12 Considerations before Starting a Coffee Shop

Coffee shops were increasing before the pandemic started. When heavy restrictions due to COVID-19 are lifted, coffee shops and the food industry will revert.

Coffee shops have already become a place where people meet for socializing, business people having informal meetings, students doing projects or assignments, friends catching up, and those who want to pass by time in a café.

Investing in a coffee shop would require an in-depth evaluation of different aspects, from product varieties to competitors, suppliers, lease, salaries & wages, and the initial capital needed.

You might say that you can start your coffee shop without a business plan. I think you can. But, determined entrepreneurs want to increase their probability of success. Creating a business plan helps you get to know deeper about your project and the coffee shop industry. It lessens the variables and unpredictability. Undesirable outcomes can be prevented by proper planning.

Presented below are the different aspects of the coffee shop business plan you need to consider.

1. Deciding Whether to Franchise or Start your Own

Choosing to franchise a known name in a coffee shop industry will save you from the hassle of marketing, establishing your brand, and selecting a good location. However, building your name and brand makes your ideas implemented, allowing more creativity. Profit margins tend to be higher as long as you can invest enough time managing your business.

2. Identify Your Target Market

Knowing the demographics of your target customers will help you identify the specific menus to offer, prices, branding, and storefront. Also, targeting specific demographics rather than catering to the general public will help your services stand, and you can create relationships with your clientele.

3. Know Your Competitors

Identify how your competitors are positioning their businesses, product offerings, branding, and pricing. Analyze how you can compete with them and have your edge to enter into the existing industry. A coffee shop is a competitive venture. Finding your niche helps you stand out with your target customers.

4. Create a Menu

Preparing a menu according to your target market helps you establish loyal customers. It is better to create a menu for specific customers rather than have a generic kind of offering. Sourcing out baked goods as a complement for your beverage can also help boost your sales.

5. Choosing a Good Location

A good location is a significant factor in the success of a coffee shop business. It would be best if you considered establishing in an area with a lot of foot traffic, a go-to place for people to chill and enjoy good coffee and food. Ensure that the place has enough parking space. Having a location in an intersection might be problematic in terms of parking and a downside for customers.

6. Carefully Prepare a Floor Plan

Consider both your customers and staff in designing your floor plan. Is it easy for the customers to find where to order, get the condiments, or go to the toilet? How about the staff? Is it comfortable for them to workaround? These are some of the questions you need to consider when designing for floor plan. If you are not good at designing, you can hire an interior designer to do it for you. A conducive place can attract more customers since they love a comfortable place to relax and easily find their way around.

7. Hiring Staff

Preparing a personnel plan is beneficial for projecting expenses and hiring the most fitted employees you want. Providing competitive salaries and benefits can attract experienced and talented employees. You should also allocate training, skills improvements, and team building costs to enhance staff performance and morale.

At the start, you would probably need a few staff. But as the business grows, more employees are needed to provide quality services to your customers.

8. Source Out Equipment

From a grinder to an espresso machine, coffee makers, toasters, blenders, POS, and security systems, will require a massive investment from you. Some suppliers offer equipment leases. You can consider leasing, especially when you are starting. On the other hand, investing in your equipment would also be a good option since it is a long-term investment and you can choose the specifications of the equipment you want.

Ensuring to source these from dependable suppliers will help your business create a long-term relationship with your suppliers. They can share with you inside information about the industry, which can contribute to your success.

9. Process Business Legalities

Your business structure must be plan out well since it will impact taxes and involvement of your assets. A sole proprietorship is easy to establish; however, your assets are tied up to your business. If something goes wrong, you can also lose your properties. A limited liability company keeps your assets safe. The creditor can only claim against business assets.

Study the local and state taxes and know how they work to keep you aware of the accounting measures to maximize deductions and reduce costs.

Secure all the necessary business permits and licenses to operate. Also, building insurance is a must to keep you safe from unexpected events.

10. Compute the Initial Investment Needed

Compute how much you need to invest before the business stands on its own. Initial costs include processing permits & licenses, building improvement, lease, purchase or lease of equipment, employees’ salaries and benefits, inventory, and utilities.

11. Assess Financial Feasibility

Before starting your coffee shop, you should prepare first a financial feasibility study. Assess if the financial projections make sense and if it is worth it to pursue the project. The financial ratios and financial metrics can help further evaluate the project and provide a more comprehensive project evaluation.

There are available financial model templates here for a coffee shop to save you time and effort compared to starting from scratch.

You are now more confident to start your coffee shop after considering all the factors presented above. In every venture, proper planning is crucial to its success. Do all the necessary preparations and proper planning before kickstarting your business.