We’re at the tail-end of the coffee revolution. We survived fair-trade coffee and we’re all now consuming single-origin direct trade coffee through vacuum tube processing or…something.
The coffee business is still booming. You see new coffee stands cropping up on every street corner. Everyone craves that effervescent pop of caffeine tickling their brains.
Consumers spent $74.2 billion on coffee in 2015. That’s only four years ago.
If you love coffee, money, and people, then you might think “hey! I’d like to take advantage of that coffee money!”
Well, you’ve come to the right place. I’m going to give you all you need to open your first (hopefully of many) coffee shop.
1. Research All the Things!
If you were the first person to open a coffee shop in the world, you would be able to skip this step. But since you’re one millions or maybe billions, you would benefit from some research.
Get to know the other coffee nuts in your town. Those who roast, those who sell, those who make. All of them.
You’re going to be a part of this coffee community soon, so you’d better get comfy. And these people are going to be both your friends and your competition. But until they’re your competition, you have free-reign to ask them anything.
What’s Their Biggest Challenge?
The more you can prepare ahead of time, the more you will make. And this goes for the obstacles you face running a coffee shop.
What part of their business is most frustrating? Do they outsource production? Do they go for wholesale coffee suppliers? Or do they roast their own?
What parts of those processes are most challenging? What do they wish they had done differently when starting their business?
Sign Up For All the Periodicals
What’s happening in the rest of the industry? You’re not going to know unless you plug into coffee journalism.
What are people drinking? What’s on the horizon? Where is coffee going? Will it be sustainable for the future?
All of these questions and more can be answered through journals and magazines.
Understand the Rules
Your local government will have a hand in how you run your business. It’s just part of the territory. Learn what licenses you need, what fees you need to pay, and what regulations you need to follow.
If you’re going to roast your own, some states will require inspections on equipment for safety and quality. You’ll need to apply to the health department if you’re going to serve food.
Get All the Money!
Starting a business isn’t cheap. You need to buy space and equipment, you need to pay baristas and buy inventory. It’s a huge investment.
If you don’t have the money saved up to start your business, you need to get a loan or borrow from friends and family.
The problem with loans: bankers. These people reject most small business loans. Why? Because it’s risky to fund a small business.
They want to know they’re going to make money off their investment. You have to prove to them it’s going to happen.
A business plan is one part of your proof. The other part? The millions of hoops they make you jump through.
If your SMB loan application doesn’t go through the first time, try, try again. Figure out what you did wrong. Ask what you did wrong because they won’t tell you otherwise.
And then throw it at the wall again. Do that until it sticks.
2. Location, Location, Location
Foot traffic or car traffic. Those are paramount in running a successful coffee shop.
Just because it’s cheap to set up shop in the abandoned warehouse behind the scrap yard, doesn’t mean it’s a good place to start a business. Unless you serve coffee that tastes like tar and put cheap whiskey in your drinks, you’re not going to attract the muscle working in the industrial district.
Thus, downtown, even if expensive, is likely the best place to set up shop if you’re opening a traditional coffee shop. You want both locals and tourist to find your place.
If you’re off the beaten path, yet close to downtown, then you’ll simply need an extra sign and permission to display it down the street.
The Other Problem: Other Coffee Shops.
What would happen if you set up shop right next to Starbucks? Well, it really depends. Are you selling something different than what Starbucks offers? Is your space cooler and more inviting than Starbucks? And lastly, are the people in your town willing to switch from Starbucks to local?
This is where your market research comes in handy. You need to send out surveys and find out all of these things. What do people want? Will they buy from you rather than the local Starbucks?
On the other hand, you need to consider where the other shops are located. Unless you have something far superior to House of Buzz downtown, then you need to set up shop a full block away. And then to compete, you merely need a different atmosphere.
This is where you’ll stand out the most. People want to be able to choose their shop by atmosphere. And some people will visit multiple shops at different times according to mood.
Ask yourself, “am I the kind of person who wants comfy and cozy (think book reading by the fire) or am I a person who wants hip and cool (think sitting at the bar and drinking your S.O. pour-over while talking about Nitsche)?”
3. Don’t Forget the Legal
You need to cover yourself just in case someone spills hot coffee on their crotch. This is why you need to set up an LLC.
An LLC makes your business a corporation. It means that the courts can’t come after you personally for things that happen at your business. They can’t liquidate all your personal assets or those of your investors.
Yes, your business will still take a hit if you get sued, but your family and your money at home will be safe.