3000-6000 BTC loan - Hookah Lounge - 9/18/12 Update

[dank]

I'll be gathering such information after I consult with a SCORE councilor.  I'll see what other business owners say as well.  I up'd the monthly expenses to $2000 from $500 though, I think that should give a better estimate of profit until I get actual figures.

Attached updated spreadsheet.

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[JMAHH]

This is with 96 customers/day

I don't think even a hairdresser gets that many customers a day, let alone a hookah bar.

[dank]

Maybe not by you, I've seen a hookah bar with 50+ people at once.  And they didn't have live music or nearly as big of a facility.  No worries though, it stands profitable, regardless:

48 customers/day:    $5,997 monthly profit
60 customers/day:    $10,475 monthly profit
80 customers/day:    $16,875 monthly profit
96 customers/day:    $22,632 monthly profit
128 customers/day:   $34,147 monthly profit

[repentance]

Maybe not by you, I've seen a hookah bar with 50+ people at once.  And they didn't have live music or nearly as big of a facility.  No worries though, it stands profitable, regardless:

48 customers/day:    $5,997 monthly profit
60 customers/day:    $10,475 monthly profit
80 customers/day:    $16,875 monthly profit
96 customers/day:    $22,632 monthly profit
128 customers/day:   $34,147 monthly profit

You seriously can't project your monthly profits until you know your overheads.   You can try to predict your monthly revenue, but you're really just guessing at the number of customers you'll get.  There'll be quiet days every week, especially after you've been open for a while.  You'll form a regular customer base, but some people will only come once or twice so you need a constant influx of new customers to keep the numbers up.  There'll be times when major events are happening and people disrupt their usual Friday/Saturday night routine to attend those events instead of hanging out at the hookah bar.  If you're aiming at the college market, there'll be times when a lot of students are out of town for holidays.  

A place that's packed to capacity on Friday and Saturday night can be not worth opening on Sunday, Monday and Tuesday night.  Indoor hospitality venues can be very busy in winter and dead in summer or vice versa, depending on your local climate and what lifestyle people tend to live in different seasons.  Few hospitality businesses make the same amount week in/week out, month in/month out over the course of a year.  Some of your overheads will be patronage-dependent, but others will be fixed and need to be paid whether business is booming or dead.

[LoupGaroux]

dank-

First off, best of luck with this, it is good to see the entrepreneurial spirit is alive. Now, I have some knowledge in this arena, having done the development of over 13,500 commercial locations for restaurants, retail locations, new concept developments, prototyping for 30 different national franchisors, and I would suggest you spend a LOT more time studying, and a whole lot less time working the forum for a loan. Your spreadsheet is essentially at the marker on a paper napkin state. You have a way to monetize hookah smoking. Great. You have a 6,000 s.f. concept. Superb. That 6,000 within a 5 minute drive of a university will run you at the very least, $6,000 per month, plus all CAM charges, which include taxes, maintenance, grounds keeping, parking lot repair, snow removal and so on, a good working figure is an additional 28% on top of rent. If you are being shown a rent number of less than $1.00 per square foot you are being lied to. Or you really don't want to do business with them because there is something hidden that you don't want to be a part of.

Then you need to heat and air condition, and for hookah smoking, filter, the air. An entry level air filtration system to deal with the smoke for 60,000 cubic feet of space will run about $45,000, depending on how much warranty you want to buy, and you will want to buy a lot, because if the filter no work, you no open the doors, that will be the health department's issue. Heat and air? Let's put you in the middle of the US, and make it a nice temperate zone like St. Louis, near the middle of the country, and relatively cheap electric. You will drop $3,500 each month on utilities bare minimum. And a service call on a weekend when the air dies on a 90 degree Saturday and you have 96 smokers dying for a smoke, that's $500 easy, and you pay the bill on arrival, because your lease will assign those costs to you. Now, have you investigated the smoking laws in your state? Usually a secondary bond is required. And nix the BYOB concept right now. You cannot be a minor and operate an establishment that permits the consumption of alcohol, and you will be required to license it anyway. Cheapest serve yourself liquor license in the US is $2,500, after you dump $25,000 in bribes, graft or lawyer's fees to get approved for it. And everyone on staff has to get certified to be around it, which will set you back a couple of hundred per person for the class.

Now, screwing girlfriends and vomiting in the bathroom is just nasty, but let's talk contingency, shall we? Brandi, that super hottie that you hired to be your coal delivery person (I know they have a name, but I can't remember what it is...) gets distracted by an incoming tweet from her girlfriend, and she accidentally drops a hot coal into a customer's lap. Hey, you are only paying her $8 per hour (plus another $4.75 in benefits, taxes etc.)- you weren't expecting loyalty or brains were you? Now your customer, who had just gotten a bad case of burnt crotch is pissed off and threatening a lawsuit- the lady with the burnt crotch at McDonald's got $7 million, he is thinking payday here... but he is willing to negotiate. Do you turn this over to your insurance agent and watch your liability insurance premiums skyrocket, or do you accept his cash offer of $10,000 in bitcoins right now?

And then Brandi decides that the stress of having burnt poor Ahmed's weenie is too much for her, so she gets a bent doctor to certify her emotionally unfit to carry on working for a year, and since it was work related, this is a Workman's compensation issue, and the state will be looking to you for her salary for a year, and all their administrative costs. Plus, you now have to go out and hire her friend Trisha who was the cause of all this in the first place. You are down a couple of hundred large, thousands Jed, better move to Beverley, right now.

Then a couple of rival groups of young males from different colleges decide to make your hookah lounge the venue for their "who is the manliest man" showdown and words lead to some silly pushing, which leads to an all out blitz, blitz, a hookah lounge blitz... and you have $35,000 in property damage, very unamused officials from the two schools who are talking to the press about what a blight on the community having a smoking den is, and the cops who would rather spend time at the donut shop than bust up frat boys pretending to smoke weed at your place. Or one of those ignorant frat boys sneaks a little of his own special sheesha blend into the bowl, and the cop stops in right then, and you have 96 counts of contributing to the delinquency...

But I might be wrong- it's your dream, go for it. But go for it with your eyes open, and listen to the unexpected voices. They may want to offer a little of life's lessons learned already. Every balance sheet can only be accurate if it considers both the costs AND benefits.

[Tyrion]

I'm seeing a lot of bullshit negative chatter in this thread from people who *want* dank to fail. Screw them, Dank, there are always going to be people like that, but if you know in your heart of hearts that this is your path, nobody will ever stop you. 

[dank]

Maybe not by you, I've seen a hookah bar with 50+ people at once.  And they didn't have live music or nearly as big of a facility.  No worries though, it stands profitable, regardless:

48 customers/day:    $5,997 monthly profit
60 customers/day:    $10,475 monthly profit
80 customers/day:    $16,875 monthly profit
96 customers/day:    $22,632 monthly profit
128 customers/day:   $34,147 monthly profit

You seriously can't project your monthly profits until you know your overheads.   You can try to predict your monthly revenue, but you're really just guessing at the number of customers you'll get.  There'll be quiet days every week, especially after you've been open for a while.  You'll form a regular customer base, but some people will only come once or twice so you need a constant influx of new customers to keep the numbers up.  There'll be times when major events are happening and people disrupt their usual Friday/Saturday night routine to attend those events instead of hanging out at the hookah bar.  If you're aiming at the college market, there'll be times when a lot of students are out of town for holidays.  

A place that's packed to capacity on Friday and Saturday night can be not worth opening on Sunday, Monday and Tuesday night.  Indoor hospitality venues can be very busy in winter and dead in summer or vice versa, depending on your local climate and what lifestyle people tend to live in different seasons.  Few hospitality businesses make the same amount week in/week out, month in/month out over the course of a year.  Some of your overheads will be patronage-dependent, but others will be fixed and need to be paid whether business is booming or dead.

I realize this, however, this is the only way to predict profit.  I'd say it's more accurate than guesstimating out your sales for each day of the next year.  I reckon 48 customers will be achievable even on the slowest of days.  But for every slow day, is there not a good day of business?  It seems, to me, it would equalize in the long run.

Loup, Thank you first of all.  I'm not sure where you're getting all of your numbers.  The place I'm looking to lease costs about $3000/month, I've looked at myself and it looks like a very nice building.  I haven't been able to reach the real estate agent, yet, so maybe I am being lied to, though I can't see why they would do that.  I don't think $45k on air filtration is quite necessary, a $600 12,000 CFM exhaust fan could replace 60,000cu' of air in 5 minutes.  I don't plan on serving alcohol so I don't see a great potential for violent outbreaks to occur.  I'll have my employees agree to withhold responsibility for their actions on the job, though I don't see how someone could drop a coal on somebody, since they're all together in a container and go straight to the hookah.

Honestly, it seems about as appropriate to plan for these events as it would to plan for 100% capacity occupation every hour we're open.  Factoring these bizarre happenings into a business spreadsheet seems a little, well, bizarre, to me.

I'm seeing a lot of bullshit negative chatter in this thread from people who *want* dank to fail. Screw them, Dank, there are always going to be people like that, but if you know in your heart of hearts that this is your path, nobody will ever stop you. 

Thank you, Tyrion! 

[LoupGaroux]

Well.. good luck to you again, I hope you succeed with it. My numbers come from having developed the site assessments, the prototype designs, negotiating the leases, and managing the construction after producing the construction documents and getting permits. If you have gotten pizza at a Little Caesars' or Godfathers, had your haircut at Sport Clips, Fantastic Sam's or Great Clips, eaten at Quizno's, bought toys at Toys R Us, shopped for shoes at 5-7-9 or Baker's, gotten printing at OfficeMax or enjoyed cable TV and internet from Charter Communications, I had a piece of designing it and getting it there.

The air can be dumped yes, but then you need to condition that many cubic feet of new air coming in from the outside. Way, way more HVAC costs. Filtration is a better option, and required by code for most smoking establishments (although my greatest experience is with cigar bars...). $3,000 for lease costs? Quite frankly scares me. Check if there have been any Legionnaire's Disease deaths in the building, or infamous murders. Heck, somebody rented Jeffrey Dahmer's apartment after he moved out...

And yes, I picked silly examples to talk liability insurance, but you will need it. A lot of it. Disclaimers and release of responsibility will protect you just until Brandi's Daddy, the big scary Southern California lawyer whose partner shows up with filings speaking to your violation of basic human rights, and forced servitude by not living up to a reasonable standard of workplace safety etc, etc, etc. And they love to do that crap in front of TV cameras... and then you lose as soon as Mr. Click Hair Lawyer opens his mouth. The point being there are a lot, no, a hell of a lot, of liabilities that you probably didn't think of. Hot coals, horny college students, professional trip and fall specialist, these are all things that plague businesses. Do yourself a favor and add costing out all your insurance to the mix. All perils $10 million umbrella. Business property and furnishings, workman's comp, fire, flood, willful acts of vandalism and negligence (Brandi has a problem remembering to turn off the heating element under the back stock of coals...) tornado, loss of income, health life and disability for the Owner (you- who runs it if you take a day of to have your spleen removed?) theft (internal and external- for $8 and hour I am going to rob you blind, it's my right as an underpaid wage slave).

Eyes open, skeptical Spidey sense tingling full time. That's the way to do this. And pump up a better prospectus when you are really ready for investors. Real, legit investors love that stuff. They eat up a well executed business plan with coherent graphics, and well explained and logical processes. Don't just show me great numbers, show me that you did your homework, then did it again, then back-tested it, had somebody who disagrees with you check it, and then had an army of trained blind monks who do nothing but analyze business plans review it and passed a blessing over it. Followed by an audit from the accounting firm that delivers the winners on Oscar night, and a strong letter of interest from Sequoia Capital, with a picture of you with a shoe on your head on the cover, and you will find the investors to trust you with the funds to make this dream real. And you will be known as the guy who invented the bithookah.

[JMAHH]

Well.. good luck to you again, I hope you succeed with it. My numbers come from having developed the site assessments, the prototype designs, negotiating the leases, and managing the construction after producing the construction documents and getting permits. If you have gotten pizza at a Little Caesars' or Godfathers, had your haircut at Sport Clips, Fantastic Sam's or Great Clips, eaten at Quizno's, bought toys at Toys R Us, shopped for shoes at 5-7-9 or Baker's, gotten printing at OfficeMax or enjoyed cable TV and internet from Charter Communications, I had a piece of designing it and getting it there.

The air can be dumped yes, but then you need to condition that many cubic feet of new air coming in from the outside. Way, way more HVAC costs. Filtration is a better option, and required by code for most smoking establishments (although my greatest experience is with cigar bars...). $3,000 for lease costs? Quite frankly scares me. Check if there have been any Legionnaire's Disease deaths in the building, or infamous murders. Heck, somebody rented Jeffrey Dahmer's apartment after he moved out...

And yes, I picked silly examples to talk liability insurance, but you will need it. A lot of it. Disclaimers and release of responsibility will protect you just until Brandi's Daddy, the big scary Southern California lawyer whose partner shows up with filings speaking to your violation of basic human rights, and forced servitude by not living up to a reasonable standard of workplace safety etc, etc, etc. And they love to do that crap in front of TV cameras... and then you lose as soon as Mr. Click Hair Lawyer opens his mouth. The point being there are a lot, no, a hell of a lot, of liabilities that you probably didn't think of. Hot coals, horny college students, professional trip and fall specialist, these are all things that plague businesses. Do yourself a favor and add costing out all your insurance to the mix. All perils $10 million umbrella. Business property and furnishings, workman's comp, fire, flood, willful acts of vandalism and negligence (Brandi has a problem remembering to turn off the heating element under the back stock of coals...) tornado, loss of income, health life and disability for the Owner (you- who runs it if you take a day of to have your spleen removed?) theft (internal and external- for $8 and hour I am going to rob you blind, it's my right as an underpaid wage slave).

Eyes open, skeptical Spidey sense tingling full time. That's the way to do this. And pump up a better prospectus when you are really ready for investors. Real, legit investors love that stuff. They eat up a well executed business plan with coherent graphics, and well explained and logical processes. Don't just show me great numbers, show me that you did your homework, then did it again, then back-tested it, had somebody who disagrees with you check it, and then had an army of trained blind monks who do nothing but analyze business plans review it and passed a blessing over it. Followed by an audit from the accounting firm that delivers the winners on Oscar night, and a strong letter of interest from Sequoia Capital, with a picture of you with a shoe on your head on the cover, and you will find the investors to trust you with the funds to make this dream real. And you will be known as the guy who invented the bithookah.

+1 for inspirational speech.

[repentance]

dank, I linked you to this sample business plan for a hookah bar before.

http://www.bplans.com/hookah_bar_business_plan/executive_summary_fc.php#.UFmnNrIgeul

Have you at least started work on producing a similar type of document.  You'll need to put in numbers which you can back up with facts rather than guesses and you'll need to put in information which is specific to your area, but you can use it as a template if you've never written a business plan before.  

A quick and dirty way you can do research for your business plan is by using SurveyMonkey.  Get a link to your survey put in the local college newspapers and on their website.  Do the same with the Middle Eastern community newspapers and websites for your area and you'll get fairly accurate information about your potential customer base which you can then use in your business plan to justify your vision for the place.

http://www.surveymonkey.com/

There is really no way for you to realise your dream of opening the lounge without researching a lot of boring stuff.  You can't just not do it because you're going to have to provide proof of being compliant with a whole lot of laws, regulations and codes before you can even open your business.  You desperately need to know how much that compliance will cost because it will dramatically affect your start-up costs.  Without the plans for the premises, you can't even begin to estimate how much fitting out the place will cost because you simply don't know what's going to be required to bring the place up to the required standard - whether that's air quality, food preparation areas, hookah cleaning areas, installing toilets and fire exits, etc.  You've budgeted for cosmetic stuff, but haven't even looked into the more mundane things.

I find it extremely odd that you have been unable to contact the real estate agent for a commercial property.  When you say that you've looked at the property you're hoping to lease, do you mean that you've been inside it when it was a previous business or that you've been inside it since it's been vacant?  How long has it been vacant?  How did you find out the rent on the property?

[BadBear]

Will do.  Just found out, I had a huge mistake in my spreadsheet.  I was calculating monthly expenses into the weekly profit, now that I fixed it, my estimated monthly profit stands at $24,132 from the previous $15,132 figure.  This is with 96 customers/day, or 12-16 people/hour for a two hour session.

60% increase in sales already, and you haven't even gotten started. You must've believed a lot that day  .

[the_thing]

Will do.  Just found out, I had a huge mistake in my spreadsheet.  I was calculating monthly expenses into the weekly profit, now that I fixed it, my estimated monthly profit stands at $24,132 from the previous $15,132 figure.  This is with 96 customers/day, or 12-16 people/hour for a two hour session.

60% increase in sales already, and you haven't even gotten started. You must've believed a lot that day  .

+1 made me laugh

[BorderBits]

You're planning on pulling in $25k in profit each month and yet you're only going to pay your employees $8.00?  These are the people who will make or break your business.  For $8 an hour you're telling the employee that you don't give a fuck about them and that they shouldn't give a fuck about you or your business.  With such a shit wage, you'll probably have high turnover, people calling in on shifts a lot, and people stealing shit from you. 

[BitcoinINV]

You're planning on pulling in $25k in profit each month and yet you're only going to pay your employees $8.00?  These are the people who will make or break your business.  For $8 an hour you're telling the employee that you don't give a fuck about them and that they shouldn't give a fuck about you or your business.  With such a shit wage, you'll probably have high turnover, people calling in on shifts a lot, and people stealing shit from you. 

Its going to happen anyways, as dank stated he is in a college town. College students will work for low wages, and like to for simple a simple reason more money they make the less free money Uncle Sam Gives them. But according to Uncle Sam it is okay to work 20 hours a week for low wages and still get all your aid from him. The Hookah Lounge Greenville NC charges no door fee and 7 dollars a bowl, that place is PACKED Aug-Jun BUT during the summer the place is pretty dead. I have seen it to the point where you could not find a couch to sit on, people were making new friends just so they could sit and chill. Plenty of college kids work there for the NC min wage 7.25 and they did not seem to disgruntled to me, I mean they could be working at McDonalds for the same pay. Hmmm college kid wants to work...... fast food 7.25 or hookah bar 7.25 lol

[heatstroke]

You're planning on pulling in $25k in profit each month and yet you're only going to pay your employees $8.00?  These are the people who will make or break your business.  For $8 an hour you're telling the employee that you don't give a fuck about them and that they shouldn't give a fuck about you or your business.  With such a shit wage, you'll probably have high turnover, people calling in on shifts a lot, and people stealing shit from you. 

Its going to happen anyways, as dank stated he is in a college town. College students will work for low wages, and like to for simple a simple reason more money they make the less free money Uncle Sam Gives them. But according to Uncle Sam it is okay to work 20 hours a week for low wages and still get all your aid from him. The Hookah Lounge Greenville NC charges no door fee and 7 dollars a bowl, that place is PACKED Aug-Jun BUT during the summer the place is pretty dead. I have seen it to the point where you could not find a couch to sit on, people were making new friends just so they could sit and chill. Plenty of college kids work there for the NC min wage 7.25 and they did not seem to disgruntled to me, I mean they could be working at McDonalds for the same pay. Hmmm college kid wants to work...... fast food 7.25 or hookah bar 7.25 lol

Did you even read the thread?  Dank's Hookah bar is going to be packed to capacity at all times, every day of the week, every single month of the year.  No employees will ever steal from Dank's Hookah bar, and every customer will be perfectly behaved on the premises.

Here is all the proof you need.  I've taken the liberty of transcribing all of dank's market research to date that proves everything he says is true:

Don't you see?  It's like dank has figured out the cheat codes to Hookah Bar Tycoon, but IN REAL LIFE!

[dank]

Heatstroke, where in the OP did you read that?  And where did you read that Hendrix has a ukulele since he was 5?

BorderBits, $8 is a variable.  If business goes well that variable very well could change.

Repentance, the operator said they'd call me back, twice.  I'll reach them sooner than later.  I haven't been inside yet but it looks great from peaking through.

[heatstroke]

Heatstroke, where in the OP did you read that?  And where did you read that Hendrix has a ukulele since he was 5?

BorderBits, $8 is a variable.  If business goes well that variable very well could change.

Repentance, the operator said they'd call me back, twice.  I'll reach them sooner than later.  I haven't been inside yet but it looks great from peaking through.

You're right, it's not the OP, but the entirety of the thread where your monthly profit projections are something like $15k from day one, like clockwork, not accounting for seasonal changes in attendance, etc.

I made no mention of the Ukelele, but I find it hilarious that you expect me to cite sources and do research, when you've demonstrated that you have no interest in doing either when it comes to any of your silly half-assed schemes.

[dank]

They're called averages.  If you take the total number of sales in a year and divide it by the number days, you'll reach an average like the ones in my spreadsheet.  I'm not even projecting this as profit, I'm saying it is possible and realistically achievable to obtain these numbers.

Greyhawk, my error.  It's nice how you assume I didn't look it up myself to behold no results.

[Phinnaeus Gage]

You're somewhat lucky with this thread, dank, for the same consideration wasn't given to Logan with his The Hub investment request.

That said, have you given consideration as to making this venue of yours an exclusive college student hangout, a place for them to come and not study, per se, but to bounce ideas around with one another while enjoying their tokes. I envision chess sets set up, along with other games to play while in your establishment. In a far corner, I picture students building a Rube Goldberg contraption simply for the hell of it. This idea alone gives them reason to return each day to contribute to the project. In another corner, a place for a small college band to play for free (tips only) so that they can hone their act. As far as for the help, minimum wage plus tips to the help would be acceptable provided...



This is what you want the talk on the street (or on campus(es) to be):

Joe: You studying tonight?
Frank: Fuck that! I'm goin' to Danks'.
Bob: Heard they got a new girl a workin' there.
Joe: Word! I need to work on that Rube Goldberg project anyway. Let's go.
Frank: I've drive.
Bob: I love Danks'!

That said, you mentioned that you wanted to make a mil before 21, then franchise the idea. Think outside the box. Here's the hard part (no pun intended, for you'll see why in sec), you'll have to keep your 18-year-old dick in your pants, otherwise your place will be closed within a month. It won't be easy for you to not to come on to all those sexy babes frequenting your joint, let alone employed there, and it only takes one to pursue a sexual harassment lawsuit.

Later, bud.

~Bruno~

[greyhawk]

Heatstroke, where in the OP did you read that?  And where did you read that Hendrix has a ukulele since he was 5?

Greyhawk, my error.  It's nice how you assume I didn't look it up myself to behold no results.

Gelfand, D.E.: Jimi Hendrix: Musician. Infobase Publishing, ISBN 0-7910-9214-3, 2006

And you're right. I was wrong. He wasn't five. He was four.



Also Phinneas's idea is great. If I were young enough to be a student, this would be a place to go to.