Wondering How to Start a Coffee Shop?
Here are 13 reasonable tips you should consider when starting a coffee shop business.
Starting a coffee shop business can be a profitable adventure. Not to mention fun and profitable too! However, it can also be a “money pit” if not planned out well or some poor decisions are made. Fortunately, many successful entrepreneurs have come before us in starting their coffee businesses and have “paved the way” for us to learn from their mistakes and their successes.
That’s the whole point here at Coffee Shop Startups – we really do harness the wisdom of veteran and even new coffee shop business owners, to help you understand the subtleties of starting a successful coffee business.
We are often told that the difference between success and failure is often only a slight one. If this is true, wouldn’t it be wise to take a moment to listen to those who have succeeded and/or failed before launching your own coffee shop business?
Here at CoffeeShopStartups.com, we’ve written extensively about “How to Start a Coffee Shop” or a open a coffee stand business. We’ve interviewed dozens and dozens of coffee business owners, visited and analyzed hundreds of coffee shop business, and have come to realize one thing: each of them are different.
No two independent coffee businesses are quite the same (perhaps with the exception of chain stores, but those are indie coffee shops!)
Over the last several years, we have written some pretty important tips on how to start your coffee shop. We would like to compile 13 of them here, for convenience for you.
In addition, you should continue to browse our extensive blog library of articles that revolve around starting a coffee business. We believe our blog library contains more information than what other similar businesses charge hundreds of dollars.
Our aim of course it to help you succeed, by helping you get your mental wheels turning. When you are ready, you should consider getting our Coffee Business Startup Resource: our audio package that contains hours and hours of one-on-one interviews. These interviews will help to develop and expand your knowledge base.
Even if you decide to work with an expensive consultant, you will know what questions to ask him or her.
Here are 13 Tips to Starting Your Coffee Shop Business
Tip #1: Don’t spend any real money, right away when starting your coffee shop.
Here’s the truth: Starting a coffee shop will take money. But, here’s the other truth: Plenty of great cafes have started with limited budgets and have gotten help by leveraging their coffee expertise, business concept (competitive advantage), and the passion for coffee in exchange for being flush with cash.
The fact is that you don’t need to spend any real money, at least right away to start your coffee shop business. (Of course, you will want to purchase our Coffee Shop Startup Kit!)
All this being said, you can do most the pre-planning without spending more than a cup of coffee at your local café and dedicating some time and energy behind your efforts.
You may be tempted to hire a “coffee shop business consultant” or a coffee shop design firm right away. Those may be in your cards, but we’d advice you to hold off, for a bit. In fact, our advice is that you can (and should) do much of the leg work in getting yourself “up to speed” with important trends, topics, and common business practices before utilizing the help of a consultant.
Don’t spend any money on coffee brewing equipment or even any money on your physical space before you have written a business plan. Spending the time planning and methodically writing down your ideas and formulating a plan will save you potentially thousands of dollars and buy more time for saving and working on the best competitive advantage you can have.
Tip #2: Learn as much as you can about the retail coffee industry
Second to only oil, coffee is the most widely traded commodity in the world. From its various countries of origin to the customer’s lips, lies a complex world that employs millions of people all around the world. How you bring this amazing product to your customers is the retail side of the coffee industry. It is the final and maybe most important phase of the chain because it deals with the end customer. Without customers, there would be no industry. Fortunately, for us, the market of coffee drinkers is robust and growing.
Learning about the retail side of coffee will help you better develop, manage and cultivate the culture of your coffee business. Many “third wave” coffee places are great because they not only serve well-roasted coffees from various places, but they do a good job of educating their customers about the origin of coffee. What are special about Central American beans? What makes coffee from Ethiopia interesting and flavorful?
But we can’t stop there. Retail coffee incorporates everything from customer service to branding and marketing. It also details the experience you wish your customer to have when visiting your coffee shop. Learning as much of the retail side of things means to study what other people are doing – and how it impacts their customers. This leads to our next tip.
Tip #3: Visit as many cafes or coffee places in your city
Coffee can be wonderful. But the experience by which you drink it can very dramatically. Enjoying (or tolerating) coffee at a variety of cafes, coffeehouses, and coffee spots in your community can be a fun and educational part of your business planning. To get a feel for what’s out there, consider visiting as many coffee shops in your city.
If you don’t have many in your town or community, that’s okay, you should make sure that you visit each of the ones you do have. Sit down, take a few minutes and appreciate the experience.
For better or worse, note what value customers are getting from each coffee house or coffee shop you visit. What is the coffee shop doing right? What is the coffee shop doing wrong?
By learning what the customers in your community are already enjoying (or not enjoying) should give you a better perspective when it comes to developing the concept of your own coffee business.
Tip #4: Get to know your local coffee roasters
Coffee brings out the best in people. This includes local coffee roasters who have passion and love for creating amazing coffee profiles. Because of the complexity of coffee, a variety of blends or single origin coffee roasts can be exciting to experiment with. This is where your local coffee roasters come in.
When choosing what coffee you’ll like serve at your coffee stand or coffee house, I’ve always recommended that you start local and work your way out from there. Even if you live in a small town, you will be surprised at what you might find: a thriving coffee roasting community!
Set out early to explore a variety of coffee roasters in your area. You may need to look online or ask around, including owners of local cafes, baristas, etc.
Once you find coffee roasters, pay them a visit. Buy a bag of beans or ask if they have free community cupping events. If they don’t, ask if you can come down and taste their coffee. Find out what other coffee retailers they work with.
Make a short list and start visiting these coffee roasters. You may like then and want to serve their coffee. By visiting these local coffee roasters, you will be able to witness their passion first hand, which I believe is an important point along the ‘crop to cup’ chain.
Tip #5: Attend a local coffee event (or maybe not so-local)
Attending a coffee convention or event is always a good thing to do, prior to opening a coffee shop. Coffee lovers and coffee entrepreneurs need a place to meet and talk about coffee. Such events are also great for also meeting product distributors, viewing brewing demonstrations, espresso machines, and other retail products.
Many local coffee events often have talks or discussions about coffee beans, marketing, trends, etc. A lot could be learned about the industry, and it’s a great way to catch up on the retail coffee industry.
If you live in a big urban city, chances are that you will have some opportunity to attend some coffee event. Chances are, however, that you may have to travel. So, take a few days and travel.
Could you imagine opening a cheese shop, and never go to a cheese event? Or if you wanted to open up a wine shop, and never attend a wine tasting? Or if you wanted to open up a craft beer shop, and never been to a craft beer festival? There is plenty to learn about coffee and such events are the perfect opportunity to expand your knowledge and make new friends.
Tip #6: Think about your overall business concept
Take the time to day dream and think about your coffee shop or coffee stand business concept. Before you share your ideas with the world or actual business professionals, you will have to decide just what type of coffee business you want.
Don’t assume that you’ll get your perfect concept right off the bat. During your visits to other cafes or coffee shops, you may think up different ideas. Consider taking notes and figure out where the needs of your potential coffee drinking customers are. Are they there because of convenience? Will they visit your café to study or meet friends? Are they there to get a bagel or sandwich on their lunch break? Figure out why your customer will be visiting you. Measure your coffee service concept versus the potential needs of your customers.
Tip #7: Decide on your menu choices
We believe your business revolves around your menu choices. Your menu will be often driven about what your customers want and the competition that already exists. For example, if you want to serve bagels and sandwiches, there may be an existing bagel place or bakery on the same street. Finding your niche can help you avoid direct competition, so you will have to also consider your neighborhood location.
Your menu will impact your coffee shop equipment needs, your space requirements, and of course, your total upstart costs for starting your business. You may some direct questions: like how much does it cost to start a coffee shop? The fact is that it really depends on your menu. Your menu will often be the lynch pin for your labor, equipment, space, and upfront investments.
So, of course, you will serve coffee, right? But what about tea? Juices? Beer? Will you offer pre-packaged goods or will you partially make these goods yourself?
Many health departments will want you to submit your menu and maybe even your complete ingredients. Doing this helps decide exactly how to respond to your health department permit request.
Tip #8: Focus on your competitive advantage
Your competitive advantage is critical to your coffee shop’s success. Just like any other business, your business produces “a product” or “product lines” (In this case, for example, your product might be coffee and donuts). Whatever it is, you have to decide what makes your business special. Your competitive advantage is what will help you achieve success within the general market place.
Perhaps you will focus on the customer experience, your donuts, or coffee – or a mix of all three. Regardless, our recommendation is that you stay focused. This reminds me of a failed coffee shop business that didn’t stay focused.
Several years back, I met and spoke with a coffee shop owner who also sold arts & crafts at his coffee shop. From the outside, you would never be able to tell that his place of business actually served any coffee. In my opinion, this was a mistake because he was in a very good location, with bus stops, students, young people, shoppers, and tourists walked by the thousands every day.
Despite my recommendations to put a prominent sign outside his business that read, “Espresso” or “Coffee Shop”, his business struggled to get customers and soon dried up. Not putting a sign up and not focusing on what he was in business to do, his potential customers just walked on by.
His action or inaction demonstrated his confusion on what he wanted his business to be known for – coffee or “arts & crafts”. The lesson for me: Decide on what your coffee business stands for and work out from there.
FYI, in our detailed business plan template, which can be found in our coffee shop business startup kit, we detail the development of your competitive advantage a little more. We believe our coffee shop business resource is one of the best ways to start your coffee shop business plan.
Tip #9: Visit local food vendors
Along the same lines as visiting coffee roasters, you will also want to consider visiting local food vendors. Selling food or snacks may not be the mainstay of your coffee business, but it will do three important things:
- Create another income stream (or several)
- Provide customers with options (add-ons with their coffee purchase)
- Bring new customers in that would otherwise may not visit your coffee business.
The truth is that a lot of great things go with coffee: cookies, bagels, pastries, cake, muffins, soup, etc. Of course, you don’t need to bake these cookies and muffins yourself. You may simply want to buy a variety of products wholesale from other local vendors.
But which products will you offer at your coffee shop? Which add-on menu items would work for your coffee stand customers? It depends. You may consider visiting other cafes and consider what the “trends” are when it comes to your coffee business. Yet, you still might consider a few basic staple vending products, especially those that your average café-going customer would expect. These may include bagels, cookies, donuts, and muffins.
Our recommendation is to visit as many vendors as you can. Each may have different terms by which you could make purchases, so study their terms carefully and see if they will work for you.
Tip #10: Start writing your coffee shop business plan
Many people tend to skip out on writing a business plan for the coffee shop. This is unfortunate, because the act of writing a business plan really does something important to you mentally – it changes your entire outlook on what you are doing when it comes to your business.
Writing a business plan for your coffee shop moves you from the “talker” to the actual “doer”. It brings y our business planning into a tangible thing.
Of course, a business plan isn’t just for you. It’s often a necessity in cases for your property lease to be approved. It is often a requirement for property managers and owners to know and understand what business they will be essentially renting to. Of course, if you want to borrow money, you will need to have a detailed business plan to satisfy lenders.
Many people believe that you can simply “wing it” and start your coffee shop just “off the top of your head.” While this may be somewhat true, chances are you will miss something. And the stakes are too high to miss anything when it comes to your business.
The fact is that your business is actually worth you taking the time to sit down and invest the mental energy towards figuring everything out, before you spend money. Because of this, I think that most people actually spend less when starting their coffee business when they have a viable business plan.
Tip #11: Choose a name and get a website
One of the best ways to get motivated in starting your business is claiming your business name online. Even if you haven’t yet formed your business LLC or Corporation, you may have a general idea of what you would like.
Consider buying and starting your domain name and get your website off the ground.
Consider going through or affiliated BlueHost or Host Gator to start your online business profile.
Tip #12: Create a calendar (with Benchmarks)
Creating a calendar with benchmarks is an important component to achieving any business goals.It may seem easy to simply jot down dates. Really, creating a detailed and achievable benchmark calendar takes a lot of forethought. We recommend writing a business plan first and understand what you’ll need to do before you move forward.
Tip #13: Take a coffee shop owner out for lunch, beer, or coffee
Our last tip has to do with the overall theme of our efforts here at CoffeeShopStartups.com – that is seeking out advice from experts before you start any business. This makes sense. This requires you to meet a current or former business owner and ask them questions: How did they start their coffee shop business? What mistakes did they make? What would they do differently? You may need to ask specific questions about your region or city. Therefore, our last tip is to take a coffee shop owner out to lunch or for a beer. Spend the $30 bucks having lunch or coffee with them and asking them what they think starting a coffee business.
The Best Way to Start Your Coffee Business: Plan
As you can see, each of our tips above requires a degree of thought and planning. The truth is that we need to plan out any business we decide to jump into. Our time and money are often not infinite, so the best way to ensure that our time and money is not wasted is by planning, learning, and carefully crafting out your business.
Our Coffee Shop Startup Kit does this for you – not only have we put together some great resources for you, including a Coffee Shop Pricing Kit, Workbook, and Coffee Shop Business Plan Template, we’ve also created hours and hours of relevant audio interviews that can expand your knowledge-base about starting a coffee shop business.
If you want to know how to start a coffee shop business or how to open a coffee drive-thru stand, it’s all here in this kit. Learn from the experiences of real coffee business owners (former and current), and then plan out your own coffee shop business.