This article is part of our Cafe Business Startup Guide—a curated list of articles to help you plan, start, and grow your cafe business! Listen to the audio summary:
If you’re like me, you begin each day with a cup of coffee. It’s not an improbable assumption, given that 68 percent of coffee drinkers (and I assume you’re one of them) have a cup within the first hour of waking up.
When we first wrote this article in 2013, there were 52,684 coffee shops in the US alone. Now, in 2015, that number has grown to 53,987. And, according to Statista, the number of coffee shop businesses is still growing. Next year, in 2016, we’re looking at a grand total of 55,246 coffee shops.
Whether you look at the numbers considering the opportunity, or the staggering competition, there’s no doubt about it—coffee is good business, and it has been good business for a long time.
With 100 million coffee drinkers in the U.S. alone, it’s no wonder the industry is booming. If you’ve been thinking of combining your love of coffee with your entrepreneurial spirit, there’s no better time to open a coffee shop.
Jack Wilson, owner of Radio Coffee and Beer in Austin, Texas, and Marc Renson, owner of Ambition Bistro in Schenectady, New York, stepped away from brewing and serving to offer these tips to prospective owners.
1. Create a solid business plan
One of the first serious steps you’ll take toward opening your coffee shop is to create a business plan. This document spells out exactly what your business is, how it will be profitable, defines your customer base, explores competitors, plans for growth, and provides troubleshooting strategies should you need help achieving your goals.
But, go the lean planning route to start
Before you dive into creating a traditional business plan (which really you only need if you’re seeking funding from a bank), we recommend creating a one-page pitch. This will allow you to quickly validate your business idea as well as get a good sense of who your market is, how you’re going to reach them and how you’re going to differentiate yourself from your competitors.
Many entrepreneurs turn to our business plan templates for guidance. Whether you’re starting a little coffee and internet café or a coffee house bistro, there’s a business plan template to suit your coffee shop needs.
Browse our free coffee shop sample business plans
Coffee Kiosk Business Plan (Full Plan Online)
Read how The Daily Perc opened drive-thru and mobile cafes serving coffee drinks and other beverages to their target market: daily commuters and captive consumers.
Coffeehouse Business Plan (Full Plan Online)
This sample business plan describes how Dark Roast Java attracted a diverse clientele with its Mediterranean art glass decor.
Internet Cafe Business Plan (Full Plan Online)
The JavaNet Internet Cafe was a true visionary business sample plan when it was written, and the number of cafes with this similar idea confirms it was an idea ahead of its time. Get inspired.
Cafe Bistro Coffeehouse Business Plan (Full Plan Online)
The Watertower Cafe sample business plan describes how the cafe will establish itself as a “destination” of choice to the many residents of the greater Atlanta metropolitan area, as well as numerous out-of-town visitors by providing affordable high-quality food, coffee-based products, and entertainment.
Coffee Roaster Business Plan (Full Plan Online)
Beanisimo Coffee is a startup coffee roaster in Salem, Oregon. Founder Frank Jones aims to bring old-world Italian traditions and recipes to meet the market need for premium coffees. His target market is coffee houses, restaurants and grocery stores.
2. Take the time to find the right building
To be successful, you need a good location for your coffee shop. You want something centrally located, a place where people already gather, and a space that’s conducive to your vision. Marc Renson, owner of Radio, Coffee and Beer, warns that finding this dream spot won’t happen overnight.
His team scoured city after city, scouting each location, even going so far as to count pedestrian traffic. He was in the market for a former restaurant, so he didn’t have to remodel everything from scratch. Finally, one day when he dropped his keys he noticed a tiny “for sale” sign in a former tavern window. After months of searching, he’d found his spot.
3. Create a floor plan
A solid floor plan is vital for a coffee shop. You want customers to have space to form a line, employees to have the materials they need within reach to quickly make coffee, and a seating area that’s comfortable. It will take some time to produce a good floor plan, Wilson says.
“Walk yourself through every scenario you can think of,” he says. “If you’re making coffee, what needs to be near you? If you’re a customer, what do you want in a seating area? Visualize everything you can and start putting those ideas down on paper.”
Design your cafe floor plan online
Here are a few free websites you could use to kickstart your planning process. Once you’ve drawn up an initial sketch on paper, why not get it online and play around?
Autodesk Homestyler (free): This is probably my favorite of the lot. You can either start designing your floor from scratch, or choose from a gallery of designs and then personalize to bring your own look and feel into the picture. In fact, there’s even an option to experiment with real-world products and brands. When you’re done, share your design with your friends. They’ll be able to see it in 3D!
RoomSketcher: If you’re the type of person that loves a good old drag-and-drop application (think the SIMS game), this one is for you. It’s a bare-bones design with a small selection of floor plans to get you started.
Floorplanner: This software is incredibly easy to use, with plenty of drag-and-drop furniture and other items to make your design look good. It’s clean and easy to use and displays your plan in both 2D and 3D and it even allows for printing!
Gliffy: I’ve included Gliffy on this list because it’s a well-known diagram and flow chart application. If you’ve used it before for any of these things, you may want to give it a try, after all, the learning curve won’t be too steep. While you’re at it, you can even plot your SWOT analysis.
4. Hire an accountant
One of the best pieces of advice Wilson says he can offer a new coffee shop owner is to turn your books over to an accountant. Aside from taking valuable time away from the business, having a numbers expert works in your favor.
“You won’t be as hard on yourself as you sometimes might need to be,” Wilson says. “Plus, you will make assumptions that an accountant wouldn’t make.”
In reality, your accountant is really your small business consultant. Make sure you find someone who believes in and can help you accomplish your business goals.
5. Get local help for funding
Finding the startup funds for a coffee shop can be difficult. Renson suggests talking with friends and family about investing in your coffee shop first. Present a solid business plan to them and ask them to invest in your business. If family isn’t an option, or if you need more cash than your family can provide, Renson suggests looking into local loan options. In some cases, local cities offer business assistance programs to offset costs. A local bank is also an option.
6. Save money for your own expenses
Aside from startup costs, don’t forget that all of your time and energy will be devoted to your new business, a business that probably won’t be profitable for around six months.
So, plan ahead. Renson suggests making sure you set aside enough money to cover your personal expenses for at least six months.
You will also want to familiarize yourself with the concept of cash flow, especially considering well over half of the businesses that fail were profitable when they went down, they just weren’t cash flow positive.
7. Shop around for everything
Most of your time will be spent in the planning and funding stages. While you work out finances, keep a list or spreadsheet of all the things you’ll need and compare prices.
Try to get at least two prices for every item you buy to ensure you’re getting a good deal. Use the internet to your advantage and look for the best prices on everything from comfy chairs to espresso machines.
8. Network your heart out
Having a hot location and brewing superior coffee will only get you so far. You need to network to maintain a connection to the area and to attract more customers, Renson says. Join the local chamber of commerce, a business association, or a local charity.
9. Start marketing before you open
If you start marketing the day you open, you’re already behind. On opening day, you want people excited to come in. To do that, you need to start marketing several months before you open. Affordable marketing options include:
- Drop off free coffee to local businesses with a flyer that promotes opening day.
- Set up and utilize several social media channels. It’s free advertising.
- Give away coffee samples at a few local events before opening.
- Try a small direct mail campaign that sends coupons to local residents.
- Call everyone, including the media, to tell them about your plans to open the shop.
10. Don’t just focus on the interior of the building
Of course, you’ll stress over every little detail of your shop, from what paintings to hang on the wall to the POS system you’ll use, but Wilson says you shouldn’t neglect the outside of your shop.
“Pay attention to the landscaping, signage, and exterior appearance because that’s the first thing people see,” Wilson says. Some people decide whether or not to come in based on their first impression of the building, so make it count.
Plus, by spiffing up the building you’ll start to create a buzz in the community. People will start to wonder, who is setting up shop in there? Every little thing you can do to attract attention to your coffee shop can serve as a marketing tool.
11. Have a positive attitude
Like every business, you’ll face challenges to get your shop off the ground. Renson says keeping a positive attitude when things aren’t going your way is a must. Fake it if you have to. If you get in the habit of keeping an optimistic attitude, even if it’s less than genuine to start, you’ll eventually teach yourself to stay upbeat.
12. Hire slowly
You need help manning the register, waiting on customers, and making drinks, but don’t hire too many people too fast. Renson suggests hiring a few friends, or neighbors who will volunteer to help you out for the first few weeks. Slowly, bring on staff.
Hiring trusted staff can be tough. No matter how well someone does in an interview, you don’t know how well he or she fits until they’re on the floor. Keep a close eye on the register, Renson suggests, and don’t be afraid to let people go if they are hurting the business.
13. Be demanding
It’s okay to set high standards for your employees, workflow, and workspace. That’s not to say that you should micromanage your employees, Wilson says, but you should “have a level of OCD when it comes to how your shop runs and looks.”
Starting a coffee shop is hard work, but for owners like Renson, owning a coffee shop is the equivalent of a living a dream. If your passion led you to open your own shop, please feel free to add to this list of tips to help others succeed in the industry.
Learn more about running a successful coffee shop:
- Free Cafe and Coffee Shop Sample Business Plans
- Should You Serve Fair Trade Coffee?
- Know Your Industry Before You Start Your Business
Need help finding a loan? Check out the Bplans Loan Finder.
Header image credit courtesy of Tony Hall via Flickr.