The Secret To Starting Your Coffee Shop Business…
Dream Big. Start Small.
You might have dreams to start a coffee shop or full-kitchen café that serves a larger crowd during breakfast and brunch. Or you may envision opening a busy coffee house that offers live music and a wide variety of food.
Whichever you choose, one thing is for certain:
You have big dreams.
However, your actual budget may delaying your goals to start your coffee shop. This is where I believe it's time to switch tactics to realize your dream. When you switch strategies, I believe that you can and will reach your ultimate goal.
If you already know your ultimate goal. You're in good shape. Most people aren't sure what they want. Financial barriers can also muddy the waters. I believe that sometimes the best way to move forward towards realizing your goals is my taking small and deliberate steps in that direction. It sounds simple, right?
When it comes to opening your dream coffee shop, dream big, but start small.
Many successful and larger coffee shops actually started off small, very small. This would include starting off as a coffee drive-thru stand, a coffee cart, a coffee kiosk, or coffee cart.
Or you might consider starting tiny café with outside seating only.
Many successful coffee business owners can reduce their initial startup costs, day-to-day operational costs, and fixed costs by trimming down their business concept – in the beginning. By never losing site of your ultimate goal, you can take an important and potentially profitable step in reaching your goal. Additionally, starting a small coffee shop can help you “grow as you grow”, especially when we are talking about things like taking care of human resources.
A Lowered Coffee Shop Budget May Increase Your Creativity
Okay, so you may not have a million dollars to open your coffee business. You may not even have $200,000 to start a coffee shop. That’s okay, because most likely wouldn’t need that much anyway – if you start a small coffee business!
You will soon discover that the actual costs of your coffee shop or coffee stand will depend largely on the concept, real estate, remodeling, furniture, and fixtures. Doing a complete remodel on a real estate place can cost tens of thousands of dollars and up.
Some coffee shop owners can easily spend $200,000 dollars remodeling, doing light construction, and putting in the fixtures that would help realize their vision.
But you can also start very small too. By minimizing your business concept and increasing your creativity you can align your coffee business with the available financing that you have.
For example instead of opening a large coffee shop or coffeehouse, you may consider opening a coffee drive-thru stand or kiosk. You may be able to utilize a “space” that isn’t being used for anything at all.
By having the ability to see through the current uses of space in different parts of your city in a manner that best serves customers can offer you an opportunity to build a great coffee business!
Opening a Small Coffee Shop Has Its Benefits
By opening small coffee shop first, you can learn the skills and get the business experience you will need to effectively and efficiently run a larger-scale coffee business (or businesses). There plenty of great benefits to starting a coffee shop. If you are looking at the financial barriers of starting a coffee business, why not scale-down and starter a smaller coffee business?
Here’s a quick brief list of some benefits starting a small coffee shop:
- It costs less money to start a coffee business. Of course, this is a big one for most soon-to-be coffee shop owners. The investment you will make will be considerably less than a full-fledged café. A coffee shop with a full kitchen, coffee bar, and adequate space for seating could cost you $250,000 to remodel, build out, and buy the equipment for. Yet a relatively small coffee operation may cost you only $15,000.
- Your day-to-day operations will be less expensive as well. For example, you probably might not need a large of staff of baristas. Labor costs can quickly add up. Variable costs such as utilities, coffee, etc., can add up the costs.
- With a small staff you can learn about HR (Human Resource) issues, such as payroll, workers compensation, and insurance.
- Inventory: You will be able to learn about how to manage your inventory.
- Ability to build your brand. Starting a small coffee shop means that you can slowly and effectively build out your brand. Test your marketing before “going big”.
How to Start Your Coffee Shop on a Budget
It takes money to start a coffee shop. The question is: how much money does it take to start a coffee shop?
The answer you want to hear depends a lot of your startup costs, fixed and variable costs.
Fixed and variable costs are those such as rental space, equipment, labor, and inventory expenditures. If you can reduce your fixed and variable costs while serving coffee you can create a profitable business.
A small coffee shop business might cost between $45,000 and $150,000. However, you might be able take over ownership of a coffee stand $10,000 or less. It all depends on the location (location, location), the existing Profit & Loss Statements, Income Statements, Cash Flow Statements, and the comparable value you, as a buyer, believe the business has.
What costs will you have to pay to establish your coffee shop or coffee stand regardless of size?
- Legal/Business Registration Fees
- Espresso Machine Costs
- Coffee Grinders
- Power supply
- Furniture & Fixtures
- Small wares
- Inventory (coffee)
- Rental Space
- Security deposits
- Other costs depending on your concept/space/location
Looking at all these costs are important to your overall coffee shop budget. Previously, we’ve detailed coffee shop startup costs in this article here for you.
Dream Big by Opening a Small Coffee Shop
Starting a coffee shop starts with a dream. Realizing your budget, it’s okay to dream big by starting a small coffee shop. We’ve seen it before and we know we will continue to see small and profitable coffee businesses pop up everywhere.
Starting small can reap bigger or better profits over time for the obvious reasons. For many, you want have to climb out of a mountain debt to simply get to the all-important “break-even” point.
You can experiment with your logo, branding, and develop a very local following. Developing your expertise and familiarizing yourself with local laws, hiring practices, and regulations can be easier with a small scale coffee shop or coffee stand.
- Start with a minimal viable business
- Do your research and planning
- Understand your budget
- Look at Crowd sourcing for additional funding
Start With The Minimal Viable Coffee Business
This is the great “non” secret: Start your coffee shop by starting small. If money is your biggest issue, then you may consider starting with the minimal viable (but profitable) coffee business that you can. This may mean starting a coffee stand, a coffee kiosk, or maybe a coffee cart. You may also consider starting a coffee espresso catering business. Any of these may (emphasize the may) cost you less than a traditional small coffee business.
If money has got you down when it comes to your coffee business. Act like you have the money anyway. What I mean by this is that you should through the motions of starting a coffee shop or coffee cart. Planning and writing your business plan doesn't require a lot of money at all.
Begin to develop your branding, your logo, your business concept. Write your business plan. Check out potential competition. Do your market research. Invest in getting to know the retail coffee industry.
These things require time, thoughtfulness, and maybe some time writing things down. What you'll find is that doing the heavy lifting thinking can help you start your business.
Making a healthy profits doesn't have to be created from a giant coffee shop. Healthy profits can be generated from a small coffee stand, coffee kiosk, coffee cart, or coffee truck. Of course, their are a multitude of factors that may lead to profits, but the biggest one is fixed costs. By having a smaller coffee shop business, typically your fixed costs will also be lower.
Coffee businesses can come in all shapes and sizes. And they could also be beautiful and interesting too! The coffee shop above is well designed for the unique space it has to generate income.
Consider areas in your town or city. Can you utilize an existing space that is already in use in a different way? Or perhaps the space is not in use at all. We've seen many great coffee business build out of existing spaces.
Many coffee businesses start small but end up making a big impact in their communities, for their customers, and for employees. We have a feeling that if you start a coffee shop or coffee business in your community, you will be driving up value for you and your neighbors too.
Consider taking a look at our blog for more topics on starting a coffee shop or setting up a coffee stand. If you want to start a coffee shop, but don't know where to start you have plenty of options and plenty of “starting” points. For starters, you probably have lots of questions about the process of setting up your coffee shop.
That's why we've created one of the easiest, convenient, and affordable way to start your coffee business.
Our Coffee Shop Startup Kit contains hours and hours of audio interviews with coffee shop owners and business experts, offering relevant discussions that you will want to hear before you start your coffee business.
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