How to Write a Hookah Lounge Business Plan or Template
Hookah lounges have been in existence for literally hundreds of years, with the first lounge identified in India. Our hookah lounge business plan writer has found that this type of business is cyclical over the last several hundred years. In other words, hookah lounges' popularity comes and goes on an almost predictable basis. As of right now, it seems like the hookah lounge industry is on another upswing based on the number of startups observed by our writer. As more and more hookah lounges open up operations, the need for competitive advantage in the industry will become self-evident. An important competitive advantage may be a written hookah lounge business plan, strategic plan, or even having access to a hookah lounge business plan templates may fit the bill. From this, our business plan writer has come up with some tips and tricks and how to best write or structure a hookah lounge business plan or hookah lounge business plan template.
Executive Summary for a Hookah Lounge Business Plan.
The executive summary section for a hookah lounge business plan should include typical business information like the company’s name, address, and a brief description of the business model envisioned by the hookah lounge business owner. Further, our hookah lounge business plan writer and hookah lounge business plan template writer suggest that business owners in this industry also provide a brief discussion about how revenues will be generated in this business. In some hookah lounges, the main revenue generator is liquor and beer sales, with hookah rentals as a secondary revenue generator. In other hookah lounges, the main revenue generator is the renting of the hookah and the sale of shisha. Regardless of the envisioned business model, disclosing it in the executive summary is an excellent practice for business plan writers in this industry (7/22).
In the company information and location section for a hookah lounge, specifically, the location section, make sure to specifically state where your hookah lounge will be located. If this information is not available, then discuss the city and state where you would like your lounge. Further, if the location is not available, make sure to also describe the required parameters that must be met for the location. Some hookah lounge owners may wish to have their location in a downtown area, near sporting arenas, or close to area attractions like beaches or state parks. By specifically stating the area and parameters required for your lounge, readers of your hookah lounge business plan will be able to better understand your thought process for location selection.
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Service Description and Competitive Advantages
The service description section for a hookah lounge should focus on services provided by the organization. For example, some hookah lounges will only rent the glass vase and sell hookah stems, flavored tobacco, or Shisha. Other hookah lounges may complement their hookah offering with a full liquor bar and food menu. Regardless of your hookah lounge strategy, make sure to not only describe the services that you’re going to provide but also include justifications for the complementary services like food and alcohol. By showing the need for the additional services, business owners are able to then support pricing strategies and other operational decisions made.
The target market for a hookah lounge may depend on the location of the facility. For example, if a hookah lounge is located in a downtown area, then hookah business owners may choose to target tourists in the area or individuals between 21 to 35, which is a common demographic for bars and lounges. However, if a hookah lounge is located in a strip mall, then its target market may be hookah appreciators within a five or 7-mile radius. By identifying their target market, business owners are able to not only design their facility to best appeal to the market but also create advertising campaigns that will best exploit their geographic opportunities.
Industry research for a Hookah Lounge Business Plan
Industry research for a hookah lounge should start with reviewing hookah lounge industry statistics in the US. For example, Market Watch has found that the US sales in 2019 were approximately $72 million. Further, industry experts anticipate this market growing to approximately $84 million by the end of 2026. This would result in an average growth rate of approximately 2%. Once an in-depth industry analysis is completed, then hookah lounge business owners can explore local competitors, hookah lounges as well as traditional lounges, as well as possible vape or smoke shops in the area. Just keep in mind, that since a hookah lounge is a niche industry, related industry research may be needed. For example, a business plan writer for a hookah lounge may supplement hookah lounge statistics with traditional lounge or smoke shop statistics as well.
The owner and management section for a hookah lounge should start with the hookah lounge business owner’s professional experience in managing either traditional lounges/bars or smoke shops. Next, educational history should supplement work experience. Important educational history for a hookah lounge business owner could include business management degrees earned, seminars attended, or online training completed. Finally, the owner and management section should also have a paragraph or two discussing why you want to start the hookah lounge. It may be your passion for hookahs or your desire to provide a comfortable setting for business professionals to socialize. Regardless of your motivation, make sure to document it in the segment.
Further, an additional segment that should be added to the owner and management section would be the job description for employees. Possible jobs listed should include bartender, barback, hookah attendant, and CEO. Under each job listed, make sure to provide a description of the job responsibilities for that particular position. An example of this would be for a bartender, collecting payments for drinks, making mixed drinks following management recipes, and answering questions about our alcoholic beverage menu. Showing and describing job positions and responsibilities in a hookah lounge business plan helps the owner show the reader that they have a sound understanding of its organizational structure as well as operational function.
Funding Request for a Hookah Lounge Business Plan
The funding request section for a hookah lounge business plan should start with identifying explicitly the dollar amount needed to start operations. For a hookah lounge, start-up costs me to be as little as $50,000 to $75,000 or as much as three to $500,000. Once a specific dollar amount is identified, then hookah lounge business owners should break out the spending into categories such as lounge buildout, working capital, inventory, furniture and décor, and advertising. Once the categories are identified, then allocate your total funding amount to each category as you see fit. Keep in mind, make sure to add a little bit of extra money to each category in case of cost overages. Once you’re done with this, then make sure to total up your hookah lounge start-up cost at the bottom of the spreadsheet. Ensure that the bottom-line dollar amount is identical to your specifically stated dollar amount at the start of your funding request. By following this practice, hookah lounge business owners are able to state specifically the dollar amount needed, but they give themselves flexibility by providing categories with specific dollar amounts.
The financial projections for a hookah lounge business plan or business plan template should start with developing a financial model geared towards hookah lounges. The financial model should start with identifying your main revenue generators for the hookah lounge. For example, some hookah lounges will provide vase rentals as well as sell flavored shisha, liquor, wine, and beer. Once the main revenue generators are identified, then estimate the number of sales for each item on a daily basis. Or, for simplicity's sake, estimate the number of customers that you anticipate visiting your location on average daily and how much anticipate them spending per visit. Once this is identified, then come up with some averages for your variable costs, which are how much it cost you to purchase shisha, liquor, beer, and wine. Once an average variable cost is identified, then deduct the percentage from your anticipated average customer spending. This will give you your gross margin for each customer. The next step is to multiply your gross margin frees customers by the number of customers anticipated at your hookah lounge. With this foundation, you can then use growth averages and estimate your monthly as well as annual profit and loss projections.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author