How to Start a Tea Shop and Secure Financing for It?

Tea is available in abundance in India, which makes it an economical business idea. To start, you need minimum capital, manpower, and infrastructure. Here is a tea shop business plan to initiate.

Mentioned below is the step-by-step guide that may help you establish a tea shop business in India:

1. Initialising the Tea Stall Setup

Undoubtedly, establishing a proper tea stall in India is an ideal way to form a profitable business. This is because tea is a popular beverage loved by almost everyone. Due to this reason, tea stalls at any location drag the attention of multiple customers. 

2. Planning and Targeting Audience

Although the tea stall business is a small enterprise, it still requires an effective business plan comprising thorough market research. You need to plan the kind of tea stall you need to establish and determine the target audience. 

Also, you need to determine whether the stall will be selling only tea or some food items as well. Planning and targeting the audience also comprises determining the design of the tea stall and deciding the price of tea, biscuits, snacks, etc. 

3. Ownership of Tea Shop

The business owner plays an important role in determining the policy and roadmap of the business. In addition, they need to have the skill and right to make strategic decisions so that their business flourishes without hassles. 

In India, with the rise in tea stall businesses, many big companies are offering franchise opportunities to individuals planning to establish a tea stall business. So, you can commence your own tea stall or get a franchise, depending on your financial capacity and other resources.  

4. Location 

While making a chai shop business plan, another important factor to keep in mind is the location of the tea stall. This comprises the locations where tea is in demand on a daily basis, such as hospitals, office areas, courts, railway stations, etc. 

Given the high demand, owning a tea stall in such areas can be more profitable than in areas with low demand. 

5. Establishment

Establishing a tea stall needs some general utilities, which are highly essential. These utilities comprise vending machines, ingredients like tea leaves, sugar, milk, etc., along with things like kettles, cups, stoves, chairs, and tables or benches. 

 Furthermore, as a business owner, you have to decide the type of tea you want to sell. Some popular kinds of tea comprise masala tea, green tea, cardamom tea or Elaichi chai, herbal tea, black tea, iced tea, aroma tea, kesar tea, etc.

6. Investment/Raising Funds for the Tea Shop

In general, the investment in a tea stall business in India depends on its nature, size, tea stall design, and so on. However, a basic investment of at least ₹1 Lakh is usually required while establishing any tea stall business. 

 This amount encompasses all the necessities for establishing a tea stall business. You can apply for a business loan to get the required funds.

7. Legal Documentation

With the increasing number of tea lovers, the tea stall business has been increasing at a staggering pace in every corner of India. Even though setting up a tea stall is quite effortless, it is mandatory to undergo legal documentation to avoid unwanted legal consequences. 

 8. Registration

Registration of a tea stall business means obtaining a trade licence from the state government wherein you want to establish the tea business. If it is a small to medium-scale tea stall business, you can register as a sole proprietorship or partnership firm. 

Now, in case there is a ‘partner’, the firm will be registered as a Limited Liability Partnership (LLP) or Private Limited Company.

9. Licence

Obtaining a Food Safety and Standard Authority of India (FSSAI) licence is necessary. It is mandatory for all businesses involved in the production, processing, or distribution of food items. Without this licence, the business can come across a plethora of problematic situations, which may ruin its prospects.

10. GST Registration

Besides getting registered, it is also mandatory for a tea stall business to get the Goods and Service Tax (GST) registration. This is because every business needs to register themselves under the GST Act, as stated in the current GST Law in India.

Starting a tea stall or tea bar requires proper registration and compliance with legal and safety norms. Here are key requirements:

• Business Registration

Every business needs to be legally registered before starting operations. This ensures compliance with government regulations and helps avoid potential legal complications.

• Proprietorship Model

Most tea stalls operate as sole proprietorships, where the business is owned and managed by a single individual. A PAN card with required registrations is needed to establish ownership under this model.

• Trade Licence

A trade licence from the local municipal authority is required to operate legally. This ensures the business adheres to local laws and health regulations.

• FSSAI Registration

A Food Safety and Standards Authority of India (FSSAI) licence is mandatory for tea bars, as they serve food and beverages. This certification ensures business adhere to the hygiene and quality standards.

• Fire Licence

Tea bars have to obtain a fire safety licence to comply with local fire department regulations, ensuring the premises have proper fire-fighting measures.

• Shop Name and GST Number

The owner needs to decide on a business name and register for a Goods and Services Tax (GST) number if the annual turnover exceeds the prescribed limit. This enables proper tax filing and legal recognition of the business.

Securing funds is a crucial step when launching a tea business. While self-funding is an option, a business loan can help if you need additional capital.

Below is a guide on how to utilise business loan funds effectively, the benefits of taking a loan, and the steps to apply for one.

A business loan can help cover various expenses when setting up or expanding a tea business. From sourcing ingredients to managing daily operations, here are some essential ways to utilise the funds:

• Setting Up the Tea Stall or Café

Use the funds for setting up your tea stall or café, including furniture, signage, and shop renovation. Expenses may also cover rent, electricity, and water bills to ensure smooth daily operations.

• Procuring Ingredients and Supplies

A steady supply of tea leaves, milk, sugar, and disposable cups is essential. Funds can help in bulk purchases, ensuring cost efficiency and uninterrupted service.

• Hiring and Paying Staff

Your business may take time to generate profits, but employees (tea makers and servers) depend on regular salaries. Utilising funds can help maintain payroll stability in the initial months.

• Marketing and Branding

Consider implementing promotional strategies such as distributing flyers, leveraging social media, and offering discounts to attract customers. Business loans can be used to build a brand identity and attract a loyal customer base.

• Emergency and Maintenance Costs

Unexpected repairs, equipment breakdowns, or seasonal downturns can impact operations. Setting aside a portion of the loan for tea-shop contingencies ensures financial stability during unforeseen situations.

With these benefits in mind, you can apply for a business loan from Bajaj Markets. Get funding of up to ₹50 Lakhs through a simple online application with quick disbursal. Explore business loan options from Bajaj Markets’s partnered lenders below:

Disclaimer: The mentioned rates are subject to change at the lender’s discretion.

To apply for a business loan on Bajaj Markets, you need to meet specific eligibility criteria. These include age, income, nationality, credit score, and business details. Below are the key requirements:

Eligibility Criteria

• You must be an Indian citizen

• Your age should be between 21 and 60 years

• A good CIBIL score is necessary

• You should be self-employed, either as a professional or non-professional

• The business must be registered as a partnership, LLP, or private limited company

• The business should have been operational for at least one year

• The minimum annual turnover should be ₹1.5 Lakhs, as per ITR records

Documents

Once eligibility is confirmed, the following documents are needed to complete the application:

Identity Proof (Any of the following):

• Aadhaar card

• PAN card

• Voter ID

• Passport

• Driving licence

Address Proof (Any of the following):

• Aadhaar card

• Utility bills

• Lease agreement

• Passport

Income Proof (Any of the following):

• Last six months' bank statements

• Income computation

• Profit and Loss (P&L) statement

• Balance sheets for the past two years

• ITR with certified details

The Indian government offers various funding schemes to assist Micro, Small, and Medium Enterprises (MSMEs). Unlike conventional business loans, these schemes provide fixed loan amounts with specific eligibility criteria. Here are some options:

Credit Guarantee Fund Scheme (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government initiative in partnership with the Ministry of MSMEs. It provides collateral-free loans to small business owners through banks and financial institutions. Guarantee coverage varies based on the business type:

• 75% coverage for most borrowers

• 85% coverage for micro-enterprises

• 80% coverage for MSMEs in the north-eastern states

• 90% coverage for women entrepreneurs

• 85% coverage for SC/ST entrepreneurs, Persons with Disabilities (PwD), and businesses in Aspirational Districts

Pradhan Mantri MUDRA Yojana (PMMY)

Launched in 2015, PMMY offers funding up to ₹20 Lakhs under different loan categories. These loans are available through:

• Commercial banks

• Regional rural banks

• Small finance banks

• Microfinance institutions

You can apply through these institutions or online at https://www.udyamimitra.in/.

Starting a tea shop in India requires careful planning, from selecting a prime location to ensuring compliance with legal requirements. A well-thought-out business plan covering aspects like menu selection, pricing strategy, and marketing lays the foundation for success. 

Financing plays a crucial role, and securing a business loan can help cover setup costs, equipment, inventory, and initial operational expenses. Lenders consider factors like your credit score, business viability, and repayment capacity before approving the loan. 

Comparing different loan options, understanding interest rates, and choosing a suitable repayment plan can make the process smoother.

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