A Entrepreneur’s Guide on How to Open a Hookah Lounge

According to the United States Small Business Administration, there were over 30 million small businesses in the country in 2018. Anyone can break out on their own, including you. If you’re considering starting your own small business, congratulations!

There are endless options to choose from, but it’s best to go with your passion. So if you’re interested in smoking shisha, why not open a hookah lounge?

By opening a hookah bar, you’ll not only be bringing people together but you’ll also have the chance to make an excellent profit. And we’re here to help you do it. To learn how to open a hookah lounge, just keep reading.

Make a Business Plan

Your first step after deciding to open a hookah lounge business is to make a business plan. This is because a clear plan with your future steps laid out in front of you is essential for success.

In addition, your bank will require a business plan before giving you a loan. The best way to do this is to start a folder in your computer where you’ll store all of your important documents down the line. While you’re creating your business plan, ask yourself the following questions:

• How much is your business going to cost?
• Who are your customers?
• What will you charge?
• What services will you offer?

You’ll need to account for both startup costs and ongoing expenses when calculating how much your business will cost.

With your customers, you know that they’ll be adults because hookah smokers must be at least 18 years old. However, you want to attract a certain type of customer. The last thing you want to do is attract a rowdy crowd that will cause you to lose money by breaking your hookahs.

You should also know exactly which services you’ll offer your customers, as that will determine the space you need, as well as certain licenses and permits.

Will you offer food? Alcohol? Will you allow customers to vape while in your lounge? There’s a difference between vape vs hookah, and not all hookah smokers will appreciate vapes, cigarettes, and other types of smoking.

Form a Legal Entity

The next step is to establish a legal business entity. The most common business structures are LLC and corporation, both of which will protect you in the event that your lounge is sued.

If you’re going into business alone, LLC is a great choice. You can start an LLC yourself and this option comes with minimal costs. The only thing to keep in mind with an LLC is that you’ll need a registered agent. You can either hire one or act as your own.

Pick a Name and Location

Perhaps the most fun part is choosing your name and location. Now, your name can make or break your business, especially in the internet age. You need to choose something that suits you and your brand but also resonates with your customers and is easily found online.

It’s never a bad idea to put your town or street name somewhere in your business name. That way, when potential customers search “hookah bar + your town name,” your lounge will come up in the results. But more importantly, choose a name that’s easy to remember and simple to spell.

Once you have a name that’s unique and memorable, it’s time to choose your location. This can rely heavily on your budget. For example, a rental space in a high-traffic area will cost more up front, but can yield better profits.

Weigh the pros and cons and choose your location carefully. Look for a space with the appropriate size and amenities for your business plan.

Apply for Licenses and Permits

As with any business, there are many hookah lounge regulations, requiring you to obtain business licenses and permits. These will vary depending on your state and town, so be sure to research your specific area to ensure that you’re meeting the minimum requirements.

Because hookah contains nicotine, you might be required to obtain additional permits as well. These include indoor smoking permits, food service licenses, and liquor licenses, depending on what your bar will offer.

In certain states, you could also be required to have a sales tax permit, occupancy permit, and an employer identification number. Failing to fill out and file the required paperwork can mean the downfall of your business and a number of hefty fines, it’s better to be safe than sorry.

Gather Funding

If you don’t have the funding for your hookah lounge on hand, you’ll need to to get a loan for the start-up costs at minimum. As with any loan, there are qualifications you’ll have to meet in order to secure a business loan.

First, many lenders require you to be able to invest 15-25% of the total start-up costs yourself. Additionally, you’ll need to have good credit. In most situations, the better your credit, the better your loan, so it’s good to have a shining credit score and record before applying.

Once you have the fund, you need a business bank account in which to store them. Keeping your personal funds separate from your business makes it far easier to track both your income and expenses.

Market Your Business

You have your name, your location, your licenses, and you’ve secured your start-up funds. You’re ready to start marketing!

There are certain aspects of marketing that you can do at no cost. Building social media accounts, for example, is a great way to get your name out there while interacting with potential customers.

That said, it’s a good idea to have a few avenues of paid advertising to go along with your social media, especially when you’re just starting out. Online, print, and radio advertising are all an investment, but can make all the difference in establishing a customer base.

Start Building Your Hookah Lounge Today

If you have a passion for hookah, what better small business to start than a hookah lounge? Your passion will help carry you to greatness and ensure that you never feel overworked or burnt out.

Remember, though, that it’s still a lot of hard work and you have a long road ahead of you. But with determination and a bit of business savvy, you can create a thriving hookah bar in no time.

Interested in more tips and tricks for building a successful business? Take a look at our blog!