How To Start a Coffee Shop
(30 Tips of the Retail Coffee Trade)
Want to start a coffee shop? If you are exploring the “idea” of starting your coffee business, we are happy to have you here! To be sure, we offer an unprecedented amount of free and continuously updated information on CoffeeShopStartups.com to help you explore “the retail coffee business”. We discuss coffee entrepreneurial topics that may be important for you to consider before you actually start your coffee shop business. Whether you want to open a drive-thru espresso stand or you want to open a coffee shop with little money, it’s all here for you to explore.
Most of the time, many aspiring coffee business owners simply don’t know where to start. Our aim is to break through the fog and provide you the relevant non-gimmicky information that you need to start, open, and launch your coffee shop successfully. Whether you want to open a coffee stand or your full-fledged café or bakery, we believe our topics can help you get your coffee business plan started. In this article, we’re going to explore a over two dozen tips to help get you thinking about the planning of your coffee shop.
Ultimately, we provide an incredible and unique coffee business startup kit that is unlike any other out there. Listen to the expert advice of current and former coffee business professionals and managers. This exclusive “behind the scenes” resource will help give you an unprecedented view of what it’s like to start your own coffee business – including the decisions, rewards, regrets, and successes.
While it may appear to be easy, opening a cafe or coffee shop business requires a lot of insight. We hope to provide you with enough insight so that you can feel confident in opening your cafe business successfully.
The following is a list of tips on how to start your coffee shop business:
1. Determine If Owning a Coffee Shop is Right For You
Starting a coffee shop business can be viewed through rose-colored glasses. The idea of owning a coffee shop can be, well, “romantic.” We may have a lot of ideas just how wonderful it can be – how we would decorate it, the poetry that will be read on weeknights, or the music that will be playing… But the reality often comes too quickly – bills, paperwork, taxes – and broken equipment. Before moving forward with your business plan, you should determine whether or not being a coffee shop owner is the right fit for you – and your long term plans. There are many reasons why a coffee shop fails, and this element is certainly one of them.
2. Get Your Personal Finances in Order
When you start any business, you will want to make sure that your personal finances in order. The investment and risk you take shouldn’t put your livelihood at risk. In other words, you shouldn’t bet the farm when it comes to your coffee shop venture. You will want to make sure you have enough cash flow to keep the lights on, pay for your basic living expenses, etc. Understand where you need to draw the line. I’ve known several seemingly smart coffee entrepreneurs rack up tons of personal credit card debt to finance their coffee shop. Having a coffee shop business plan will help you determine just how much money you will need. Begin to plan out how you will separate your money into two different categories: one for your personal needs and the other is your actual business funds.
3. Learn as much as you can about coffee
Coffee is a complicated drink. There are 1000 flavonoids that make up the taste of coffee. Any combination of these flavonoids can alter the taste and texture of a coffee drink. Consequently, there many, many, many roasting profiles and blends (or single origin) that are waiting to be discovered. (This is the fun thing about coffee!) But when it comes to your coffee shop, which will you serve? I recommend spending some time learning about coffee by reading books, attending coffee events, seminars, and cuppings. Not only will you make new friends but you’ll often come away with even new information and you will expand your palate. If you live near a large urban area, chances are you will some type of event where you can rub shoulders with other coffee professionals and enthusiasts.
4. Explore Local Coffee Roasters
You can either roast your own coffee beans – or you can select a coffee roaster who will deliver their coffee to you for your customers. Learning to roast your own coffee beans is a skill unto itself and requires tons of practice and skill development. While roasting your own coffee beans can save you significant money, you probably already know that roasting your beans – while it will bring down your expenses in the long run – will it take up much of your time and it will require extra capital, including money for a coffee roaster, equipment installation, and administrative effort to coordinate purchases and deliveries. You may also have to hire additional staff.
Still, you will want to explore local roasters for your coffee business. Having well-roasted local beans will be important to the experience your coffee customers receive. Start exploring local roasters early. Not only will it be fun, but worth it. Dont know where to start? How about trying a local roaster whose coffee is already served at you local indie coffee shop?
5. Start Your Coffee Business Plan (Use our template to help)
If you start a coffee shop business, you will want start your business plan early. The act of writing out your thoughts and ideas in a cohesive and comprehensive manner – in a coffee shop business plan. You will need to show your business plan to your investors or, at the very least, your property manager. Having a business plan will also help you to figures out your budget – and a number of other essential items. Our coffee shop startup kit provides you with a template to help you get started. By following our coffee shop business plan template, you be on your way getting the help you need to start your coffee shop business. For many of us, getting motivated to start a business plan for our coffee shop is a lot like going for a jog at 4:30 am – it sounds great but who really wants to do it? Only the motivated! Well, we’ve taken the “ugh” out of writing a business plan with our coffee business plan template. In just 30 minutes a day for a week, you’ll be done.
6. Determine Your Coffee Business Concept
You can (and should) start developing your coffee shop business concept early and without spending any money. You should be crafting what your concept and getting those thoughts on paper! This is where you turn your dreams and ideas into actual concepts that are on paper. Consider detailing your concept in your coffee shop business plan – and continue to refine it as you grow out your business to suit your budget realities. Opening a coffee shop business starts with day dreaming about your concept. Getting your coffee business concept down on paper will help you forge your way forward.
7. Determine Your Coffee Shop Menu
Figuring out your menu for your café will be the central to your business planning. Without it, you wont be able to determine your coffee equipment needs, your estimated budget, your space requirements, and thus, your location. Spend some time figuring out your menu. Visit potential vendors. Explore your options, then move forward to the other important matters. While coffee (and tea) might be your central focus, other tier products will play an important role in expanding your average ticket price.
8. Explore Locations for Opening a Coffee Shop or Drive-Thru Stand
Your coffee shop location and subsequent lease will either maximize your potential business success – or disable it. Your coffee shop business’s location (and the terms of your lease) will play an important role in your overall bottom-line and survival. So, as you would imagine, you need to start early with this part of your plan. Explore multiple locations. Talk to neighboring businesses. Work on your business plan so that you can quickly give your plan and proposal to the owner or property manager of your future location. Make sure you take the time to count customers. Analyze existing competition and substitutes. In our coffee shop business startup kit, we offer a great discussion on your lease/location – I recommend listening to it before you even start looking.
9. Look at the Existing Market (Competitors, Substitutes)
Who are the existing competitors? What will their reaction be? Who are the substitutes? While you may not have direct competitors, the substitutes also play an important role at filling the needs of your costumers’ wants and needs. Examine analytically, but don’t be afraid to use your gut feeling about a specific location. If you’re not getting a good vibe, then it may not be a good place to start a business there. Depend on the math, but trust in your gut feelings too. Once you find several locations, then you can then look at the terms of the lease.
10. Consider your local laws
The city or county you are in will determine the framework for your operations. Taxes, employment, codes, regulations can all be impacted. If you live in an urban area where many local cities and counties are smashed together (and difficult to tell where the borders are), a small change in location – from one street block to another – can dramatically impact your coffee business. For example, one city or business district may ban certain signs from being placed on the outside of your business (yes, this happens often). I have met many businesses who have suffered simply because they were not able to let anyone know they were there – or that they were open! Many business districts within a city can also impose additional regulations to promote a cohesive shopping experience, etc. You should just be aware of these. Your taxes can also be impacted. No doubt, some retail businesses fail to collect the right percentage of taxes only to be hit with a big expense.
11. Explore your coffee equipment options
Your coffee equipment is what allows you operate your coffee shop successfully. Having a quality equipment that works when you need it to will be imperative. Getting the right equipment for your coffee shop depends on what you are selling and what your volume of sales will be. (Therefore, you will need to calculate your estimated sales before buying your coffee equipment). Having the wrong equipment will not only cost you more money in the short run (and long run), but will can also cost you in lost sales if your coffee equipment cannot not handle the sales you may get. *We want to note here that our Coffee Shop Startup Kit contains an excellent hour-long discussion on coffee equipment that you will want to hear before you buy your equipment.
12. Determine Your Initial Startup Costs
Starting a coffee business is a significant expense. When you buy or invest in anything, you will want to know just how much it will cost before you spend any significant money. Most of us already know this: we need to determine our startup costs before moving forward. And yet, true question here is, “how?” How do you determine your startup costs? In our coffee startup kit, we help you determine your startup costs by providing you the template you need to get going. If you want to start a coffee business, determining your startup costs will help you move forward.
13. Determine Your Break-Even Point
It’s hard enough to start a business with knowing key benchmarks. But not having any idea of what your break-even point is, will make it that much harder for you to reaching profitability. Determining your break-even point isn’t just about numbers, but it’s branding, service, and product offerings. The greater value you create, and subsequent branding, will help you increase the value of your products (AKA your pricing scheme). This greater value per sale will help you reach your break-even point and reach profitability. We’ve spent a lot of time creating an easy-to-follow and relevant guide that discusses these very important aspect of your business, which comes with our coffee shop startup kit.
14. Determine How Much You Need to Borrow, Steal, or Beg (Just kidding on the last two)
Knowing your costs, break-even point, pricing strategy, will help you lay out your financial picture. Put everything on the table. Next determine, how much you have to invest. Finally, determine how much capital you will need. My recommendation is that you review your numbers twice, three times, and four times for good measure – then anticipate spending about 20% more. Somethings may costs more, other costs may be surprises, and yet other costs may be the result of delays. Of course you want to minimize these as much as possible. What you don’t want to do is fund your project 90% of the way – and fail because you could secure or plan for the last 10% of expenses. In other words, make sure you will have enough funds to reach your break-even point. You coffee shop business will need money to run. Having enough funds to until you reach sustainability is critical. Your business plan will help you with this but you will still need to do that leg work and critical thinking for it to work out.
15. Establish Your Business Structure (Such as with an LLC)
Having a legal business structure will help protect your personal assets. You will do this in your prospective states. While you can get a service like LegalZoom to help you, you may simply be able to do so online yourself. Either way, you will want to establish some type of legal entity for your coffee shop or coffee stand.
16. Explore Vendors (For additional product lines, such as bagels, pastries, etc.)
This is the fun part about starting your coffee shop business. Explore the vendors you will work with. I always recommend to start looking at local business. Local business are often willing to establish local accounts with coffee shops and coffee stands. Not only will your account deliver profits for them but will help their brand awareness. Buying locally leaves a good taste in the mouths of your customers. Additionally, buying locally may mean that your customers may already know the products you are serving and may be more apt to buy them. Nevertheless, you will want to determine what their contracts are – what are their daily, weekly, and/or monthly minimums. What is there policy for non-sales or defective products? Additionally, what will your customers want? How will you like working with the people at these companies? All these will play a part in your decision making. Start early and have fun!
17. Explore, Meet, and Determine Health Department Regulations (Others)
Your local health department will be a prominent figure signing off your coffee shop or coffee stand’s readiness for business. You should determine who your local contact will need to be and work with them. Most health department agencies want you to be successful. Our coffee shop business startup kit offers an informative look at one of the nation’s busiest departments (when it comes to opening a coffee shop). By listening to our exclusive discussion, we are confident that you will be able to increase your knowledge base – and determine what to ask your health department in your locale.
18. Revisit Your Finances, Adjust Your Costs as You Learn More
As you move forward with your coffee business, there will likely be changes and adjustments that need to be made. This is natural and should be expected. You should make sure that you codify these changes in your business plan and other calculations. Making sure all your variables are updated and accurate will help you better determine your on-going and fluctuating needs. This, in turn, will help you make better financial and purchasing decisions.
19. Complete Your Coffee Business Plan (You will need to do so for the next step)
Completing your business plan will be more important than you think. While it may seem like “busy work”, it’s really prompting your brain to do the hard and thoughtful work of calculating your business.
20. Explore a Point-of-Sale System
Having your POS system ready to go will take some thought. You may make your decision based on your choice of accounting software, ease-of-use and implementation, or fees associated with every transaction. Like the other recommendations, it’s always best to start early. Your POS system can I either make your life easier (with accounting or inventory management) or it can slowly bleed your bottom line. One thing is for sure, as the owner of a coffee business, you definitely have options. Making sure it’s the right one for you (and your customers) will have an immediate impact.
21. Open a Bank Account
Opening a bank account early – with the actual name of your cafe or coffee business will allow you to better manage your business finances without co-mingling your money. That is, separating your personal money from your business money. Come tax time this will help ease the money headaches.
22. Determine Your Branding
This is also the fun part. Naming your coffee business and developing your business brand. From the concept, colors, to the logo, your branding will play a key role in the perception of value that your customers will have. Spend time and thoughtfully cultivate your brand. If you need help with your logo and other graphics, consider utilizing a professional online from services like UpWork (formerly Elance).
23. Get Your Coffee Business Website
Having your own website will be important for your branding – and for being able to share your story with your customers. It also serves as the main platform or “hub” for all of your social media efforts. And unlike social media sites, you completely control the content, look, feel of the website. Additionally, you can offer gift certificates, pre-paid cards, merchandise, coffee beans, etc. Having a website and “claiming your brand” is valuable to your business, as a whole. You can utilize it to strengthen and defend your brand when necessary. Fortunately, having a coffee business website doesn’t have to cost so much money. For more information about having your own coffee shop website, visit our previous post on the subject.
24. Get Training (Look for Baristas To Hire)
Having a training program for your new hires (and for your established baristas) is important. Hiring a coffee education consultant can be advantageous. Training allows your staff to be the best that they can be, allow them to improve their skills, and deliver a consistently good cup of coffee. Your baristas are important to your business. Investing in your baristas will not only improve morale, deliver more quality coffee, but also reduce turnover. We’ve written extensively about hiring baristas before so we wont delve much into it here. However, we always believe that hiring for personality and trainability is more important than experience.
25. Have a deep understanding of Your USP (Unique Sales Proposition)
As a coffee business in your community, you should be aware of the value you provide your customers. Know your competitive advantage and what your USP is. This will help you strengthen your position in the market place, train your employees, and provide you a place to focus your marketing efforts. Detail your USP in your business plan.
26. Determine Your Pricing Options
Your pricing option will play a key role in your ability to turn a profit. Yet, if some markets, your pricing will impact sales and repeat customers. Getting the “pricing matrix” right will be important to your ultimate survival. In our coffee business startup kit, we provide a good discussion of your pricing options that we recommend you read. Implement those strategies that we provide in a manner that works for you.
27. Create a Time Line
As with any planning, establishing goals and benchmarks tied to an approximate time line will be important to your planning. Figuring out which items still need to be completed and those who are already complete should be written somewhere. Having a time line will help propel you into taking care of starting your coffee business in a more effective and efficient manner.
28. Establish an accounting system
Whether you utilize software like QuickBooks or get a bookkeeper, establishing an accounting system before you open your café will be important. Your accounting system should help you keep track of your income and expenses, your inventory, losses, and payroll. Maintaining an updated accounting system will not only help you pay taxes, but it will also help you make decisions about where to allocate resources. It will help you better maintain inventory and where your biggest gains and losses are coming from.
29. Get Worker’s Comp Insurance
In nearly every state, you will need to get Worker’s Compensation insurance. This will not only satisfy the requirements in your locale, but also serve to protect you and your business assets. You should be proactive with your business about getting workers’ compensation insurance and general liability insurance for your business. Not only is it the law but it will help you sleep better a night. Don’t take our word for it, ask an insurance agent in your city to help you determine what is right for you and your café.
30. Put it all together for a great coffee shop business
Putting it all together takes work. Opening a business requires a deep commitment. We believe it’s a labor of love. While money and profit may be part of the benefits, maintaining a successful business requires knowledge and planning. Our aim is to help you process your thoughts and ideas in a manner that allows you to better plan and execute your coffee business planning.
What Else is On Your “Coffee Shop” List?
Starting a coffee shop business requires many elements to work together. This list of course, isn’t a complete list. But it’s a good start. Go through them and see where you can made some headway. Take note of where you need to take some time to learn about the topic and learn as much as you can. Remember, when it comes to your dream coffee business, the more information you have is empowering.
Here at CoffeeShopStartups.com, we provide a lot of free resources for you to get started on your own coffee shop business planning.
Whether you want to start a bookstore cafe or a drive-thru espresso coffee business. Topics that are important to new and aspiring coffee business owners are always being published or updated. We encourage you to seek the knowledge you need to start your own café or retail coffee business.
When you are ready to move to the next level, consider getting our exclusive coffee business startup kit. Our coffee business startup kit comes exclusive and important interviews – packed with knowledge and wisdom everyone should know about – before they start their coffee business. Additionally, it comes with several important guides (delivered in an e-format) to help you plan, strategize, and open your business.
Have you ever wanted to ask the following questions to a coffee shop owner:
Starting a coffee shop can be a fun, profitable, and rewarding achievement. Having a thriving coffee shop business is certainly obtainable by many would-be coffee entrepreneurs. But, as you can imagine, there are also risks to any business venture. While we cannot guarantee your personal success, we do know that learning as much as you can from a variety of experts can help you develop your personal concept and planning.
We know that by strengthening your knowledge in key areas can deepen your understanding of what you will soon be facing. Allowing you to get affordable information about “how to start a coffee shop” is essential to your success. That is why we’ve created our coffee shop startup kit, with streaming audio interviews you don’t want to miss.
There has never been a better time to start a coffee shop or drive-thru espresso stand, and we strongly believe there has never been a better resource. Take the first step in your coffee business with our startup kit!
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