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How (not) to start a Coffee Shop

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As the owner of a two-year-old coffee shop, looking back, there are some things I would do differently.

Okay. There are a lot of things I would do differently.

It’s the same as anything in life – things look different in the rear-view mirror.

I have an entrepreneurial spirit. Before opening Sourdough Cuppa Joe, my entrepreneurial spirit had never taken me anywhere truly risky. Obviously, starting a brand new, never-heard-of-before brick and mortar company with very real expenses is risky. I do have many years of relevant experience, but no ownership experience.

Nevertheless, my confidence being boosted by this experience and others’ encouragement, we opened on October 13, 2016…

and I have learned so much!

My Top 10 List of things NOT to do, even though someone, somewhere will probably tell you it’s a great idea…

1. DON’T lease all of your equipment – Some equipment leased is ok, but don’t fall for the lease      everything advice.

2. DO NOT trust your sales projections.

3. IT’S BEST TO NOT start with a huge menu.

4. DON’T try to do everything yourself.

5. DEFINITELY DO NOT assume it’s going to be easy.

6. YOU’LL REGRET IT IF YOU ride the “I’m new, so I’ll be busy” train, forgetting about marketing.

7. DON’T get used to grand-opening sales.

8. DO NOT blindly sign up with the first food vender who comes knocking on your door.

9. DEFINITELY DO NOT be in too big of a hurry to open.

10. PLEASE DO NOT skip the training to save money.

BONUS! – DO NOT buy a large, beautiful commercial building.

Equipment Leases

Many of the decisions we made, which we later regretted, were unavoidable at the time due to the fact that we did not have enough money saved. Hindsight is 20/20, and we would not do this again in the same way. We were given advice by a trusted source which included considering leasing all of our equipment.

Pros of Leasing Equipment

  • All new equipment. New equipment is generally more reliable.
  • Equipment warranties. Generally there will be at least a one-year warranty on new equipment, so any repairs should be free. Just make sure you go through the right channels to arrange the repair.
  • In most equipment leases, you own the equipment at the end of the lease period.

Cons of Leasing Equipment

  • The total cost of the equipment will be much, much higher than buying it outright. It would be more advisable to get a loan than a lease if possible.
  • You have to pay tax on every piece of equipment you use in your business, whether or not you own it.
  • Usually all of the lease payments must be made once the agreement is in force. In other words, unlike a loan, you cannot save yourself money by paying off the lease early. All payments will be collected, whether in installments or in full.

Sales Projections

Long before we opened, even before we settled on a location, I had numerous scenarios of daily transactions and check average. I even had these broken down by day of the week and hour of the day.

Once we found our location, I had even more data to back up my numbers since we had traffic count approximations. I was even more sure of my numbers and even began to think that some of them were too conservative.

I was wrong.

After our grand opening sales subsided, the reality of what was going to be “normal” settled in. My transaction count projections were considerably too high, at least in the beginning. I was so confident in my projections, even back when I wrote my business plan to present to our now landlord that I actually had the arrogance, well, okay, yeah, the arrogance to say that our business should be debt-free and making a substantial amount of money in 6 months after opening.

I could not have been more wrong.

Sales projections are important, but I suggest getting lots of opinions from others already in your niche who have walked the road you are about to walk before. Talk to people who will tell you the truth, even if you don’t want to hear it. Seek these people out, and let their opinion weigh in your decisions about projections.

Menu

Some people will say that you can make it on coffee alone, and that may very well be possible, but our customers like pairing their coffee with something to eat, so we serve food as well. We offer all made-in-house baked goods. You certainly don’t have to do that, but that was important to me, so we do. We did bite off slightly more than we could chew in the beginning from a food standpoint. It wasn’t a big deal, but we cut a couple of sandwich options about a week in.

Offering too large of a menu will stretch you and your staff too thin during your grand opening when you are still likely figuring many things out operationally. You don’t need the additional stress, and you’re new, so you don’t need a ton of options, just a good selection to get started.

My suggestion would be to develop what you want the menu to eventually look like, than pare it down for your grand opening. You can always add those extra items in very easily a few weeks later if all is running smoothly.

Getting Help

When you are first starting your business, money is, for most people, very tight. There are many ways to save money by doing some things yourself. The tendency is to carry this frugal mindset (which is not inherently bad) too far. There are some things which you are going to need help doing.

Use this as a rule of thumb… If you can easily do a task yourself, without sacrificing service or quality in your shop, it’s probably fine to handle that task on your own. This is true for tasks which you have experience completing, not for developing systems to do things that you know nothing about.

Suppose you have a task, let’s say payroll, which you have no experience in and you want to save money by doing it yourself. This is a recipe for disaster. You will spend hours getting your system right so that you can complete your payroll each week, and you will likely, at some point, make a critical mistake. Payroll mistakes are never easy or cheap to fix. Hire a company to do this for you.

Save yourself a lot of time, money, and heartache and get help to complete tasks which are out of your experience zone.

This is Going to be Anything But Easy

I am going to assume that you have some experience in food, at least, if you are considering opening your own coffee shop. If you do not, I strongly suggest that you find somewhere to learn, even if you have to volunteer your time to do it. Assuming the former, that you have experience, there is one thing that you really must not forget.

The companies you have worked for in the past have years of experience and vast resources available which, even though you may not have realized it, made your job much easier.

I would suggest that Newton’s first law of motion can be applied to startup, small businesses as well. The first part of Newton’s first law of motion basically states that an object at rest tends to stay at rest unless an external force acts upon it.

You are the external force.

There is simply no way for you to, from your perspective, see all of the intricate, behind the scenes support you have at a larger, more experienced company. It is vast, and you are going to have none of it. Everything depends on you. Nothing will happen without you putting forth the effort to make it happen.

This list is too long to cover it all in one post, so this is part one of two. Stay tuned for numbers 6-10 of what NOT to do when opening a coffee shop. I’ll even include a bonus in the second post!

Are you considering opening a small business? Ever dream of opening a coffee shop? Are you in the early stages of business looking for encouragement? Comment on this post and connect with us! We would love to hear your story, and even offer advice if we can!

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16 Comments

  • Sarah Knabel

    Thank you for this article and blog – I have dreamed for many years now of opening my own coffee shop. I am just starting to do more research and work towards my dream. I worked in a coffee shop for 4 years and knew from my first few weeks I wanted to create my own! I look forward to following your blog and being inspired to follow my dreams!

    Best, Fellow Coffee Lover

    • thebakeristas

      Hi Sarah! Thank you for your comment! Opening a coffee shop can be very exciting and challenging and requires much research and capital, as I’m sure you’ve discovered! We’d love to offer any help or advice we can give, so feel free to shoot us an email! We’d love to hear more of your story and find out where you are in the process! Wishing you the best!

  • Anny

    This is awesome, I really appreciate your post. Very honest and straight forward. I am looking to open a coffee shop in a VERY competitive market (Seattle) and I have a few friends who are business owners. The simple fact that it won’t be easy is something I keep ever present in my mind, and I appreciate your advice to not do it alone. I am asking for help here and there but I realise I don’t evener know what or where to ask for help yet! Sooooo many fine details. How do I get out of the dreaming phase and into the productive phase?
    Thanks again,
    Anny

    • thebakeristas

      Hi Anny! Wow, Seattle! We’ve seen the small drive thru coffee shops in your area and LOVE that style! You’ve asked a loaded question that’s difficult to answer – how to get out of the dreaming phase and into the productive phase. We’d love to hear more of your story and where you are in the process and are happy to offer any help or advice we can give. Please, shoot us an email and let us know how things are going. Thank you for your comment, and we look forward to hearing from you!

  • Shyam Agrawal

    I amm planning to open a coffee shop in june 2019 but confused about the. Menue and how to make good interior in cheaper price

    • thebakeristas

      Hi Shyam! Congrats on opening your coffee shop! I’d suggest checking out other coffee shop menus for ideas about design and pricing.This was one of our most challenging areas as well. Wishing you the best! Feel free to shoot us an email and let us know how things are going for you!

  • Amanda

    This article is so incredibly helpful and insightful, thank you! I’m creating my business plan now to open a local coffee shop in Oceanside, CA; I worked in coffee shops through my teens and 20s but I must admit it’s been a few years:/. But I’ve wanted to do this for many years and the time and location is right, right now. Any suggestions on where to brush up on my barista skills and knowledge? I’ve reached out to other coffee shop owners, but maybe additional online references? Thanks in advance!

    • thebakeristas

      Hi Amanda! Congrats on opening your own local coffee shop! As far as suggestions on where to brush up on barista skills and knowledge, we were trained by our roaster who provides our coffee beans, Vienna Coffee House. Have you visited any local roasters that would be willing to help and train? We also had another local coffee shop that had opened a year or two before us that allowed Stephen to watch and practice on their espresso machine. Sometimes if you’re willing to provide the milk, a local coffee shop may be willing to let you practice steaming on their machine. There are also many great videos on YouTube you could check out. I hope this helps! Feel free to shoot us an email and let us know where you are in the process and how things are going! Thank you for your comment!

  • Mads

    Hello! We’re quite unusual in that we are opening a coffee shop inside disused toilets in a large London primary school playground! It’ll be open 2 hours before and 3 hours after school and the school are laying out all the initial costs as they want it to be a community style coffee shop but with a boutique/indy look and feel. Our only cost will be very subsidised rent, raw materials and staff. My husband is a baker who supplies coffee shops around town but it’s still stepping into the unknown. We do have help from a friend who owns a chain of indy coffee shops but he’s acting in an advisory role. Are we crazy?

    • thebakeristas

      Wow, London! What you are describing sounds like an amazing opportunity to me! I’m all for thinking outside the box, and while disused toilets may be a little unconventional, the location and the low costs and community support sound ideal. It sounds like you have a lot of support and are getting great advice from your friend who owns a chain of indy coffee shops. You might be a little crazy, but so were we! You have to be a little bit crazy to embark on an adventure like this. If there is anything we can do to help, please send us an email and we’ll do whatever we can! Thank you for reaching out to us!

  • Mireille

    Hi! I love your articles. My dream is to open my own coffee shop in my country but I’m still just 18, I’ve got a long way to go. Any advice on how to build up to reach my dream?

  • Kimberly

    I’ve read most of your blog posts and just wanted to pop by and say that I have loved reading the posts! They’re very informative and aren’t confusing in the slightest! I am in the super beginning stages of creating a small business and would love to get some information from you guys if I could. Thank you so much!

  • Brittney Myers

    Thanks for this post! My husband + I want to start a coffee trailer in SLC, Utah. We are both ex-baristas and the love of coffee runs deeps in our blood. We don’t really know what we’re doing but we know we need funding. This was helpful insight! Curious if you had any advice for a mobile cafe? Thanks in advanced!

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