Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Vividly coloured teas with names like Blue Hawaii and Gummi Bear are generating social media buzz.
Many non-Herbalife loaded teas are emerging, redefining the concept
Many nutritionists question the health benefits of loaded teas
As the popularity of loaded tea grows, the market is increasingly competitive
How much does it cost to start a loaded tea shop business?
Startup costs for a loaded tea shop range from $10,000 to $25,000, though it could be considerably less for an online shop. For a brick-and-mortar store, the costs include space rental and preparation, equipment, and ingredients and supplies.
In addition to your drink ingredients, you’ll need a handful of items to launch your loaded tea shop, including:
Glassware and plastic ups
Table and chairs
Kitchen equipment if you offer food
Setting up a business name and corporation
$100 - $500
Business licenses and permits
$200 - $300
$200 - $1,000
Initial Marketing Budget
$300 - $500
Space rental and preparation
$5,000 - $15,000
$2,000 - $4,000
Ingredients and supplies
$2,000 - $4,000
$9,900 - $25,800
How much can you earn from a loaded tea shop business?
Loaded tea usually goes for about $7 a cup, and your profit margin should be about 30%. In your first year or two, you could sell 50 cups a day, bringing in $127,750 in annual revenue. This would mean close to $40,000 in profit, assuming that 30% margin.
As you gain traction, sales could climb to 150 cups a day. With annual revenue of more than $380,000, you’d make a tidy profit of nearly $115,000.
What barriers to entry are there?
There are a few barriers to entry for a loaded tea shop. Your biggest challenges will be:
Funding the startup costs
Breaking into an increasingly competitive market
Related Business Ideas
If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
Now that you know what’s involved in starting a loaded tea shop, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.
Why? Identify an opportunity
Research loaded tea shops in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill.
For instance, maybe the local market is missing a shop that offers truly healthy and nutritional loaded teas or sugar-free loaded teas injected with protein.
You might consider targeting a niche, such as loaded tea smoothies. This could jumpstart your word-of-mouth marketing and attract clients right away.
You might consider targeting a niche, such as loaded tea smoothies. This could jumpstart your word-of-mouth marketing and attract clients right away.
Analyze your competitors
Analyze competitors to gain a better understanding of the market and identify opportunities.
Make a list of loaded tea shops that offer similar products.
Review your competitors’ products – their features, pricing, and quality – and marketing strategies
Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
Identify your competitors’ strengths and weaknesses.
This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.
What? Determine your products or services
You’ll want to come up with a menu of loaded tea drinks. You could also offer fruit juice and smoothies and a few food items to boost revenue.
How much should you charge for loaded tea?
The average price for a loaded tea is about $7, but you should check prices in your area. You’ll also want to consider your ingredient costs and other costs when setting your prices.
Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Trendy beverages like loaded tea tend to attract a younger demographic, so you could focus your marketing on TikTok and Instagram. Or you might want to attract a more mature crowd to your innovative loaded teas and advertise on Facebook and LinkedIn.
Where? Choose a loaded tea shop location
Assuming you’re not only selling online, you’ll need a space for your shop, preferably in a trendy area. You can find commercial space to rent on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Central location accessible via public transport
Ventilated and spacious, with good natural light
Flexible lease that can be extended as your business grows
Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Loaded Tea Shop Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
Name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “loaded tea” or “nutritional beverages”, boosts SEO
Name should allow for expansion, for ex: “Global Brews & Infusions” over “Oolong Oasis”
Avoid location-based names that might hinder future expansion
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation.
Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward.
Step 4: Create a Loaded Tea Shop Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
Product and Services: Describe your offerings in detail.
Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Make Logos, Business Cards, Social Designs and More!
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to loaded tea shops.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your loaded tea shop will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best option, other than friends and family, for funding a loaded tea shop business. You might also try crowdfunding if you have an innovative concept.
Step 8: Apply for Loaded Tea Shop Business Licenses and Permits
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
Check with your state and local governments to find out any health or food service permits you need. You may also need other state-level and local county or city based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your loaded tea shop business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Square, clover, and toast, to keep track of orders and inventory, engage customers, manage payments, and more.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Create a website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.
Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Order To Go Now”. This can sharply increase purchases.
Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Here are some powerful digital marketing strategies for small businesses:
Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
Instagram: Same benefits as Facebook but with different target audiences. It’s a very good platform for creative businesses.
TikTok: This social media platform has over 1 billion monthly active users and it is used primarily by a younger demographic.
Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal.
Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
Influencer marketing – Pay people with large social media followings to promote your loaded tea shop. You can find micro-influencers with smaller followings and lower rates.
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand.
Traditional marketing is any form of marketing that uses offline media to reach an audience. Some options that might work for a loaded tea shop business include:
Signage – Put up eye-catching signage at your shop and website
Flyering – Distribute flyers in your neighborhood
Sponsor events – You can pay to be a sponsor at events that are relevant to your target market
Limited edition – Offer a one-time version of your loaded tea.
Testimonials – Share customer testimonials about how your loaded tea helped them
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your loaded tea shop meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your loaded tea shop business could be:
Our loaded teas will keep you going all day!
The tastiest and healthiest loaded teas in town
Grab a bite while enjoying your loaded tea
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a loaded tea business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in loaded tea shops for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in loaded tea. You’ll probably generate new customers or find companies with which you could establish a partnership.
Step 12: Build Your Team
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a loaded tea business include:
Counter Clerks – make tea drinks, customer service
Marketing Lead – craft and execute a smart marketing campaign; social media
General Manager – accounting, scheduling, inventory management
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Step 13: Start Making Money!
Are you ready to ride the loaded tea wave? You could have fun, boost local health, and make a good living all at the same time. And once you’ve established your reputation, you could expand to new locations and even go regional, or national.
You’ve got the business information you need, so it’s time to start mixing up some fantastic loaded teas!
Loaded Tea Shop Business FAQs
Is a loaded tea shop profitable?
A loaded tea shop can be profitable. The key is to have a good location, preferably in a trendy area where there is little or no competition.
What is the growth potential of a loaded tea shop?
A loaded tea shop can grow its revenue by adding food items to the menu. It can also grow by adding new locations or franchising the business.
Can you start a loaded tea shop on the side?
It would be very difficult to run a local tea shop on the side. You need to be open as often as possible to be competitive. It’s best to run it as a full-time business.
What are the ingredients in loaded teas?
Many of them contain a caffeine source like guarana, an herbal tea like ginseng, taurine, inositol, and niacin. They may also contain juices for flavor. Some even contain actual tea.