10 Tips on Opening a Coffee Shop

1) Research and a Strong Business Plan

A perceptive business plan backs the opening of any excellent business, and a coffee shop is no different. A strong business plan is well structured yet malleable so that the entrepreneur can make changes as they go along. Before writing the business plan, however, it is vital to research the market, the prospective location, and the industry. Successful entrepreneurs are informed, and choosing the coffee industry is the first step. Now, it is time to become an expert in all things coffee.

Good research will fuel an intelligent business plan, which should include:

• The type of coffee shop. Will the store be traditional or a mobile cart? Will the shop roast its own beans?
• An estimate of the startup costs
• The location
• Staffing needs and estimates

For future coffee purveyors, networking is also a vital part of this first step. Finding strong connections in the industry through networking is a tool that can give a new business a much-needed boost. Reach out to coffee shops and cafés in the area to see if other business owners offer advice and suggestions. These days, networking can be done through social media, email, or even the old-fashioned way: in person.

2) Create the Coffee Shop Brand and Define the Target Customer Base

After some solid research is completed and the business plan is drafted, it is time for entrepreneurs to focus on marketing. The shop’s brand must be front and center here, so what is the unique and intriguing story of the coffee shop, and how does it inform the brand? Creating a brand involves thinking about the type of shop the entrepreneur wants to run. It may help to consider:

• What the logo will look like
• What people should associate with the brand
• What special products will be sold?

Next, entrepreneurs should identify the target market. The target market may fluctuate over the business’s life, but it is crucial to start with a clear idea of who the customer base is. Some categorization can help here, along with focusing on these questions:

• What types of customers are expected and from where?
• Is the business near a college or university?
• Is the business in a residential area, rural, or urban?
• What industries are located nearby?
• What age groups are you targeting?

Questions like this will help entrepreneurs zero in on the target market and demographic.

3) Create and Launch the Company

Launching a new business venture requires dedication and commitment. Entrepreneurs must also be committed to the business structure they choose and make this decision before starting the company. Running coffee shops as limited liability corporations is most common in the coffee world. This structure provides new businesses with the necessary protection, separating business assets from personal assets through the corporate veil.

After forming the LLC by submitting the appropriate documentation and choosing the right location, entrepreneurs should obtain a Point of Sale system. POS systems make keeping track of inventory and sales much easier and have become a necessity for most businesses that sell products to the public.

Another aspect of this step is hiring and training staff. Entrepreneurs should have a consistent hiring process and ensure that all new employees receive above-average training.

Next, entrepreneurs should ensure they have thought about all the small details, such as electric power, supplies, identified suppliers, and funding. Of course, much of this will have been included in the business plan. However, before launching the business, it makes sense not to leave anything to chance.

Lastly, all successful coffee shops have a particular individual vibe. Whether the shop is decorated with portraits of famous local athletes, stocked with books, or set up to host open-mic nights for the musically minded, the coffee shop should have its sense of culture. Customers should immediately understand what makes the business unique from the moment they step inside. Often, the vibe of the coffee shop is linked to the entrepreneur’s personality, so do not be afraid to be yourself!

4) Successfully Run Day-to-Day Operations

Like restaurants and bars, coffee shops require employees to work long hours. Therefore, entrepreneurs must recognize that running a coffee shop will be challenging and rewarding.

Regular maintenance must be done when a business uses the same equipment over and over—for example, the espresso machine. Even coffee shops that keep all their devices well-oiled and clean, and all of their technology up to date, encounter problems. When day-to-day operations become complicated, customer service suffers, and the business struggles.

Entrepreneurs must work hard and set an example for staff with dedication and perseverance. Coffee shop owners should not be afraid to clear tables, pour dark roast, and run the espresso machine. However, entrepreneurs should also take time off to relax, stretch, and ensure that their hardworking staff takes regular breaks.

When the day-to-day operations of a coffee shop become monotonous, feel free to mix things up. Assign employees new tasks, introduce a new bagel sandwich or a variety of beans, or simply hold a team meeting to get things back on track.

5) Consider Growing the Business

When the coffee shop is finally up and running, profits are being made, and the staff is motivated and energetic, it is tempting to take a break. However, this is the point when vital work regarding growing the business must be done.

Before considering how best to expand the business, entrepreneurs should honestly appraise how the company is performing. Is the team working well? Are sales increasing, staying the same, or falling? Is demand as high as ever? Are there new coffee competitors on the scene?

If the time feels right, product lines can be expanded, with suppliers tapped for new deliveries. The shop could physically develop, satisfying more customers daily, or the business could grow into a new franchise. However, the entrepreneur should also not feel pressure to expand. The decision is up to them and their investors.

When expanding, it makes sense to maintain brand consistency. Coffee entrepreneurs should also be careful with their cash flow and make monetary projections for the future. These steps should help prepare the business for expansion and growth.

6. The Cost of Starting a Coffee Shop

The overall cost of starting a coffee shop is dependent on many variables. The most important of these are:

• Location
• Size
• Type of shop

Opening a coffee shop can cost entrepreneurs anywhere from the manageable sum of $80,000 to a more significant figure of $250,000. But, of course, most shops fall somewhere in between. So next, let’s break these costs up into easy-to-digest categories.

7. Startup Costs

When starting a coffee shop business, much of the company’s capital will be spent securing the location and purchasing the necessary equipment. Some entrepreneurs choose to rent, and others can buy the space for the shop, but building codes must be dealt with, and often repairs are needed.

Franchising Costs

To operate a franchise business, owners must pay a franchise fee. This is usually within the range of $10,000 to $50,000. Additionally, franchises typically pay an ongoing royalty or franchise fee, a percentage of gross revenue. The regular percentage rate is 5% or 6%.

Another cost to be aware of when opening a coffee shop are marketing fees. Usually, a marketing or advertising fund exists that each franchise in the county or region adds to. Typically in the 1-4% range, this fee is a fixed amount or a percentage.

Yet another probable cost is the amount that must be paid for products or services that the franchisor requires.

8. Coffee Shop Hiring

Every entrepreneur seeks to hire motivated, skilled employees for their new venture. Hiring staff should be a careful process resulting in the best team possible. All new hires should have the ability to patiently deal with customer complaints. All staff members should be experienced in customer service, and at least a few should have worked in restaurants or coffee shops.

Entrepreneurs who know they do not want to play the role of owner and manager are tasked with a significant decision. The manager of the coffee shop is, in many ways, the face of the company. Choose wisely, and trust the interview process and overall hiring system the business uses. New business owners would be wise to search for applicants with managerial experience.

The number one position that will need to be filled for the coffee shop is next.

9. Barista

A barista creates the drinks at the coffee shop. They serve the customers and are the face of the business in many ways. This is an important position, and baristas should be:

• friendly
• entertaining
• engaging
• calm under pressure
• overall, a positive person

10. Unique Coffee Business Ideas and Concepts

Within the coffee industry, there are various emerging business ideas that are both unique and intriguing. So why not try something different in one’s coffee career?

Coffee Roaster

One idea for entrepreneurs who enjoy superior roasted coffee is to roast beans. The key to this concept is obtaining a coffee roaster; these machines can cost a mere $500 or go up to $58,000. In addition, roasting coffee allows a business to sync the brand with the beans and become a supplier, providing other shops with high-quality flavors.

Portable Coffee Cart

When entrepreneurs love coffee but want their idea to be mobile and flexible, they often turn to a mobile coffee business. However, there are a few necessary conditions for this venture. First, there must be an area with foot traffic where the owner can roll—and work. Entrepreneurs must purchase the cart with all the needed technology or add it in. Therefore, a coffee cart with all the bells and whistles can cost up to $20,000.

Coffee Stand

A coffee stand provides more refrigeration and counter space than a cart. Depending on its size, a stand can also allow the entrepreneur to expand their vision to include additional items. However, coffee kiosks do not come cheap and cost between $15,000 to $80, 000 to purchase and equip with high-test java.

Drive-Thru Shop

Nowadays, everyone is in a rush—but everyone still wants their caffeine buzz. Entrepreneurs who thrive in fast-paced settings and pride themselves on excellent customer service can make their coffee shop a drive-thru and serve the masses that way. The cost of opening a drive-thru shop can range anywhere from $35,000 to $75,000.

Cat Coffee Café

Entrepreneurs who are not only coffee enthusiasts but cat lovers can combine their passions and start a cat café. This concept may be new in the U.S., but it is all the rage in many Asian countries. Additional costs must be added because of the felines and their care, so we price this idea out at $100,000 or so.

Opening a coffee shop is always a strong business idea based on our collective love for the flavorful beverage at any time of day. When the new coffee shop owner plans well, research, and pays attention to detail, their new venture will be successful, and the java will flow.