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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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