"I want to open a coffee shop". You've said it a million times. Now you're ready to make your dream a reality. The question is: How do you get started?
Opening a business of any kind requires a great deal of research and preparation. But most importantly – it requires you to take action on those plans.
It’s easy to get bogged down by the details. Having a blueprint or roadmap to follow can help you stay on the track to success.
Preparation, Vision and Competition Research
To succeed in the business world, you need a plan. Sure, you could take over someone’s lease and open up shop tomorrow. But what if the location is poor, or you have too many other competitors?
Preparation is the first – and arguably most important – step in the entire process. Don’t skip it – no matter how tempting it may be. Not only do you need to prepared for the actual process of opening your shop, but you also need to be prepared mentally for the hard work and sacrifice it will take to succeed.
Why do you want to open a coffee shop?
Are you prepared for the challenges of running a coffee shop?
Along with preparation, you need to research the competition and local laws to determine:
If you can open a coffee shop in your area (and the laws associated with it).
If there’s too much competition.
Finally, let’s not forget about the importance of having a vision for your shop. You don’t have to have every last detail ironed out just yet, but it’s important to have an idea of what type of shop you want to open.
Business Plan and Insurance
You have a vision for your shop, and you’ve researched the competition. Now it’s time to create your business plan.
Every business needs a plan, and this will be the first real step to making your shop a reality. It’s also a necessity if you plan to apply for financing to open your shop.
Business plans are complex and have several elements, which is why it’s important not to rush this process. Be prepared to do a lot of research. Take your time and do it right.
While working on your business plan, you may also want to look into what type of insurance your business will need. Insurance can protect you against liability, theft and loss of income.
Budgeting – Costs and Expenses vs Profits
How much will it cost you to open your shop? Creating a budget is essential if you want to keep your doors open. You need to know how much you’ll spend to get your shop up and running.
Opening a coffee shop – even a small one – can cost tens of thousands of dollars. A large percentage of the costs is associated with equipment and leasing out your space.
Sit down and create a list of all of your equipment, supplies and everything else that you expect to spend money on. Use this list to create an estimated start-up cost budget.
Once you have an idea of your start-up costs, consider the expense of maintaining your shop and the expected profits in your location. A shop with a prime location in Manhattan stands to generate more profit than a small shop in rural upstate New York.
Location, Size and Floor Plan
Finding a good location is absolutely critical when opening a coffee shop. A little shop tucked away in a back alley may sound cozy and romantic, but if no one can find it, your business won’t stay open for long.
There are several things you need to consider when choosing a location, such as:
- Traffic and visibility. Will people be able to see your shop easily? Does the area get a lot of traffic?
- Neighborhood. Does your target audience live in the area?
- Size. Will the shop be able to accommodate your vision?
- Cost. Does the space fit into your budget?
- Competition. Is there a lot of competition?
Along with finding a good location, you also want to start thinking about floor plans. The layout of your shop will directly affect the flow and feel of your shop, so think this through carefully.
The floor plan of the shop itself will obviously factor into your plans, but you will be in control of most of the elements in your shop’s layout. It’s important to set your shop up in a way that makes it easy for customers to get what they need and for staff to work efficiently.
Suppliers and Equipment
What’s the difference between a great coffee shop and a mediocre one? Most of the time, it’s the quality of the equipment and, of course, the coffee itself. Investing in great quality equipment and supplies will help you deliver a superior product that virtually sells itself.
But outfitting your shop won’t be cheap. A new commercial espresso machine can cost thousands of dollars. You’ll need other equipment, too, like:
- Drip coffee makers
- Display case
- Point of sale system
Along with the equipment itself, you need supplies, like cups, milk, creamers and sugar.
Make a list of all the equipment and supplies you need to get started, so you can estimate costs and prepare to get all of the items you need.
Designing a Coffee Shop
Designing your shop is the fun part of the launch process. Here's where you can let your creativity shine.
If design isn’t your forte, that’s okay – you can either hire someone to design your shop or take cues from other successful shops.
A few things you need to consider: your budget, the vibe (or feel) of your shop, size and brand.
Local Regulations and Licenses
The logistics of opening a coffee shop can be confusing. Understanding local regulations and license requirements will help you avoid unexpected fines and setbacks that can keep you from reaching your goals.
Coffee shops still need to adhere to local health regulations – even if they don’t serve food. There are also several licenses that you will need to acquire before you can open your doors.
Hiring and Setting a Standard for Customer Service Quality
Even if you plan to open a small coffee shop, you’ll probably need to hire employees. At the very least, you should hire a barista who understands how to properly brew coffee and make coffee drinks.
Create a list of the staff you want to hire along with the duties and responsibilities that will come with that position. Once you have a list of your desired staff, you can start calculating the costs of hiring.
While you’re at it, take the time to think about the type of customer service you want to provide. Setting service standards will ensure that customers are treated a certain way and your staff is capable of answering questions.
Products, Services and Food Safety
What will you serve at your coffee shop? A mix of coffee drinks and food? Just coffee? Just pour-over coffee?
Your menu can be as simple or as complicated as you want it to be, but you still need a plan. It helps to know what the locals drink and eat. If your customers are plain, drip-coffee drinkers, adding macchiatos to the menu may be a waste.
Now is also the time to think about your food safety policy and local regulations regarding food safety.
Along with your menu, you want to think about what other products – if any – you will sell. From mugs to specialty food items, many coffee shops also sell additional products.
Marketing, Promotion and Loyalty Programs
Even if your shop has a great location with high visibility, you still need a stellar marketing plan to succeed. Every business needs a marketing strategy; a way to promote their shop to local customers.
Successful strategies take a multi-channel approach that includes both online and offline elements. Creating and implementing a loyalty program will also help boost your repeat customer business.
Many coffee shops struggle to turn a profit. Finding ways to maximize your revenue is crucial if you want to keep your doors open.
Shopping around for products and buying products wholesale are two ways to cut down on costs. But there are other creative ways to boost revenue, such as offering point-of-sale promotions, offering gift cards and making your shop a place that attracts groups of friends.
Launching – and running – a coffee shop can be a rewarding challenge. When all of these elements come together in the right way, they create a solid foundation that will help your shop get started on the right foot.
Learn more on how to open a coffee shop:
- Starting A Coffee Shop. Step 1: Choose Your Concept
- Starting A Coffee Shop. Step 2: Create A Business Plan And Find Insurance
- Starting A Coffee Shop. Step 3: Budget - Expenses Vs Profits
- Starting A Coffee Shop. Step 4: Find The Right Spot For Your Shop
- Starting A Coffee Shop. Step 5: Supplies And Equipment
- Starting A Coffee Shop. Step 6: Local Regulations And Licenses
- Starting A Coffee Shop. Step 7: Hire The Right Staff
- Starting A Coffee Shop. Step 8: The Menu And Food Safety Issues
- Starting A Coffee Shop. Step 9: Marketing And Promotion
- Starting A Coffee Shop. Step 10: Maximize The Revenue