The coffee business, sometimes it’s good, sometimes it’s bad. The 2020 pandemic put a significant toll on the world’s economy. The cafe business was almost out of business. Gradually It’s going to recover. Everyone’s gonna be okay. The goal of this article is to give you kind of the ins and outs on what it took to set up a place, how it’s going, and where you will be going from here and give you about a seven-step process on how to start a coffee business and help you succeed into the future.
So, grab your favorite coffee beverage. This is going to be an interesting one with a lot of information.
How to start a coffee business: 7 Simple Steps
You will have to go through a lot to build out a coffee shop from the ground up, and it won’t be accessible by any means, but once you have got the taste of success, you wouldn’t want to change it for the world.
01. Start with a small place
The first step would be to pick a small location where you can grow and build a brand. A small quick take-out keeps that people flowing with not too much labor involved.
You can start with a coffee take-out shop. People will grab a coffee, a cappuccino, a wrap, or a dessert, and they’re gone. That’s the way I think I would advise anyone trying to open up a small Cafe, just a quick take-out spot. After you build your brand, you can expand from there.
You can add a bunch of retail space to add to those sales, and when people come in for a coffee, they may pick up seven or eight more items, which just adds to daily profit and sales. If you don’t want to do that, don’t take too much space.
02. Work experience
Probably one of the most important things that you need to work in a cafe before opening a cafe. So, you know the ins and outs, you know, precisely what to do, you know what sells & what doesn’t sell.
Not only that, so many people glamorize the idea of being a cafe owner or a retail store owner, or a restaurant owner without actually knowing how much work is involved and how much time it even takes to make some money for yourself.
The idea of coming in once in a while and running the show is very far-fetched, and when you can see what it actually takes to deal with customers or when you run out of something & someone’s upset, or you’re scrubbing toilets, that’s a whole other side of the coin that you would never know unless you ran a cafe or worked in a cafe at least a year.
Even a person who has worked in a cafe for about nine years, when it comes to opening up their own business, they will be nowhere near ready even after nine years of working as an employee. They will still need to learn so much after opening their own business, but the previous working experience prepared them to deal with the basics of running a similar business.
You need the experience to really make it work. You need to know exactly how much it’s going to take, what it’s going to take every single day out of you to run your own Cafe. Without that experience, you are still just kind of daydreaming about what it’s going to be like or what it’s supposed to be like, or how much money you want to make.
You need that initial experience to prepare yourself for that business. If you haven’t run something similar, the chances of you failing are much much higher. Knowing how to start a coffee business highly depends on the experience.
When you go to get financing for your business, and no matter where it may be, any country in the world, they’re going to ask you if you have experience running this business because they know this as well.
People experienced in the business are less likely to fail because they already know the business’s ins and outs in general. Even your friends and family will trust you more with a gift or a loan if you know how to manage a business before you even start thinking about opening your own.
03. Getting the finance
So the most crucial question is, how do you get the financing for your business? Well, there are many options, and that’s really up to you. If you have the personal money to start with, then you can start small enough where you grow your brand, or you may need to take a bank loan.
Friends and family can help you with the money as a gift or loan. But honestly, you may need to invest some of your own money and experience in order to gain more money & to make your dream come true.
So make sure you have experience plus some money of your own. To be honest with you, it may be difficult to secure any money for your Cafe in the beginning because there’s such a high failure rate in cafes.
The banks are very wary when they give money out. That’s where your experience & some of your own investment comes in. Your ability to talk like a professional would also help in that situation when you’re looking for money. Of course, the less money you ask for, you probably be more inclined to actually receive that money because it’s less risk to the bank.
That’s why it’s suggested to start small with the take-out option, maybe a nice drive-through window & there’s less risk for the bank If you take less money. Of course, they love to loan you as much money as possible at a high interest rate, but it’s not what you’re looking to do. So, it is better to skip taking a bank loan if you can manage other ways.
04. Select the location.
About the location, everybody says it’s important, but nobody really has the same answer when you lookup for your research. Location selection really depends on where you are, how much you want to pay, how much you can pay, and that will make or break your business.
Every point in the article ‘how to start a coffee business is essential. But, the location selection is without any doubt the most crucial factor. Location can make or break a business; even if you have the best coffee in the world, even if you have the best customer service, location is the most important.
If nobody knows where you are or don’t have visible signage, other buildings block your Cafe, and you’re tucked away in a corner, you can’t get enough traffic to your store. Unfortunately, no matter what you do, you probably will fail because you don’t have that day-to-day traffic, and coffee shops live and die by their daily sales.
Therefore, you need that constant flow of people at all times because when you’re only averaging four to five dollars a ticket, you need a constant flow of people, and you want to keep all your baked goods fresh.
You need to be busy all the time to make sure when you make something, and it’s out the door before the end of the day. If not, it’s going to be sold by the next day. You constantly need to have a busy location. So paying a little bit more rent is something to get yourself that flow of traffic. Don’t make the wrong decision, just because you want to save a bunch of money on rent and you end up in a hole the wall behind like a back alley and a chunk of cheese.
It doesn’t mean you’re going to have a successful business because paying a little bit more for that location will build you that regular customer base. It will push you into those three, four five six seven years.
Now, you’re building your business, and that’s when you need to spend a little bit more money on rent to make sure you’re in a good location that’s visible and probably in a decent neighborhood. Maybe a growing neighborhood would help out. Your concept probably steers you into the right path of success.
05. Finding the right people
You may know how to start a coffee business, but it’s not a one-man show or a solo act. You will need people to run the Cafe. Finding the right people to help you build your business with the right mindset is actually what you’re trying to accomplish.
Many people that just come in for a paycheck and are miserable. Don’t treat your customers well, and you can get rid of those employees. Believe in those employees who remember people’s orders, smile when people come in, make small talk, remember people’s names, and actually show up on time.
You need to try to find those ones with golden gems. As an owner, you need to show them that they’re actually appreciated because a good employee can cost you money or make you money. If you have to keep retraining people, that will cost you money.
So, you want to keep those good employees in the long term because those are the people that your customers will connect with as well. Sometimes your customers will come in just to see those people that make them happy, that make their day, that make small talk with them.
Your customers will come in to support you as a business. They want to see you do well as long as your part is good as well. You know, people aren’t going to just buy garbage to support you. Keep those employees for the long-term because a good employee will make you more money than you actually have to pay them.
06. Be consistent
Knowing how to start a coffee business is not just limited to place selection or finance; if you can master being consistent, this is where you’ll see that big growth in your coffee shop. This is where many people fail because they end up kind of taking a break when things are growing or going well, they kind of relax, but that’s not the right thing to do. You need to stay consistent with everything about your business.
If your business is going very busy or very slow, staying consistent is a must. Always stay consistent with what you post on Google or Facebook or the door menu; make sure you have the same product.
Every time a coffee goes out on a customer’s hand, it needs to be the same because people can tell the difference on their favorite drinks. This will make you build a loyal customer base. If it’s on your menu, you better have it in stock because people will not return if you don’t have something one time. You will lose a lot of customers at the start if you are running short on things.
You should know how much to buy when you’re dealing with so many perishables. You don’t want to buy too much and then have to throw it away. Try having a surplus of stuff just to keep the customers happy and returning. Gradually, you will have an understanding of how much to buy, when to buy it, when it’s going to be busy when it’s not going to be busy. So that’s where you really want to make sure you’re consistent with your product list.
Your Customer doesn’t care why you don’t have something, or someone didn’t bring something in, or the delivery is late. They don’t care why you don’t have it. They just want it. No one cares about the reason; they just think it’s an excuse or trying to make them happy and get them out the door. Make sure what you have on your menu is what you can actually provide your customer.
07. Don’t lose hope
Last but certainly not least don’t be surprised if you’re working really hard and not getting any profit. When you start your own business, there will be a long time before you take any money home for yourself.
A lot of people think opening a business is like a license to print money, but the actual scenario is different. There’s so much overhead and so many things to pay, and when you’re first starting, you can be lucky to take any money home in your first year.
You’re lucky if you survive even your first yea; if your business makes a little bit of profit, that’s a success. I don’t expect to make any money. The coffee business is a long-term game and a short-term sacrifice that you have to make every single day.
See the bigger picture. The vision of your store should be focused on three, four, five, and even six years from now, and maybe you can start working on the business instead of in the business, and really grow this thing to new heights.
I hope you got the gist of how to start a coffee business. It’s going to be an exciting experience. It’s going to be a ton of work, and the saying goes, if you love what you do, you never work a day in your life.