Building Your business from scratch.
All business ventures involve an element of risk. There are ways to minimize your risks but there is no way possible to totally eliminate the possibility of failure. Whether you start your business from scratch, franchise, or purchase an existing business, what you don’t know will hurt you badly. Since starting a brand new business is the most risky of the three ways to get a business of your own, this is the one which requires the most amount of background work.
I spent more than a decade dreaming about opening a coffee shop of my very own before I started taking my first steps towards attempting to realize that goal.
Step one: Learn all there is to know, and take notes!
My earliest research into the grounds of the coffee business involved visiting a lot of cafes and observing their operation. Field work is essential to determine not only what everyone is doing, but also to know what they need in order to do it. Espresso machines are not cheap. You want to make sure you buy a commercial machine which will be able to handle the demands of the consumer. You want to make sure there is adequate seating, and that you have something that brings people back, it could be the food, or it could be a gimmick. Get it right, because people will talk and their words will go far. You want to be remembered for being great, not for being so bad that people have to see it to believe it.
A tale of two cafes.
‘The Bohemian Coffee Shoppe’.
Several years ago, I visited a very strange coffee shop near the end of North Queen Street in Lancaster PA. It wasn’t in operation very long. The only signage was a flag that read COFFEE. The woman had a small espresso machine that made one cup at a time, it was not a commercial machine. I think it was a De’Longhi. Coffee was served ONE SIZE in a 12oz cup, black, no creamer of any kind. The only sweetener she had was rapadura . Rapadura is unbleached, unrefined dehydrated cane sugar juice. It’s brown in color and has a molasses taste to it. And like the flag on the outside of the building proclaimed, coffee was the only item to be had in that establishment. I paid $2, then sat at a very large dining room table, the ONLY table. It was covered with newspapers and magazines. I remember thinking to myself that this had to be a joke. I went there two, maybe three times in total and brought my friend Talley with me the last time I went. For years after the fact, we jokingly referred to that nameless cafe as The Bohemian Coffee Shoppe. It certainly was unorthodox.
Snakes and Lattes.
I first heard about this unique coffee shop from a friend on Twitter. I then drove 500 miles north from the USA to Toronto Canada to check it out. I ended up spending 11 hours in that cafe. Their gimmick was that they charged a cover fee to enter, which allowed you access to use their vast collection of board games. I played game after game sitting at various tables with complete strangers, and I had a tab run which was settled at the end of the night. It was also the first cafe where I ever saw computer tablets being used to record customer orders. A couple of years later, I drove a hundred miles to The Board and Brew in College Park MD. The owner had also visited Snakes and Lattes and had cloned their business model. I too had had a similar thought upon my initial visit to Snakes and Lattes, because you can’t copyright an idea. My lack of knowledge of gaming was what quickly made me abandon that plan. I’m a coffee man, not a game boy.
Step 2: Learn the basics and practice.
The very first cafe that I ever tasted espresso and espresso based drinks like lattes was at The Monk’s Tunic . I became addicted to these drinks very quickly, so I purchased a very basic espresso machine and several espresso bartender guides and spent years studying the books and making my drinks at home. There’s a reason why the coffee at cafe’s taste better, they have much better equipment and their beans are usually much fresher, having been roasted very recently and freshly ground for each drink. Better ingredients and better equipment equals better product, especially when made by the hand of a skilled barista. You can’t do latte art with a home unit. The machine just doesn’t have the right temperature and pressure to generate a proper crema on the espresso or the micro foam in the steamed milk. There are only really a dozen basic drinks that form a basic menu and they are easily learn-able once you know the basics of how to operate the machine.
Step 3: Beef up your bank account.
Banks do not loan money to new business start-ups. The majority of all new business fail in under 5 years, and a fair amount shut down within months of opening. This is often because they underestimated the expenses and ran out of money. If you plan to open a business you will need money. Lots and lots of money. You will need to self-finance, and possibly enlist the help of friends and relatives as potential backers. Cash flow is the life blood of business, and if you run out of money, you are out of business. You will not be able to prolong the inevitable for very long.
Step 4: Hire competent professionals and consultants.
The very first person you should seek out is a qualified CPA (certified public accountant) and a reputable business attorney. These two should be able to help you set up the paperwork and ground work to set up an LLC, open a business banking account, etc. LLC (limited Liability Corporation) status will protect you from losing everything you own including the shirt on you back should the business fail. You’ll also want to run a check on the name you intend to call your business to make sure no one else is using that same name, or you could face legal action. I once worked for a video game arcade that made the mistake of calling themselves Jolly Time Inc. They had the same exact name as Jolly Time Inc, the Popcorn company. They were forced to re-brand the arcade to Pocket Change. Never use your personal banking account for your business. Open a business checking account. Open a P.O. Box for the business, never put your home address on anything for the business. A few months ago, I purchased a jar of Salsa at a food festival. The proprietors at the stand were from Columbus Ohio, where I happen to be on vacation this week. There was an address on the jar which I assumed was their local storefront. I drove there and very quickly realized that this was their home address when I saw all the town houses in a residential neighborhood. This is why you open a P.O. Box.
I would also recommend contacting consultants in your field of business. If you live in the USA, I would contact the S.C.O.R.E. Association. The Service Corps Of Retired Executives has been in operation since 1964 and is a 501 nonprofit organization that provides free business mentoring services to prospective and established small business owners in the United States. They will provide all sorts of advice and contacts.
If you are looking into the coffee shop industry as I am, I fully recommend contacting Crimson Cup. https://www.crimsoncup.com/ They are a franchise alternative and are consultants and suppliers for independent coffee shops. They have over twenty five years of expertise and experience, and have helped over 400 small coffee shops open. When I finally do open That Coffee Place, I will be proudly serving Crimson Cup coffee. They are awesome! The Better Business Bureau rates them A+ status. If you are serious, really truly serious about opening a coffee chop, buy Greg Ubert’s book, Seven Steps To Success. It comes with a sample of their coffee and teas, and you get a phone consultation. It’s worth the $69.99. When you do sign up with them, their fee is about $30,000, but that includes a lot including shop design, staff training, and coffee supplies for your store. These people are the cream of the crop!
Next find a good business realtor. I have looked at over a dozen potential sights so far. Nothing has stuck yet, but some were very close. When you do locate a property, you’ll also need to hire an architect , a building engineer, and a construction crew if the landlord doesn’t have their own. This is all before you even open your doors. My first year of attempting to open a cafe generated thousands of dollars of business expenses, and I still don’t have a shop. The point is, by going through the process, doing everything in order, dotting all my ‘i’s and crossing all my ‘t’s, I’ve protected myself from potentially disastrous mistakes while establishing a firm foundation for my future business venture. Hopefully, you will do the same. As always I wish you success and happiness!