Open Your Coffee Shop With No Money
Want to start a coffee shop but have no money?
Starting a coffee shop with little money is among the most common dilemmas for aspiring coffee entrepreneurs.
We think this is a worthy topic to discuss this in greater detail in this article and hopefully provide you with recommendations on how to get your coffee shop off the ground.
Learning how to start a coffee shop without money (or an espresso drive-thru stand with no money) is a common hurdle for many aspiring coffee entrepreneurs.
Fortunately, with a little bit of planning and dedicated learning, it is possible to start a business or any business without using your personal funds. Keep in mind however, that every, and any business requires startup money to successfully launch.
I want to highlight this point early in this article: It takes money to start a coffee shop.
However, the question remains on exactly how to start a coffee shop with no money. If you are short on funds, but have a deep passion and knowledge for coffee, or you are able to think outside the box and understand what a potential target market wants, you may still be able to start and open a successful coffee business. But you will have to leverage your knowledge or your business savvy to do so.
Certainly, having enough capital to prepare and sustain your coffee business until it is self-sustaining will be important as you move forward, so planning to have that capital before your begin will determine the successful launch of your coffee shop or coffee stand.
In other words, you will have to know how much money you need and determine where you will get it from.
As I just mentioned, there are certainly a variety of ways to open your coffee shop with little money, but they require in-depth planning, a dedication to learning about the retail coffee business, passion, creativity, and financial discipline.
In fact, it may be a lot more difficult to start a coffee shop with someone else’s money, because the level of scrutiny and accountability may be more profound. As well as it should be, right? Yet, being accountable for other people's money may propel you to “do your homework” and research.
On the other hand, when you are sitting on your own pile of cash, it can be easy to lack the discipline and short-change your planning efforts that are needed for you to successfully launch your coffee business.
Having a relaxed attitude about how your money is being spent can lead to some poor decision making.
But again, when you are responsible for the care of other people's investments, you have a duty to plan and execute well.
Despite all this, we have seen very successful coffee businesses actually start off with very little funds.
Out of necessity, the lack of funds has forced the hand of coffee owners to be creative, to “think out of the box,” and institute unorthodox business plans and models to realize their coffee shop dreams!
We don’t expect you to invent the wheel. But looking at ways to go around traditional methods of putting up your own savings can still be found. There are tested methods for raising enough money for your coffee business.
We'll discuss a few common ones below. Of course, you can add one, two, or more methods to create your own hybrid financial plan to start your coffee business.
As we begin to discuss some of the ways that you will be able to start your coffee shop business with little or no money, consider all the mentioned options and consider your own.
Each one may or may not work depending on your specific situation.
Like other successful coffee business owners who had no money when they started out, you should consider attempting to go “outside the box” with your financing and implementation strategies.
Remember you goal is to serve coffee and get paid for it.
Additionally, you may consider a hybrid of each approach, which may only “go so far”. Bridging the natural gaps with other creative financing is always a possibility.
Before you consider the viability of financing your coffee business with one or more of the following financing options, which have been pursued by other aspiring coffee shop or coffee stand owners, it is strongly recommended that you do your homework for your specific coffee business.
For example, we recommend that you start writing your own coffee shop business plan and detail what your ideas are, what your concept is, what you intend to serve, and where you intend to open.
In order for you to know what your break-even point is, you need to develop your coffee shop menu, coffee brewing equipment needed, space requirements, etc., which will all impact your startup costs, as well as your operational fixed and variable costs.
In short, you will absolutely need to know how much you need to borrow or finance. And you cannot do that without having a business plan.
By doing your due diligence and appropriate budgeting, you’ll be in a much better position to finance your business until it is self-sustainable (or profitable).
There are many mistakes that coffee business owners make when they start and open a coffee business.
Here are the common mistakes from new coffee shop owners:
#1: They fail to adequately and thoroughly plan their coffee business
Starting a coffee shop requires planning. This matters even more when funds are scarce and mistakes can be costly. Planning will often save you thousands of dollars in avoided mistakes. Yet, many new coffee shop business owners fail to find the time to adequately plan out their business.
#2. They fail to adequately learn from other coffee business owners
When you start any business, but especially when you start a coffee shop, you have the unique opportunity (and perhaps the duty) to learn from existing coffee businesses.
Yet many new coffee shop owners avoid making the effort to learn about how to start a coffee shop from existing or previous coffee business owners and/or experts. The insight, the wisdom, and the knowledge that you can obtain from an experienced coffee business owner can save you thousands of dollars, hundreds of hours of time, and lots of headaches.
#3. They fail to realize how much startup money they will need
Having a budget and writing a business plan will give you a better idea of the costs associated with starting a coffee shop. If you don't plan or anticipate the costs, you'll never be sure of just how much money you will need to succeed. And yet, many new coffee shop business owners fail to plan out their coffee shop's budget.
#4. They fail to understand their budget
Your startup funds need to cover a variety of different things, including your rent and equipment. But there are a lot more costs that you should budget for.
When people do not plan their anticipated costs well, they often leave big expenses out of the equation. In the end, they leave themselves vulnerable to not having enough cash.
Even the best planning and educated estimates can fall short. Life happens. Unanticipated costs can arise. That's why having a little bit of reserve funding that will be there for your business “just in case” anything happens, will be important.
You can take some serious steps to minimize the risk to your business. The first is to learn as much as you can about retail coffee, understand the costs of a coffee business based on your concept and location, and complete your coffee shop business plan.
Our Complete Coffee Shop Startup Kit provides you with a number of resources to help you learn about the retail coffee business – from your leasing options to your interaction with the health department, to exploring the common mistakes made by new coffee business owners.
This affordable “how to” coffee business resource is unlike anything else on the market today to help new and aspiring coffee business owners.
Additionally, the good news is that each of the above points can be addressed with some effort on your part. You can, in fact, reduce the risk, startup costs, budgetary issues by thoroughly examining your concept and needs.
In no particular order:
#1. Piggy Back on Another Successful Business
This is one of the most under-utilized options for many coffee entrepreneurs who are lacking money. When the focus is, ‘How can I share my passion for coffee to others in my community?’, a coffee business owner can start to unlock the potential of their own coffee business.
A simple change of perspective can allow you to discover new, novel, and successful coffee startups ideas.
Many coffee businesses have “piggy backed” on already established businesses that can and benefit from offering their clients, customers, or employees a good cup of coffee.
Take for example a “work space sharing business” in Seattle who offers rented office space for freelancers and solo entrepreneurs.
A small, but enterprising coffee business can set up shop to serve coffee to “share-space” workers, their clients, and the community in general. And they have.
They rent a tiny section of the entire office space with a custom made coffee bar.
Another local flower business that we know needed more customers and had too much space.
They decided to basically recruit a local coffee entrepreneur to open up a second coffee business right in their flower shop.
The result: more customers and additional income.
In the Seattle’s University District, a struggling record and video store decided to put in an espresso bar in to bring customers and help pay the rent.
The fact is that many businesses find that having a coffee bar or espresso cart or kiosk is beneficial. If money is the primary barrier, why not work out an agreement for several months of free rent and utilities until you can establish yourself?
Of course, you may need to find a business that has the space and need for a coffee shop. This requires some research.
But it also requires you to prepare long beforehand by learning everything there is to know about the coffee business. With an eye towards starting a coffee shop, you may approach a complementary business that may benefit from coffee being served on or near them.
At first, the existing business might be resistive to the idea of a coffee shop, coffee kiosk, or coffee cart being on their premises because it was never a part of their personal business venture idea.
You will need to come back to them with some important selling points, such as hard data, information on competitors, and potential sales numbers. Additionally, you may need to emphasize just how much the existing business will benefit without them taking any risk.
- Research business spaces and places
- Do you research on the target market
- Learn all that you can about the retail coffee industry
- Reach out to existing coffee business owners
- Start developing your business plan
#2. Open an Online Coffee Business
Starting an online coffee business may be one of the most affordable ways to develop your brand, your customer base, and your expertise. It often takes less than $100 to set up your website and web hosting (an annual expense).
Starting your coffee shop business online can bring some pretty enormous benefits. The first benefit is that you can start building your brand. Your social media awareness can be an excellent way to get started. We’ve written about this before here.
So, what can you sell online? There are a number of local online coffee shops that sell locally roasted beans. You can make arrangements with your local roasters in your area to sell small bags of their coffee or you can roast your own coffee beans.
Creating beautifully arranged coffee gift boxes or packages can help you develop your expertise, branding, and potential reinvestment into a larger coffee business with the traditional brick-and-mortar coffeehouse.
- Choose your online niche
- Research vendors (where will you get your inventory?)
- Look at the ways to open an online coffee shop website
- Determine your short, medium, and long-term strategy
#3. Start a Coffee Non-Profit or “Co-op” Business
Pooling in resources to start a coffee shop is more common than you think. Families, friends, and business partners invest funds to create a joint venture. By creating a cooperative, every owner or partner is an equal partner. Decision making is democratic and financial decisions and obligations are mutual and worked out to benefit the entire business.
If you don’t have the financial resources to open a coffee shop, why not partner with others who have? Work out the financial arrangements in a manner that works for everyone. Perhaps, you know how to manage a coffee business, roast beans, or have obtained coffee equipment, while other owners can bring in accounting expertise or money for lease.
Pooling your resources with a small group of willing individuals can have an important and lasting impact on the coffee shop startup. We’ve interviewed a successful co-owner of one coffee co-op. In that interview, which is available in our complete coffee shop business startup kit, he details his experience of opening a coffee shop business using this unique business model.
It is important to note, that despite this business model is not traditional, you will still need a business plan:
- Develop your coffee shop business plan
- Consider who you may partner with
- Determine how much money you will need
#4. Sell Roasted Coffee Beans at Farmers Markets
Starting a coffee shop can start off in any number of ways. Remember, your end goal is to “Have the Coffee Shop of Your Dreams.” But there are many avenues to get there.
The idea is to get started.
One of the low cost ideas of starting your own coffee business is to sell roasted beans at your local Farmer’s markets.
People love to buy local… especially at local farmer’s markets everywhere.
All you need is a table, a tent, and to develop relationships with your local coffee roasters.
Your job is to sell coffee beans. And you can do it relatively cheaply.
Get wholesale beans from a variety of local roasters in your region and hit the farmer’s market circuit.
- Get a coffee business name
- Create a Website (So fans know where you are)
- Buy a tent and table
- Make relationships with local coffee roasters
- Sign up for your local farmer’s market
#5. Using “Sweat” Equity and a Personal Loan
Many new businesses can start with taking a personal loans or using credit cards to finance their coffee businesses. Before you decide to open a coffee shop business and decide to use a loan or personal credit cards, we strongly urge you to do your homework.
Does it make sense to take out a personal loan or put the costs onto your credit cards? Remember, the interest on personal loans and personal credit cards can quickly rack up.
Doing your homework before taking out a loan, requires you to put in some sweat equity, by really researching your options. Figuring out your break-even point and having enough capital reserves (AKA Money) will be vital to your success.
We believe that this requires you to take a hard look at what your weaknesses are. Where do you need to shore up your knowledge base? What aspects of the retail coffee business do you need to get a better understanding? What information do you need to get the confidence boost you need to be successful as a coffee shop owner?
While there are a number of resources out there, including the possibility of hiring a retail coffee consultant, we think that a good place to start learning about how to open a coffee shop is right here with us. Our coffee startup kit provides an excellent spectrum of knowledge based from real-world interviews with coffee business professionals.
- Do your homework
- Learn about the retail coffee business
- Write your coffee shop business plan
- Determine how much money you will need to start your business and sustain your business until profitability
#6. Crowdfunding Your Coffee Shop Business
This is one of the newest ways to raise money for your coffee business. Crowdfunding your money can be a very effective way to get the capital resources you need to open a coffee shop.
The truth is that there are coffee businesses (from new to established coffee shop businesses) who have successfully used crowdfunding through websites such as KickStarter or Indiegogo.
We believe that this year and the next, we’ll see even more coffee shop businesses launch with the help of crowdfunding. In our coffee shop startup kit, we have added a short bonus streaming audio interview of young coffee entrepreneurs who have started their coffee shop with some help using crowdfunding.
While raising money online may seem like a no-brainer, it also takes work, planning, and follow through. It isn't as easy as one might think.
Don’t be misled by the notion of “free money” through crowdfunding as you will need to put in your “sweat equity” on the table as well. Research, planning, and marketing will be important elements to consider before you launch any crowdfunding venture to open your coffee shop.
The truth is that offering a compelling reason to support your coffee shop as well as a reward scheme will take work to plan and implement.
- Write your coffee shop business plan
- Determine how much money you will need to start your coffee shop
- Create your crowdfunding plan and promotion
- Create a website and social media accounts to foster followers and added support
#7. Start a Coffee Shop by Starting Small, Scale Big
Finding the money to start your coffee business can be challenging, especially if you don’t have any significant capital to start with. However, every day some aspiring coffee business owner is working hard to realize his or her dreams of success.
Fortunately, starting a coffee business can be scaled up. This means that you can have tremendous amount of success by simply starting small. By starting small as reasonably possible, you will allow yourself the time to prepare, plan, and save for taking your business to the next level.
So, what does small mean exactly? Well, your dream coffee business differs from the next person, so the answer lies with you. Where are you now? What do you envision your coffee business to eventually look like? What’s the first step that you can take to put something real on the table?
Does opening an online coffee business make sense right now? Does starting with a coffee kiosk make better sense? How about serving coffee at your local farmer’s market?
Start small buy learning all that you can about the retail coffee industry, your primary target market, and your local laws. These are important elements that you can do without spending any significant resources other than your time and maybe a couple of hundreds of dollars.
- Look for opportunities to start your coffee business
- Think out of the box when planning
- Determine how much money you will need
- Start small, scale up your coffee business
Start a Coffee shop Via a Traditional Method
There are many potential silent investors or partners that want to invest in a successful coffee business.
Often times, these investors are known by word of mouth or familial relationships, or through local businessmen and women who want to diversify their portfolio and are reaching out through various channels. Whether by chance or by association, finding investors can either be brokered or made possible by natural relationships.
Regardless of how you are paired together, as an aspiring coffee business entrepreneur, your job will be to make sure that you are ready, that you are prepared, and that you know what you need to do to open your coffee shop or business with their money.
In other words, you need to plan, prepare, and research before you approach (or get approached) by investors or silent partners.
This means, knowing how much money you will need, what the time frame would look like, and what your break-even point will be.
Start researching potential investors. Consider that a willing investor may not be the right investor for your business. Qualitative variables are also important for you and your coffee business.
Having a business plan that details your concept and your financial need for your coffee shop will be critically important.
But how do you get started? How do you start writing it? Before you write your plan, we recommend that you learn as much as you can about the retail coffee industry.
We recommend that you ask seasoned coffee business owners what their take of the industry is like. You can learn some valuable information from those who have already had success (or failure) with their coffee business.
- Develop your coffee shop business plan
- Determine your financials and pro forma estimates (Get help with our Startup Kit)
- Determine who you think would be good silent partners
- Approach potential silent partners
How to Start and Open a Coffee Shop With No Money
It’s time to grab your cup of coffee and get your creative juices flowing! There are many ways to start a coffee business that can work successfully. How will you start and open your coffee shop with no money?
Of course each coffee business and each situation is different. The amount of funds you have, or the amount of money you have access to, will alter your planning and the direction you choose to implement your business plan.
We’ve offered several ways to start your coffee shop with no money, limited money or funds that you can receive from outside investors or supporters.
You have an opportunity to think out of the box here. Look for opportunities to start your coffee business with the resources you do have.
The resources you do have also include your willingness to do the extra homework, to learn all that you can, to find the opportunities where they exist, and be financially responsible, and to do your due diligence. Many successful coffee businesses have started small, started with the strengths, and passion for coffee.
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