How to start a water company from the ground up

Starting a water company is a rewarding venture that combines knowledge of logistics and quality control with business savvy. The bottled water industry is worth billions of dollars, fueled by consistent demand from homes, offices, gyms, and restaurants.

This guide will take you through the practical steps of validating your business concept, securing funding, obtaining necessary licenses, and acquiring equipment to help you launch a successful water company in the U.S.

Step 1: Create your business plan and validate the concept

Begin by researching your local market. Identify potential high-volume customers like corporate offices, fitness centers, and restaurants within your desired delivery radius. The International Bottled Water Association (IBWA) also provides valuable reports on national consumption trends and market size.

Next, analyze your direct competitors. Look beyond major retail brands and identify local water delivery services. A frequent oversight is ignoring these established local players who already have strong customer relationships. Note their pricing, bottle sizes, and delivery schedules.

Typical startup costs

Your initial investment requires careful planning, so a detailed budget is a must. Accounting for these expenses upfront helps secure adequate funding and prevents early cash flow problems. The costs can vary widely based on the scale of your operation.

• Water Source & Purification: $25,000 - $100,000+
• Bottling & Packaging Equipment: $50,000 - $150,000
• Delivery Vehicle: $30,000 - $60,000
• Licenses & Permits: $500 - $5,000
• Initial Inventory (bottles, labels): $10,000 - $25,000

In total, you might expect startup costs to fall between $115,500 and $340,000. These figures help you create a realistic financial forecast for your business plan and for potential lenders or investors.

Here are 3 immediate steps to take:

• Map out all gyms, offices, and restaurants in a 15-mile radius to estimate market density.
• Create a spreadsheet comparing the pricing and services of three local water delivery companies.
• Draft a preliminary budget using the lower and upper cost estimates provided above.

Step 2: Establish your legal entity and secure licenses

First, choose a business structure. An LLC is a common starting point because it separates your personal assets from business debts. You might also consider an S-Corp for potential tax savings once your business becomes profitable, but an LLC offers a simpler setup.

With your business structure decided, you can turn to regulations. The U.S. Food and Drug Administration (FDA) oversees bottled water at the federal level. However, your primary interactions will be with your state and local health departments, which handle most of the direct licensing and inspections.

Required permits and licenses

You will need to obtain a water bottler or processor license from your state health department. The application process can take 60 to 120 days, and costs often range from $500 to $2,000. Many new owners underestimate this timeline, so it is wise to start the application process early.

In addition to your state license, you will need several other permits. These typically include:

• A general business operating license from your city or county.
• Food handler permits for any employees involved in bottling.
• Zoning or land use permits for your bottling facility.

Here are 3 immediate steps to take:

• File the paperwork to form your LLC or other chosen business entity with your secretary of state.
• Contact your state health department to request the application packet for a water bottler license.
• Check your local government’s website for information on business license and zoning requirements.

Step 3: Secure insurance and manage risk

With your legal entity formed, the next move is to protect it. Standard business insurance is not enough for a water company. You handle a product people consume, which introduces specific liabilities that require specialized coverage to fully protect your investment.

Key insurance policies

You will need a package of policies. Many new owners are surprised to learn that a general liability policy does not cover every risk. For a water company, you should plan for the following types of coverage:

• General and Product Liability: This covers accidents on your property and, more importantly, issues from your product. A minimum of $1 million in coverage is standard. Many owners opt for a $2 million policy for greater peace of mind.
• Commercial Auto: This is for your delivery vehicles. Coverage must meet your state’s minimums, but higher limits are recommended. A single accident can be costly.
• Workers’ Compensation: If you have employees, this is mandatory in nearly every state. It covers medical costs and lost wages if an employee is injured on the job.
• Commercial Property: This protects your bottling facility and expensive equipment from events like fire or theft. You should also ask about equipment breakdown coverage.

A major risk for any beverage company is contamination. Your general liability policy might not cover a product recall. You should obtain specific product recall insurance. Without it, a single contamination event could force you to close your doors permanently.

When you look for providers, consider companies like The Hartford, Nationwide, or Travelers. They have experience with manufacturing and food production businesses. A general agent may not understand the unique risks involved, so a specialist is a better choice.

Here are 3 immediate steps to take:

• Request quotes from insurers that specialize in the food and beverage industry, like The Hartford or Nationwide.
• Ask any potential insurer about adding product recall and equipment breakdown coverage to your policy.
• Check your state’s department of motor vehicles website for its commercial auto insurance minimums.

Step 4: Find a location and buy equipment

You will want to find a facility between 1,500 and 3,000 square feet. Focus your search on properties zoned for light industrial or commercial use. This classification is important because it permits manufacturing activities and simplifies your permit applications with the city.

When you inspect a space, look for floor drains and high-capacity water lines. A mistake many new owners make is to underestimate plumbing needs. You can often negotiate a tenant improvement allowance with the landlord to help cover the cost of necessary plumbing and electrical upgrades.

Your bottling line setup

You can purchase equipment as a complete system or piece by piece. A full system from one supplier often streamlines installation and service. Your main components will include the following.

• Water Purification System: This can range from $25,000 to over $100,000. The price depends on the technology, such as reverse osmosis or distillation.
• Bottle Washer and Sanitizer: Expect to pay between $10,000 and $30,000 for a reliable unit that meets health department standards.
• Automated Filler and Capper: This part of your line can cost from $30,000 to $80,000. It is a major factor in your production speed.

Suppliers like Norland International or Aqua Vita can provide quotes for complete systems. For consumables like bottles, be prepared for minimum order quantities. A typical minimum is one pallet, which can be over 1,000 five-gallon bottles, so confirm you have storage space.

Here are 3 immediate steps to take:

• Search online commercial real estate listings for properties zoned as "light industrial."
• Request a quote for a complete bottling system from a supplier like Norland International.
• During lease discussions, ask potential landlords about a tenant improvement allowance for plumbing upgrades.

Step 5: Set up your payment processing

Now, let's talk about getting paid. Corporate accounts often expect Net 30 payment terms. For residential customers, you will want payment upon delivery or through a monthly subscription. This requires a system that can handle recurring billing automatically.

When you select a payment solution, look for low transaction fees and mobile capabilities for your drivers. Many new owners get caught by providers that charge 2.5% to 3.5% per transaction, plus monthly fees and costs for card readers.

For water companies that need to accept payments on-site or on the go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done. At just 1.99% per transaction with no hidden costs or extra hardware needed, it is particularly useful for drivers who collect payment at the point of delivery.

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done. There is no wait for bank transfers.

Here are 3 immediate steps to take:

• Draft your standard payment terms for both corporate (Net 30) and residential (payment on delivery) customers.
• Compare the total cost of two traditional payment processors with JIM's 1.99% rate.
• Download the JIM app to see how it works for mobile sales before you commit.

Step 6: Secure your funding and manage finances

Finding the right loan

You might want to look into an SBA 7(a) loan, as they are designed for new businesses. Lenders typically offer between $50,000 and $250,000 and will want to see a strong business plan and a personal credit score above 680.

Another path is equipment financing. This loan uses your bottling machinery as collateral, which can make it easier to obtain. Interest rates often range from 4% to 12%, depending on your credit and the equipment's value. This frees up other capital for operating costs.

Budgeting for your first six months

With funding in mind, let's talk about working capital. This is the cash needed to run the business before you are profitable. Many new owners focus only on equipment costs and find themselves short on funds for daily operations within months.

You should plan for at least six months of operating expenses. This typically amounts to $30,000 to $60,000 and covers costs like:

• Rent and utilities for your facility
• Insurance premiums
• Initial marketing campaigns
• Payroll for your first employees

Here are 3 immediate steps to take:

• Contact your local Small Business Development Center (SBDC) for free help with your loan application.
• Calculate your estimated working capital needs for six months, including rent, insurance, and marketing.
• Request a quote for equipment financing from a lender that specializes in manufacturing machinery.

Step 7: Hire your team and set up operations

For a small launch, you will likely need just two or three key people. You can handle sales and administration yourself at first, but you need hands on deck for production and delivery from day one.

Key roles and responsibilities

Your first hires will probably fill these positions. Many new owners underestimate payroll, so budget for competitive salaries to attract reliable staff. A high turnover rate can disrupt your operations significantly.

• Delivery Driver: This person is the face of your company, handling deliveries and basic customer service. A salary between $35,000 and $50,000 is typical. Check if your delivery vehicle's weight requires the driver to have a Commercial Driver's License (CDL).
• Bottling Line Operator: This employee runs your purification and bottling equipment and ensures quality control. Expect to pay $40,000 to $55,000. They will need a Food Handler's Permit, which is usually a simple online course.

As you grow, you will also need an Office Manager for scheduling and billing, with a salary around $45,000 to $60,000. A good benchmark to aim for is $100,000 to $150,000 in annual revenue per employee. This helps you decide when to hire.

With your team in place, focus on operations. Manually planning delivery routes is a mistake that costs time and fuel. You should use route optimization software from the start. Programs like Routific or Onfleet create the most efficient routes for your drivers automatically.

Here are 3 immediate steps to take:

• Write job descriptions for a delivery driver and a bottling line operator.
• Check your state's DMV website for CDL requirements based on vehicle weight.
• Request a demo for a route optimization software like Routific or Onfleet.

Step 8: Market your business and get customers

Your initial marketing should focus on direct outreach. Target corporate offices, gyms, and medical clinics within your delivery zone. A simple cold call or a visit with a brochure can be very effective. Many owners find that direct sales produce a higher return than broad digital ads at first.

At the same time, establish your online presence. Claim your Google Business Profile and fill it out completely with photos and your service area. This helps you appear in local search results when potential customers look for "water delivery near me."

Effective acquisition strategies

Here are a few proven methods to attract your first customers. A common mistake is to offer discounts without a clear goal. Instead, use promotions to secure long-term contracts.

• Free Trial Offer: Provide a free water cooler rental and one month of service to new corporate clients who sign a six-month agreement. This removes the risk for them to switch.
• Referral Program: Give existing customers one month of free service for every new customer they refer who signs up. Word-of-mouth is powerful in local service businesses.
• Community Sponsorship: Sponsor a local 5k run or a youth sports team. This gets your branded bottles into the hands of potential customers and builds goodwill.

For your budget, aim for a customer acquisition cost (CAC) under $100 per new recurring account. Track your spending on each channel to see what works best. If a strategy costs more than that to land one customer, you may want to adjust your approach.

Here are 3 immediate steps to take:

• Create a list of 25 local businesses to contact for direct sales outreach.
• Claim and complete your Google Business Profile with service areas and hours.
• Draft the terms for a free trial offer for new corporate clients.

Step 9: Set your pricing and define your offerings

With your operations ready, it is time to decide what you will charge. Most water companies use a hybrid model. You can charge on a per-bottle basis, typically $7 to $9 for a five-gallon jug, and add a monthly cooler rental fee of $10 to $15.

Another popular option is a subscription package. For example, a residential plan could include four bottles per month for a flat rate of $30. This simplifies billing and helps you forecast revenue. Just be sure to define fees for extra bottles or rush deliveries.

You should aim for a gross profit margin between 40% and 50% on water sales. Many new owners make the mistake of pricing based on cost alone, ignoring what the local market will support. Your pricing must be competitive from day one.

To do this, analyze your competitors. If they charge $8 per bottle, pricing yourself at $10 is a tough sell unless you offer a premium product like alkaline water. You might want to start at $7.50 to gain a foothold and adjust later as your brand grows.

Here are 3 immediate steps to take:

• Research the per-bottle price and cooler rental fees of three local competitors.
• Create two sample subscription packages: one for a residential customer and one for a small office.
• Calculate your gross profit margin using an estimated sale price of $8 per bottle and your own cost of goods.

Step 10: Maintain quality and scale your operations

Establish your quality standards

Your operations must follow the FDA’s Good Manufacturing Practices (GMPs). You should also review the International Bottled Water Association (IBWA) Model Code for industry best practices. Many new owners only perform water tests when the state requires it, but you should test your water monthly for pH and Total Dissolved Solids (TDS).

For service quality, track metrics like customer complaints per 100 deliveries or your on-time delivery rate. A rate below 98% suggests you may have issues with your routing or scheduling that need attention.

Know when to grow

Once your quality control is a well-oiled machine, you can focus on growth. A good benchmark is to add a new employee for every $100,000 in annual revenue you generate. You might also plan to add a new delivery truck for every 250 active accounts.

As you expand, route optimization software like Routific becomes even more valuable. You can also use customer management software like Jobber or ServiceTitan to automate recurring billing and scheduling, which frees up your time for sales and strategy.

Here are 3 immediate steps to take:

• Download the FDA’s GMP guidelines for bottled water to create your own quality checklist.
• Set a growth benchmark, such as hiring a second driver once you reach 100 active accounts.
• Schedule a demo with a customer management software like Jobber to see how it handles recurring billing.

Building a water company is about more than logistics. Remember that consistent quality and reliable service build the trust that turns one-time buyers into loyal customers. You have the roadmap, now go build your business one delivery at a time.

And when it comes to getting paid, a simple solution like JIM lets your phone accept cards without extra hardware. At a flat 1.99% fee, it keeps your finances clear from day one. Download JIM and you are ready to go.