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

[repentance]

You are thinking about furniture when you haven't even secured a location or have a floor plan? Yikes!   

To be honest, I wouldn't want him to secure the location until it's been inspected out the wazoo, he's absolutely sure that he can use it for his intended purpose, and he has firm quotes on exactly how much it will cost to built out to the standard required by various regulations which will affect his business.  He definitely needs the plans, though, as well as detailed information on the specific requirements for toilets, food preparation areas, ventilation, fire exits, licensed capacity, noise control, etc.

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[dissipate]

You are thinking about furniture when you haven't even secured a location or have a floor plan? Yikes!   

To be honest, I wouldn't want him to secure the location until it's been inspected out the wazoo, he's absolutely sure that he can use it for his intended purpose, and he has firm quotes on exactly how much it will cost to built out to the standard required by various regulations which will affect his business.  He definitely needs the plans, though, as well as detailed information on the specific requirements for toilets, food preparation areas, ventilation, fire exits, licensed capacity, noise control, etc.

+1

I know nothing about running a small business, but common sense tells me that selecting furniture would come after all of the above. Probably long after.

[repentance]

I know nothing about running a small business, but common sense tells me that selecting furniture would come after all of the above. Probably long after.

You can certainly design a theme before doing the other stuff, and the theme you choose may even influence the type of property suitable for your venture.  What you can't do, though, is focus on the cosmetic stuff to the exclusion of the practical stuff.  There's no point in him choosing furniture for this particular property if it's going to cost him $50,000 to build it out to required standards.

[dank]

You are thinking about furniture when you haven't even secured a location or have a floor plan? Yikes!   

To be honest, I wouldn't want him to secure the location until it's been inspected out the wazoo, he's absolutely sure that he can use it for his intended purpose, and he has firm quotes on exactly how much it will cost to built out to the standard required by various regulations which will affect his business.  He definitely needs the plans, though, as well as detailed information on the specific requirements for toilets, food preparation areas, ventilation, fire exits, licensed capacity, noise control, etc.

+1

I know nothing about running a small business, but common sense tells me that selecting furniture would come after all of the above. Probably long after.

How can I budget my furniture expenses if I don't know how much it costs?  I'm just under $11,000 for 56 seats but, depending on how big of a loan I get, I may start with just the cheaper furniture, first.

[silverbox]

I'm still curious, does your steering wheel still have a rip in it dank??

[dank]

Yes.  Increasing loan request to 3000-6000 BTC, I want this place to be nice, it will be worth it.

[repentance]

Yes.  Increasing loan request to 3000-6000 BTC, I want this place to be nice, it will be worth it.

If you're going to try to borrow between $36,000 and $72,000, you're going to need to come up with some verifiable numbers for your start up costs rather than rough estimates based on guesses.

[dank]

This displays the allocation of funds with a $40k budget.  All of these numbers are verified with an exception of insurance, licensing/permits and decoration.  They are also gross overestimates based off my budget sheet, rounded up to the nearest thousandth.

[btcANGEL]

Adding beach theme to hookah bar.  Will setup subs to make rumbling wave sounds.  Wall will be the ocean.

Will there be sand and towels and college girls in bikinis?

[dank]

If by sand, you mean carpet, then yes.

[btcANGEL]

For $40k I expect real sand.

However, if you have enough underdressed college girls, no one's going to notice the floor.

[LoupGaroux]

Here's a little free market research for you... I have a very elegant hookah bar about a mile from the Rancho Loup. The building has been, variably in the past ten years, a pancake house, a martini bar, a Greek restaurant, a BBQ joint, a different martini bar, and for the past two years; a hookah bar. Background- this is a vibrant suburban community outside of Chicago, with four universities within 10 miles, and three remote campuses for adult study for other universities. The community has a much higher than the national average Middle Eastern population (12%) and a very affluent spendy 20's to 30's demographic. There are three other hookah establishments in the town of 135,000, one of which is only open on weekends. All very positive. The nearest full intersection with a light has 68,000 VPD (vehicles per day) so you can gauge how this relates to your location. Large lot, well lit, two blocks from a 6 plex movie theater, 2 blocks one direction to a Starbucks, 2 blocks the other to a Caribou Coffee. A Realtor's wet dream of a location for food/drink right?

I have now made a point of driving by each evening for the past week around 8:00 PM to see the traffic. The highest parked car count was on Saturday (predictably) with 6 cars. This evening it was just two at 7:45. I'm am going to say one of those each night is staff, so you might have one pipe going in there tonight.

Dank- while I applaud your efforts, and really do wish you every success, because damn it, entrepreneurial stories warm my jaded heart, but you need to do a lot more research and analysis before you are ready to borrow money for this idea. The interest clock is ticking as soon as you borrow the money, but I note that you did not carry a number for debt service on your chart. Thanks for the colored bar graph- that's a step in the right direction for investors! And you need to think about cash flow.

Borrow $40,000 and open the place with painfully under resourced promotion (you need to think about a radio station remote for your grand opening, a live band, belly dancers, free goodies for the first 500 guests, gimme smoking passes to get people interested and so on... $500 ain't going to put a dent in the T shirts for your staff.) and Yeah!!! People are flocking to Dank's House of Smoky Delights. It's working, and you are already planning the giant- see? I told you so post for all the naysayers... but then 30 days later another month rolls around. And that pesky staff, including my favorite tobacco bimbo Brandi, wants to get paid again! And the state wants their unemployment tax premiums again, and the rent, and the utilities and so on and so forth etc, etc, etc. Will you have sold enough bowl to service the debt, cover all the cost of the first month of operations, and set aside enough to begin to pay for the second month? Have you thought about what happens if there is a huge snow storm, or mudslide or hurricane (I don't know where you are doing this...) and no customers can come in for a week? That's 25% of your revenue stream for the month, but the costs just keep on costing.

[silverbox]

I'm still curious, does your steering wheel still have a rip in it dank??

Yes. 

Say it ain't soo..  Dank the proprietor of a styl'n Hooka Bar can't be rolling in a ride with a ripped steering wheel, YO you need to get that fixed like the very first thing..  Please add it to your budget.

Oh and btw if someone had say a few pounds of "tomatoes" and wanted to invest in your business, could you handle that action??

[repentance]

This displays the allocation of funds with a $40k budget.  All of these numbers are verified with an exception of insurance, licensing/permits and decoration.  They are also gross overestimates based off my budget sheet, rounded up to the nearest thousandth.

Exactly how have you verified the building costs when you don't even have the plans and you haven't yet checked the fire exit, toilet and ventilation requirements much less had the place inspected to see what work would need to be done to make it compliant with those requirements?  You can't calculate those costs until you have an actual plan ready for your venue because you can't just put toilets and fire exits wherever you want.  Both the number required and where they must be located are subject to local codes/regulations.  You will need sound-deadening in a space that big.  You haven't even told us what the floor is made of.  Simply covering a floor that size can run into tens of thousands of dollars, depending on the type of existing floor and its condition.

Stop just making up numbers and do some actual research on the building and what you're going to need just to make it compliant with regulations for its intended purpose.  If you haven't yet got detailed information from the real estate agent about the plumbing, the wiring and the ventilation and also checked with your local government office about the requirements for operating your specific business and also obtained quotes for getting that work done, then you cannot possibly "verify" your estimates for what building the place out is going to cost.

[dank]

This is two months rent, plus whatever the security deposit may be.  I believe it will be under $10,000 dollars.  This isn't verified, you're right, but the building has a rear entrance, good wood flooring and I have a hunch that it has a bathroom, though I could be wrong.

[repentance]

This is two months rent, plus whatever the security deposit may be.  I believe it will be under $10,000 dollars.  This isn't verified, you're right, but the building has a rear entrance, good wood flooring and I have a hunch that it has a bathroom, though I could be wrong.

How many toilets and fire exits you're required to have for your specific type of business and where they must be located is something you'll need to check with the city.  A rear entrance won't generally count as a fire exit as fire exits have to meet very specific criteria.  Given that normal smoke alarms are going to be useless in an indoor smoking venue, you'll also need to check what kind of fire alarm system you'll require.

A hardwood floor is good in some ways, but if you've ever been in a high school hall you know that a wooden floor plus a large space means a lot of sound bouncing around.  You'll need to find cheap ways to minimise that.  You'll also need to check whether fire regulations require the floor to be finished in a specific manner given the purpose for which you'll be using the property.

Actually, before you even bother with the real estate agent, it would be worth ringing the city and finding out whether there are any restrictions on the use of the property (there often are).  If there's no way that property would be approved for use as an indoor smoking venue, then there's no point in you obtaining costings specific to that property.

[LoupGaroux]

Without knowing the exact jurisdiction you will be in, for a 6,000 s.f. space you are looking at three stalls per gender, 1 of which will be required to be fully handicapped accessible. You mentioned food service. That means health department in addition to all the other headaches, it also means you will required to provide at least three new sinks, each with its own requirements, a hand sink for wash-ups, a three compartment for food prep, and a mop sink for cleaning. You will also be required to have a certain type of ceiling over the food prep area.

[dank]

Is there really regulations about the number of toilets a place must have?  I said I'm not preparing foods, only prepackaged.

[repentance]

Is there really regulations about the number of toilets a place must have?  I said I'm not preparing foods, only prepackaged.

Yes dank, there are.  It depends on the type of business (some businesses aren't required to have toilets which are open to the public), and the rules will vary by location.  So will the rules regarding food and beverages.  If food - even pre-packaged food - is being consumed on the premises, your city may have specific rules in relation to that.  We don't know the specific rules for your city which relate to indoor smoking venues or businesses where people consume food.  You'll have to check those for yourself.

There are often specific rules about how toilets open to the public must be cleaned (both how often and using what types of products) as quite a few diseases can be spread by the oral-faecal route - ie, someone with diarrhoea uses the toilet and doesn't wash their hands properly.  They then transmit whatever virus they have to the doorknob, which is touched by other people when they leave the toilet.  Both the original offender and those other people are then going to be putting their fingers on the hookah mouthpieces.  Rotavirus or C. diff outbreak ensues.

While your exact local regulations may vary, here's a list stuff a hookah lounge in Nevada got busted for.  I've left out the food service stuff.

- Toilet facilities for employees inadequate, inconvenient, unclean and/or not in good repair. Covered trash cans not provided. Doors not self-closing.
- Unsuitable hand washing facilities, unclean, inaccessible and/or not in good repair, with unapproved soap, towels and/or waste receptacles not provided.
- Facilities for washing and sanitizing equipment and utensils unapproved, inadequate, improperly constructed, maintained and/or operated.
- Unclean wiping cloths, stored in an unapproved sanitizer, and/or unrestricted in use.
- Non-food contact surfaces and/or cooking devices not maintained and/or unclean.
- Improper lighting and/or ventilation, ventilation hoods and/or filters improperly cleaned and/or maintained.
- Plumbing and/or fixtures improperly sized, installed and/or maintained. Plumbing and/or fixtures improperly drained.
- Floors, walls, ceilings, improperly constructed and/or installed. Not in good repair and/or clean

http://www.city-data.com/las-vegas-restaurants/Tangerine-Hookah-Lounge.html#ixzz274tqVn3j

I also had a quick look at hookah lounges and bars for sale.  Even with other income streams attached, I couldn't find one claiming a revenue of more than $180,000.  Their profit was listed as being in the low 80k range, but then you have to take tax into account (and repayment to lenders).

[dissipate]

Is there really regulations about the number of toilets a place must have?  I said I'm not preparing foods, only prepackaged.

You are asking for 10s of thousands of dollars worth of loans and you are asking this question now? I'm shocked that there are people in this thread entertaining this by giving you information and advice. 

Oh wait, I forgot, in the beginning of the thread you clearly stated that the strategy is to figure out everyone on the fly. My bad. Carry on then. Get the money now and figure out those pesky details like toilets later.