When I ask potential coffee shop owners why they are interested in opening a cafe, they usually tell me “I thought it would look cute.” My response is “It sure is cute spending all your savings and then working 80-90 hours each week to earn enough money to pay the payroll.”
Consider the following questions if you are thinking of opening a cafe or coffee shop. Are you able to spend about $150,000 on the initial build-out? Are you able to keep $50,000 extra in your bank for payroll or other unexpected expenses? If yes, then read on to learn the most important steps to take before you open doors.
1. Find the best coffee roaster
Coffee roasters should not only roast coffee to perfection, deliver coffee on time, and answer all your questions via e-mail, telephone, and social media throughout the day. You should find a roaster who has these qualities and build a relationship with them. Then, make sure to pay them on time. You can also buy your own equipment if you have a misunderstanding or need to change.
2. Are you looking for a building to house your business? Be a spy
Before you purchase or lease a building, have you done a thorough survey of it? You should park on the lot of the building or nearby before you sign a lease. Count the number of people and cars that pass you every hour. You can be there at different times, such as 2 a.m. and 8 p.m. or 6:30 a.m. to find out who your potential customers are. Are drivers looking for a quick cup before going to work in your area? Is there a traffic light or stop sign near your home? Is there a street corner with teens? Are you able to park enough for your business and make it a tourist attraction?
Look into the history of businesses in this area. Find out why another coffee shop closed down in the exact same spot. You should also look for the most affordable rent, otherwise your customers will not be able to stop smiling at you.
3. Trust people you trust
To review all your lease and contracts, you’ll need a real estate lawyer. To keep your finances in order while you are building your business, hire an accountant or bookkeeper. You should also consider a good commercial agent as buying insurance shouldn’t be about the price. You don’t need to worry about whether someone sues or if you are affected by a catastrophe.
Don’t let Uncle Louie write checks for your payroll. Your business will be doomed if Uncle Louie’s dog is killed and he fails to withhold the correct taxes. A reputable payroll company will handle all your reporting needs. You will be able to sleep better at night if you have financial and legal professionals on your side. You will notice that I did not say “sleep well”. It takes many years of hard work and long days.
4. Be a coffee geek
Learn how to make coffee, tea, and other beverages. Learn everything you can about the product that you sell. You should know everything about coffee, including the altitude and variety of coffee, as well as the name of the farm, cupping notes and the recommended brewing methods. You can read every book and search the internet to find out more about your product. Your products should be your “expert”. Your passion for coffee and cafes should be shared with your employees. They won’t help you if they aren’t passionate about your products or services.
5. Your products should be priced accordingly
Pricing is complex, but not impossible. You should always think in terms of metrics. What number of espresso shots, cappuccinos or lattes do you need to sell to break even? What is the minimum amount you must sell each day to make sure you get paid as the owner? How much does your product cost to replace? Do you deliver coffee to customers? The holy business axiom teaches you how price your products. If everyone complains, your prices are too high. Your prices are too low if no one complains. They’re perfect if only a few people complain. This isn’t a one-time thing, it’s an ongoing process.
Pricing is something you should consider as you grow your business. Your revenue must grow if your expenses are increasing. What would happen if your prices were gradually increased by a nickel or quarter. It’s worth trying it for a few weeks to see if customers notice that you are raising your prices. Your customers will not notice that your prices have gone up if you provide exceptional customer service and product. They will love you if you succeed. They also own businesses. Their happiness is your happiness.
6. Know the perceived value of your coffee products
Pricing is not complete without considering the perceived value. What is the perception of coffee? What is the correct price for a Hawaii Kona coffee? It can be expensive (to you), but it can sell for between $40-50 per pound. What information can you give your customers to show the true value of this coffee? Are you able to show photos of the coffee farmers who picked this coffee? Are the coffee organic and fair-trade? Will a portion of the proceeds go to an important charity? Are you communicating with customers via email and social media about the coffee? If you answered yes to any of these questions, then you can make that coffee at $50 per pound.
7. Find passionate people to work with you
Hire salespeople. Instead, look for people with smiles and smiles on their faces. People who smile, are enthusiastic about your company and products will be the best candidates. If they lose their smile, I will fire them. Your cafe should be a model for your employees. You can nurture your employees and pay them well. This will help you find employees with big dreams.
8. Compete for the best coffee in your cafe
Everybody sells coffee. The Blue Ocean Strategy is a great idea. How can you make your cafe stand out from the rest? Keep an eye out for new businesses and research the competition within 50 miles. Ask yourself every day, “Who does this?” If you get a “nobody does this”, then you are on the right track.
9. Passionate and full of joy
Your business must be filled with joy. It is said that a smile can make the world a better place. If you, as the owner, love your customers, business, and products, you will be able to sell more. Customers want to purchase from happy people.
10. Keep in mind your ultimate goals
Remember that you are opening a business to expand your life. Although it may sound strange, you need to plan your exit strategy for the business as well as its growth. The long hours will not bother you if you are passionate about your business. If you work long hours, you will probably hate your business after three years. You can plan your exit strategy by hiring top people, planning financially for the worst and best of times, as well as delegating many of the day’s tasks. You can be more connected to your family and friends, which is a sign that you are a successful businessperson.