The Modern Water Business The Cost of Starting A Water Refilling Station A Guide For Small Traders (2021 Updated)

The first time I bought a 1o liters of water from a water ATM in March of 2018, I realized how the cost of clean water was becoming cheaper. However, back then, these businesses were few.

Fast forward to the present.

In almost every busy street, you can’t walk for a while without seeing a water purification business.

The business is right at the doorstep. And it’s booming. Anyone with the right capital can start it.

But how much does it cost to start a water refilling station? To start a water refilling station, it will cost you at least Ksh. 500,000 when on a budget. However, to start the business with a comfortable capital, you’ll need a total of Ksh 1.85 million to invest in more performant equipment, industrial standard installations, and business permits.

As you can tell, there’re a lot of variables unsaid in the above response.

That’s why, in this article, we’re going to breakdown the costs of running the business piece by piece.

In each breakdown, I will share with you tons of invaluable tips so that you can feel comfortable knowing what types of equipment to purchase and with what projected cost.

With that, let’s get into the details.

Water Refilling Startup Cost: General Expenses Breakdown Table

Before getting into the details, let’s have a general overview of the projected costs of starting a water refilling business.

The items are not in any specific order.

Also, note the following:

• I’ve provided a variety of equipment for your selection – we’ll get into a detailed topic later on the selection criteria.
• Furthermore, the cost of acquiring a specific equipment differs depending on the capacity and the output rate.
• Besides, the costs I’ve provided below favors a small trader with a limited budget.

For an investor looking to invest in a water processing plant, and you need an in-depth cost analysis guide, this guide will not give you an in-depth cost breakdown.

However, you will get an overview of what to invest in.

There are invaluable tips in every section. You will find them useful.

But for extra details, check the references section to get our list of recommended vendors at the end of this article.

The Table of the projected cost for equipment and other expenses for starting a water refilling business

Which Water Purification Machine Should I Acquire for A Budget?

With the previous tabulation of all the equipment and expenses, I suppose you’re wondering, of the 3 purifications machines, which should you select for your business.

But first, as noted earlier, the figures we have provided above are as per the lowest capacity of a water purifier we’ve found the majority of vendors offering.

If you want a water purifier with a higher output rate, kindly contact a verified vendor for clarifications.

So, let’s get back to the answer.

The answer to this question has two angles to it.

1. 1The type of water you’re likely to receive from your suppliers
2. 2And the size of capital you have at hand.

Below is a detailed discussion.

Angle 1.What’s the type of water, Are you likely to get from your supplier?

Here, what you should know is that there is either fresh water and hard water.

Freshwater is water with low impurities in it. It means the water has low fluorides, iron, and suspended solids (Read this article on this subject for your in-depth understanding).

On the other hand, hard water is totally opposite of the freshwater. All the impurities we’ve mentioned are available in the water.

In either case, it will determine the type of equipment you’ll invest in.

As a result, you must know the type of water you’ll get from your supplier to make the right purchasing decision.

So, let’s dive into the purification selection criteria below.

How to select the right water purification machine for the budget.

For the freshwater supply, choose the freshwater purification machine. 

Note the water source should be from a spring, freshly supplied by the county council (in Nairobi – kindly make inquiries from your locality), and other natural sources.

This will mean your initial investment cost on this machine will be Ksh. 220,000.

It’s the cheapest option as it does not have those extra mechanisms for purification.

Its work is much easier than the ones we’ll discuss below.

If the water is fresh but has few fluorides and fewer dissolved solids, choose the reverse osmosis system.

It will do a better job by purifying this type of water.

What that means, you will be looking to invest Ksh. 280,000 into the equipment.

However, if the water you will get from your supplier will have high levels of impurities (fluorides, iron, and suspended solids), go for a general-purpose water plant.

This machine is built to do the heavy lifting.

In terms of investment, you’re looking to invest a whooping Ksh. 330,000.

Of the three available options, this is the most expensive water purifier because of its additional functions.

Why Choosing The Right Machine For A Specific Water Type Will Be Good For Your Water Business?

I know this question might bother you, why all these types of machines?

Of course, at first, I was asking the same question too.

So here is the answer.

• To safeguard the quality of the water output – you see, every water purification machine has custom parts designed to handle a specific type of water.We have seen that in the previous section. Of course, the general-purpose water plant can work in all circumstances. But if the water you’re receiving has high impurities, going for the freshwater purification machine just because it is cheaper will ruin your business. Your customer will notice the difference in your water quality compared to a competing trader who bought the right purification machine. So, ensure you’ve safeguarded your customers’ interests by going for the right water purifier. I recommend you don’t start selling water till you get the clearance from the water purification department.
• For your machine to have a longer life – this is the part where you use the purification machine for its intended purpose. Don’t try to be foxy because you want to cut the cost of investment. That attitude will revert to you as a hefty investment in the future when the current machine is broken because you did not follow the instructions.

How Do You Know The Type Of Water They Are Supplying So As To Know Which Purifier To Buy?

In every town or city, there are certified labs to test water quality. Your first plan of action is to take a sample of your purified water to the lab, pay for the services, and wait for the results.

Something To Remember

Remember, before you make any sale from your water plant, make sure you have a clean bill of health from the labs. It will save you lots of headaches down the line. For instance, it will clear you from having bad blood with KEBs or even fix the installation faulty caused by the company earlier before you start the business.

Similarly, to ensure you get a freshwater supply, there’re KEBs satisfied water distributers. These should be your alliances. They’ve already gone through all the procedures, and they have been certified to distribute the water.

A reliable supplier will help you achieve two things:

• You will cut down the acquisition cost of a water purification machine – You already know which one.
• And with proper relationship cultivation, your supplier can help you forego the KEBs license, among other costly business permits this business faces. We’ll discuss that topic later in the article when dealing with cost of the business permits.

If you can’t get hold of a certified water distributor, you will have to get your own water source. As a result, you will have to get the necessary business permits all by yourself to be on the good books of the authorities.

Angle 2. What’s your budget? 

As you can tell from the previous discussion, there’re several factors that will determine the budget of the purification machine you’ll be buying.

Those factors are almost not negotiable. If one variable is missing, it will affect the bottom-line of the other.

However, here is a guideline you can use to ensure your budget stays at minimal as possible.

• The type of water you’ll be receiving will affect the cost of the purification machine you’ll be investing in – if you’ll be receiving a fresh water supply, the price of the purification machine will be lower. By now, you already know you’ll be investing Ksh. 220,000, a Ksh. 110,000 less from the general purification machine. However, if the water supply will have more impurities, your budget will be higher.
• The availability of a certified water supplier – if you’re lucky to have access to a reliable certified water supplier, the chances that they’ll be supplying freshwater is high. Meaning, your cost of acquiring the purification machine will be lower – the opposite holds. Besides, you can take advantage of the partnership and get a franchise, thereby taking advantage of the licensing, as we’ll see later in the article.
• Do you want to provide high quality water services? – this is out of the question. Of course, for a competitive advantage, always favor your customers. They’ll always reward you with higher returns and loyalty. Avoid greediness because it always comes with hidden costs.

With that guide, I believe you have a way to determine which water purifier to invest in. Always do your background checkup first to determine the next step.

In the next section, let’s have a quick discussion on how to select a filling station.

Of The 3 Filling Stations, Which Is the Best for The Money?

In this section, you don’t have to worry much about issues like…

…which water type or reliable certified supplier or other technicalities you have no control of.

Here is why.

While choosing a filling station for your business, you have full control over which one to select of the three options in the table.

• Normal filling station- manual type
• Water vending station ATM with a digital control unit (PLC)
• Coin-operated filling station

Here are the 2 main criteria to use when selecting the water filling stations.

1. 1Your budget
2. 2Preference for convenience

Your Budget: Does your capital allow you to invest in an HIGH-END water filling station?

What it means, if you have heavy capital backing your business idea, you’ll invest in the equipment that will give you more value for the money.

However, I usually say, upgrade as you go if your capital is limited.

Don’t be intimidated that your station doesn’t have a high-end filling station. You can always upgrade later once the business gains traction.

So, don’t worry if you start with the manual filling station. It’s slow, but still, it does the job.

Preference for convenience

Here the preference for convenience means:

1. 1The filling stations give you better options than the other ones. The additional functions mean a deeper benefits. Let’s expand on that in the next points.
2. 2You’re saving time by increasing the speed – for instance, the Water vending station ATM with a digital control unit (PLC) has an output speed of 900ltrs/hour. It means, if you are prospecting for high traffic, it will serve you better.
3. 3You’re saving both times, cost of extra equipment, and controlling theft – the Coin-operated filling station gives you more options here. It even has a bottle riser, which may mean in the meanwhile, you may forego investing in a Normal washing sink. Likewise, the coin-operated system gives you a cleaner way of tracking your sales.

In any of the above options, what plays a bigger role here is your capital.

With the tips I have shared, I believe you can make better judgments.

However, don’t forget to make further inquiries from your vendor.

Installation Costs: How to Get the Best Value for Your Money.

We won’t delve deep into the specifics of this topic. It is because it’s hard to generalize the cost of installation. And there are also so many variables involved.

But I will share with you a few tips when contemplating installing a water refilling station.

In this case, we’ll group the water installation cost into the following 3 groups.

1. 1Costs related to the general shop installations
2. 2Costs related to Equipment installation
3. 3Costs related to the Branding of the business

Costs related to the general shop installations

Once you have identified a perfect location for your business, start taking the necessary steps towards ensuring the shop is ready for the launch.

The following will be the expenses you’ll be incurring in this category.

1. 1The cost of renting the premises
2. 2The cost of electricity
3. 3The cost of renovating the shop (Floor, ceiling, walls)
4. 4The cost of installing shelves

Of the three costs, renovation expenses are higher and time-consuming than the rest. However, this will depend on the status of the shop. A shop with high renovation needs will require more cash to fix it. The vice-versa holds.

Here, the general rule of thumb is to ensure you hire an experienced contractor to design a high-quality outlook of the business.

The shop should have an outlook that shouts we are clean and friendly.

White color and blues are usually the themes for the business. We generally associate them with serenity, tranquility, and cleanliness.

Something To Remember

When it comes to location selection, ensure the location is along a busy street, but not close to dumping sites. You need your business to look clean and portray a healthy outlook. You will not only look professional, but also boost your customers’ confidence when buying your purified water.

Costs related to Equipment installation

Mostly, when it comes to equipment installation, most vendors who’ll be selling you the equipment, they’ll offer you free installation service as an after-sales service.

However, if you’ll be importing your equipment or buying the equipment from a vendor who does not offer installation service (which is a bad idea, stay away from such vendors), you’ll have to pay for the installation service.

Costs related to the Branding of the business

At this stage, you’ve installed the equipment, and the shop is ready for the business. But the final piece remaining in the puzzle is the branding.

What you have to do is to contact back your interior designer. This company will come up with a beautiful printout and the theme that goes in hand with the type of business you’re offering.

A tip on this one

Visit several water refilling businesses near you to gauge the level of their competitiveness on their quality of branding. Never offer anything less than them. Ensure your business shouts we are superior.

Alternative, mostly you’ll franchise the business.

So, the company you’ve entered the franchise with will dictate to you their standard printouts for branding your business.

Licensing Acquisition: How To Partner With The Water Distributers For Permit Cost Reduction.

Earlier I promised we will revisit this topic for an in-depth discussion.

Therefore, let’s quickly look into what it means to have your business fully licensed.

First, the current cost for KEBS certification is around 102,000 per year.

As you can tell, the license is costly for a startup.

However, if you partner with a reliable water distributing company, you can use their licenses to cover your business. This is how new traders get into the market despite the high licensing fees in Kenya.

So, let’s have a breakdown of other types of must-have water business permits to comply with the authorities.

The table below shows a full annual business permits costs for a refilling water business

In the end, there is one simple conclusion, the business licensing is way above the roof. An average trader like yourself may find these licensing fees intimidating to dare venture into this business.

So, what’s the alternative?

Of course, here, you have to take a second route. And that’s the franchise route. That’s why I noted earlier to check with this section.

Unfortunately, we won’t delve deep at this stage on the franchise.

I’ll leave a link below this article to a vendor willing to show you the ropes of setting the water business without all the licenses we’ve listed above.

Something to remember

 Ensure the deal you’re getting is a pure franchise – not a local arrangement without proper documentation..

Sourcing The Water: How Much Is The Costs?

This is a huge topic to discuss with the limited stage we’re having here.

However, here we will recommend two options for a small trader:

1. 1Water from the municipal council
2. 2Water from a licensed supplier (Most Recommended option)

Water from the municipal council

Generally, this is the water you’ll get from the tap water. Often, you’ll have to have all the necessary licenses to opt for this option.

Still, your landlord owes to agree with the terms of business. Filling a 5000+ water tank twice or thrice a week won’t be something your landlord will simply shout loud, yeah, sure, let’s do it.

The good thing with this option, the cost of water will be way too cheap.

However, having noted that, make sure you contact the necessary authorities to ensure that this option is available for you.

If not, you’ll have to consider the next option.

Water from a licensed supplier

The next and the most ideal option for you is to get water from a licensed supplier.

This is the safest and the best option we’ll recommend for you here in BiasharaTalk. The chances of you landing in trouble with the authorities is so limited.

When it comes to the cost of sourcing water, you’re looking for Ksh. 2 or Ksh. 3 per liter.

It’s a fair price compared to the selling price per liter.

But that is a subject to discuss in the topic of profitability.

For now, let’s stick to the startup costs.

Other Expenses Related To Starting A Water Business.

Here we’ll briefly look into the category of:

1. 1Other Equipment Costs
2. 2and the Recurrent Expenditures/Others.

Let’s have a detail discussion on each of the category

Other Equipment Costs

These are equipment like:

• washing sink,
• packaging bench,
• purified water stainless steel holding tank
• raw water storage tank
• Other that I did not include in the table are like bottles, labels, and equipment related to packaging.

In this context, I have not given much weight to packaging. This is because, at this stage, you will be operating on a small scale. All the packaging elements will require a small capital investment.

At the startup stage, let’s not give much weight to it compared to the fundamentals. However, it is fair for you to know this is an expense you will likely spend on. 

Also, in most cases, packaging will be limited as most of your customers will be the walk-in type.

On washing sinks, in the table on the projected cost of running a water business, I have tabulated two different types of washing sinks. The acquisition of either will depend on the size of your capital and the market potential.

If you’re projecting for a fast market that will be consuming bottled water at a high rate, a bottled machine is a must acquire. If most of your customers will be walk-ins, all you need is a normal washing sink.

Also, if you’re planning to acquire a packaging bench, ask yourself whether it’s a worthy investment at the initial stage. At first, you may not need it. But as the business grows, it will become must-have equipment.

The purified water stainless steel holding tank and the raw water storage tank is a must-have. Here go for the tank with holding capacity within your capital reach and still serve your market without frequently refilling your tanks.

Something to remember

The frequency of refilling will affect the cost of running the business. 

Recurrent Expenditures/Others

These are generally your overhead costs as the results of running the business.

As you will notice in the table, I did not include their estimates. It is because they vary from place to place.

Therefore, giving them a specific figure will appear like we are trying to dictate the standard operating costs – these expenses differ from one locality to another. There also other unknown variables affecting them.

It will be prudent to omit them but mention their existence.

So, take your time and do a little bit of research on how much it may cost you to rent, pay electricity, or hire a person in your locality.

You Now Have A Detailed Guide On Cost Of Starting A Water Refiling Station

It’s now your turn.

Make sure you have all the necessary equipment ready.

Your shop is furnished and branded to send the correct message to your prospects.

And ensure you have complied with the authority.

As you know, water is sensitive. Small contamination can be fatal, damaging your reputation, while it provides a perfect condition for you to exit the market.

I bet you don’t want that.

Be honest and maintain the cleanliness of the highest value.

With this guide, I am sure nothing is stopping you from starting your own water refilling station.

Go and get started.

However, if you have a question needing answering, or you noted something we owe to add in the article, share with us in the comment section below. We’ll get back to you with a suitable response.

Refences:

• Water Business Kit Kenya (A research conducted in 2013 on water business in Kenya – Download it as an in-depth guide)
• Saset Technical Services – Suppliers and have tiny guides on your way around starting the business. I recommend you check with them on their equipment and advisory on licensing.

related resources on starting a business

• 14 Best And Wrong Reasons To Start Your Own Business: An In-depth Guide For Realigning Your Whys
• 5 Reasons To Start A Fruit Business in 2021: Is It Profitable?
• Starting a Timber Selling Business in Kenya
• Building a Successful Furniture Business from Scratch