Posts Tagged ‘how to start a coffee shop business’
Everyone is star struck with the success of Starbucks and dreams to open coffee shop. After all, who could resist the feeling of open coffee shop, spend the whole day interacting with customers, having no worries over deadlines and be your own boss at the same time. However, unseen behind the scene of every successful coffee chains, there are many hours of planning and hard work to make them into the success that you see them today.
You may have heard that 95% of all new startups fail within the first two years. Most of the time, the failures are mainly due to the lack of proper strategy and execution. In this article, I shall lay down the steps to open coffee shop.
Steps to open coffee shop
Step 1-Write A Business Plan
Like doing anything, you begin starting a coffee shop with a plan. My favorite habit of Stephen Covey’s 7 habits of highly effective people is to begin with end in mind. If you do not know where you want to go, it does not matter how you go there. To be effective in business, you need a business plan before you open coffee shop. In this case, you need an opening a coffee shop business plan.
In simple words, it is a paper stating where you want to go and how you plan to go there. Of course, you need to be more specific than that if you want to open coffee shop. The minimum things you must have given a lot of thoughts are qualitative and quantitative factors.
The qualitative factors to open coffee shop, among others, are as follows:
a) Specific target market-As you are not selling to everyone, it is important to know details such as who your customers are, what their buying habits are and their demographics;
b) What your competitors are doing and what is your unique selling proposition (USP);
c) Location for opening a coffee shop and the coffee shop layout;
d) Starting a coffee shop equipment needs; and
e) Marketing strategies.
Quantitative Factors to open coffee shop, among others, as follows:
a) Startup costs;
b) No of employees needed;
c) Monthly operating costs;
d) Financing costs; and
e) Breakeven analysis.
Having a solid business plan have 3 advantages before you open coffee shop:
a) It show you the roadmap to operating a coffee shop;
b) It is a blueprint for your investors; and
c) It makes bankers more confident that you know your coffee shop business.
Step 2: Location
After having a business plan, you should have done an extensive research on the coffee shop industry and come up with your own USP. Next, you need to find a good location that has good traffic, right demographics and willing buyers before you open coffee shop. In short, you are looking for a hungry crowd. The location must also suit your USP and marketing strategy.
Step 3: Staring coffee shop equipment needs
The most important thing to remember before you open coffee shop is not to order any old and outdated equipment. The lists of equipment needs are too extensive. You can refer to the article here.
Step 4: Open Coffee Shop Marketing Strategy
The marketing strategy depends on your branding. You want to establish a brand in the minds of your customers as the place they want to come back again and again before you open coffee shop. This brand image must be consistent with your other promotional materials such as postcards, web presence and the way your staffs interact with the customers.
You can get free publicity by writing press releases to your local media. Of course, you must add the news angle to the release so that the media will find you news worthy.
You can also take a leaf from Starbuck by having your own t-shirt and mug with your company logo on it. When your customers are wearing them, it is free advertisements for your open coffee shop.
Step 5: Cost of starting a coffee shop
Again, this is a very big topic by itself. Basically, we can break down the costs to open coffee shop into startups and monthly operating costs. Startup costs are costs of renovation and design of the layout, equipment costs and setup costs like licensing, permits and so on.
Monthly operating costs are like the cost of renting or leasing a location to open coffee shop, hiring of staffs and utilities. At the minimum, you should have a buffer of 3 months in case there are not enough sales before you open coffee shop.
The quantum of the costs to open coffee shop really depends on your strategy. If your USP involves having an upscale coffee shop, then your renovation and food must reflect that. The cost will be higher but you can also charge a premium pricing. You must also balance it with the demand and supply equation.
It may look scary when you add up all the figures but then if you know some good negotiation tactics, you can save a lot on some start ups before you open coffee shop. An entrepreneur was reported to have started a coffee shop for less than $US25,000. For example, you can negotiate on leases, doing a barter trade for free equipment or joint venture with other businesses in the local area.
Step 6: Starting a coffee shop funding sources
This is a critical step as most business fail because of lack of funds. Before open coffee shop and start buying equipments, hire an architect to design the coffee shop or even hire a single staff, you need to plan your cash flow requirements and sources of findings.
Here I will list down some sources to open coffee shop you can consider but the details will be covered in other articles. These are:
a) Own savings;
b) Family members and friends;
c) Supplier financing;
d) Bank borrowings;
e) Investors; and
f) Government grants.
Conclusion to open coffee shop
These are the necessary steps that need to be taken to open coffee shop. However, these are only the initial steps. There are other equally important steps you need to run a successful coffee shop. These steps are covered in the other article.
Find out how you can open coffee shop using less than $25,000 or less and none from your own pocket. Check out this book to open coffee shop.
