more than entering into an investment journey without carrying out through research and planning beforehand.
It is also worth mentioning that your business plan in this case has to include delivery strategy, and, most importantly, cost planning.
Cost planning a business involves identifying beforehand the monetary expenses and resources needed to get the business off the ground, and moving seamlessly.
It is highly important to spend as much time on cost planning mainly because one of the biggest challenges you can face in a business is to get a satisfactory point where everything is starting to look rosy, and then hit a painful snag thanks to lack of sufficient funds.
And when it comes to a Kombucha business, regardless of the nuances involved, cost planning is just as important as in any other business.
What are the Costs of Getting the Business Going?
The costs of getting a Kombucha business started include the cost of acquiring necessary equipment, the cost of bottling and packaging your finished product, and the cost of marketing and promotion.
Of course this all depends on scale. For instance the sophistication of your brewing equipment is all dependent on how big or small you're starting out.
Starting out on a small scale in your home will not require as much sophisticated equipment as it would if you were to start on a larger scale. Same goes for the cost of packaging, and promotion.
There is also the cost of a proper legal setup, licensing, certifications and nutritional analysis.
All in all, we estimate that if you're going to set up a kombucha brewery at home on a small scale to start with, you can come up with a perfect system for about $1000.
What are the Recurring Costs?
The recurring costs involved in running a Kombucha business are down to the costs of maintaining equipment, keeping promotion campaigns going, and acquiring needed supplies for bottling and labelling.
And then there are the costs incurred when you start to scale your business as you go, which we will discuss further in the coming sections.
Step 2 – Target Market
Analyzing a target market ensures that you're not just shooting a wild hail-mary shot in the wind. Instead, you have a targeted niche audience with a higher chance of conversion.
So who is your target market as a Kombucha brewery runner? First of all you can choose to appeal to folks who already have an affinity for Kombucha, or even go further and reach out to newer beverage lovers who are looking for something healthier and more satisfying.
The best part of Kombucha is that when people try it out, and learn of its health benefits, it's hard to go back to drinking beers or other unhealthy beverages. And that's one of your leverages.
How Exactly Does a Kombucha Business Make Money?
At the risk of sounding redundant, a computer business makes money by brewing Kombucha and selling to interested consumers. Depending on scale, you may choose to sell directly to final consumers at a local farmer's market, or in bulk to retailers and restaurants to sell on your behalf.
How Much Do You Charge Customers?
Depending on how established the brand is, a store-bought 16 pound bottle of kombucha may be sold at anything from $3 to $5.
How Much Profit Can a Kombucha Business Make
The size of your business determines how much you're going to make, obviously, but another thing almost as important is your distribution strategy. Distribution is key when it comes to estimating the profit potential of your business.
Most states allow self-distribution and this can increase your earnings by about 50%. Choosing to go through a distributor, though, is a less stressful and more assured process as they (distributors) would already have the connection to gain access to shelves and placements that you may not.
Having a distributor also guarantees that pickup and delivery tasks are off your hands.
What are the Costs of Scaling?
The cost of scaling your Kombucha business involves getting bigger and better equipment, so that you increase your output by a significant margin. You will also have to profoundly increase your marketing expenditure, labor costs, and of course the legal costs of expanding to more states and territories.
What Types of Equipment Do I Need For a Kombucha Business?
Producing Kombucha on a small scale does not require such a high level of sophisticated equipment. Some of the most important things you'd need include a fermentation vessel, and you can easily make use of a large glass carboy for this purpose, for a small scale operation from your home.
You also need some sort of racking cane system to move your Kombucha from the first vessel to another larger fermentation vessel, and of course you need a filter and bottling equipment if you're going to be bottling your Kombucha on your own.
For more information, you can consult any brewery or winery equipment supplier.
Step 3: Forming a Legal Entity
For the best overall value, ZenBusiness is our recommended LLC formation service. Great price of $49 (plus state fees) and everything you need to start your business.
For the cheapest LLC formation service and great customer support. You can get your LLC formed for free (plus state fees).
Looking to set up the perfect legal entity for your Kombucha business? For most people an LLC is the best way to protect your personal assets in your new business.
We recommend you go with either ZenBusiness ($49) or IncFile ($0) to set up your Kombucha business for success!
Naming Your Business
Ideally, for your Kombucha business, as well as any other business really, you should choose a name that stands out, and is easy to remember, and at the same time, is available for registration with the appropriate state body.
You should go through this step before filing your articles of organization – which will signify the official establishment of your LLC, or whichever company structure you choose to go with.
Register For Taxes
You register your business for taxes by obtaining an official Employer Identification Number from the IRS, as well as other appropriate state organizations, depending on which particular state you choose to establish your company in.
Obtaining an EIN is a relatively simple affair and should not take up too much of your time.
Business Bank Account
No matter the business you choose to go into, your personal finances must always be separated from your business. This ensures that you're safe from liability and are able to keep track of business growth better.
You can also use your business account to build a solid business credit that makes you eligible for an even greater range of financial benefits including business credit cards, better interest rates, and so on.
Step 4: Business Accounting
Business accounting is what comes next after opening a business bank account. Opening a business account, you see, is one thing, keeping proper track of your income and expenditure flow, is another.
Of course it doesn't hurt to hire a proper accountant for this purpose if you can afford it. Professional accounting tasks are quite demanding, and time consuming. Having someone to take the chores off your hands is usually a luxury, especially when you'd rather have all your attention focused on other important aspects of running your Kombucha business.
Regardless of which way you choose to go, though, once your business really starts to grow, hiring an accountant may become more and more imperative.
Step 5: Permits and Licenses
Assuming that you would have done your research in the planning section regarding governmental laws and licensing, this is the point where you actually comply by acquiring all necessary licenses and permits.
Step 6: Business Insurance
Getting business insurance is not only great for keeping your business safe from unforeseen liabilities, it is also legally mandated and a no-brainer for any business owner.
The policy you choose to go for is up to you, as there are a lot of options in this regard for business owners.
Step 7: Defining Your Brand
Branding your business is as important for a kombucha business as it is for a national fast food outlet – the reason for this is quite simple: it helps get your name out there in a way that ensures it sticks to the mind of customers and potential customers.
Having a recognizable brand also breeds trust and can bring in more customers than the most vigorous of advertisements.
Promotion and Marketing
Having a great brand, as mentioned above, is great for marketing, for a kombucha business as well as any other. And then there's the peculiar fact that Kombucha Itself isn't as popular as some other beverages. Now while some can choose to see it as a deterring factor, you should instead choose to see if as a propelling one.
It means that this great business is just waiting for people to come over and carve out their brands, and a share of the market.
So how do you promote your Kombucha product? You can choose to do this by striking a partnership with local beverage dealers, restaurants, running a discount sale on bulk purchases.
And of course you should always leverage the power of the internet by establishing a strong online presence. We discuss more on this below, but first, a few words about customer retention.
Why is customer retention so important in a business? It's simple, customer retention is one of the greatest forms of marketing. It is ultra-targeted marketing, without having to do any of the heavy lifting that comes with marketing to new customers.
With customer retention, you already have your set of customers, who have proven to be willing and capable of purchasing your product. The next thing to do then, on your part, is to ensure that they keep coming back, and even refer more people to your business.
So how do you ensure customer retention in your Kombucha business? By serving out high quality products, of course. Add this with a dose of professionalism, customer service, and solid follow-up, and you will have yourself a self-sustaining business in little to no time.
Building an online presence is like having a fresh new supply of oxygen for your business. It is practically providing your business with a fresh, new source of revenue. And what's more, there is no limitation to how far you can go.
Traditional marketing and local outreach is great. But in the 21st century, businesses that don't expand their reach to the internet space have a lesser chance of survival that do.
By building an online presence, either through your search engine optimized website or social media pages, you are effectively helping new customers find you as easily and seamlessly as possible.
Step 8: What You Need To Enter into a Kombucha Business
Who is a Kombucha Business Suitable For?
A Kombucha business is suitable for anybody who has a love for beverages and has the general idea of how to brew this particular health-friendly beverage.
Now you don't have to have a big restaurant or work at a brewery to get your home-based Kombucha going, but sometimes it does provide something of an edge, seeing as you would already have a few technical know-how in that line of business.
Skills and Experiences
The skills needed to start a kombucha business is the knowledge of how to brew the beverage in the first place. Having a prior experience working at a brewery, or running a brewery, or working at a restaurant with a brewery, can all come in really handy for those wanting to start a kombucha business.
What is the Growth Potential of a Kombucha Business?
The growth potential of brewing Kombucha is immense. It all comes from not just being able to produce more units, but also being able to enjoy the economies of scale that come with having enough experience and a solid setup upfront.
For instance, once you get the initial equipment costs out of the way, you will never have to pay for those things again, which means that as you brew more bottles of kombucha, your cost per unit becomes greatly reduced, and subsequently your net profit increases.
And the more you scale and get the initial costs out of the way, the higher the profit potential becomes. In no time your Kombucha business may be raking in higher six figures every year.
Find a Business Mentor
Finding a business mentor, no matter what niche or industry you choose to get into, can never hurt you. At worst you gain some knowledge you'll hold on to forever, and at best you get people willing to work you through challenges and ensure that you do not make the same mistakes you did.
All in all, you end up with an easier path to success than you would have had without a mentor. So find someone you trust and respect who's been through what you're about to go through, and you'll have a bigger chance of success.
Build a Team
Building a team ensures that you enjoy all the benefits that come with division of labor and economies of scale. Of course it goes without saying that once you get big enough, building a team becomes a priority. Every business has its moving parts, and no matter how savvy you are, as your business becomes bigger, it gets a lot harder to keep track of all of these moving parts on your own.
And this is where you start to build a team, to facilitate even more growth.