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The Complete Guide on How to Start a Coffee Shop

Building a business from scratch is a daunting task.

The success of even a tiny, one-room operation depends on a host of moving parts. Yes, people will always want to drink coffee and you can be the one to quench their cravings.

However, you’re probably not the only one with that idea and business model. You’re up against everyone from mighty Starbucks to coffee cart owners. Entrepreneurial spirit and determination can only take you so far.

The good news is there are surefire ways to come on top. Here is a guide on how to start a coffee shop and make it profitable as well.

Come up With a Game Plan

A solid business plan is the cornerstone of the whole endeavor.

This document contains a set of vital sections. In them, you have to define who you are and who you want to serve, which means your target market and value proposition. It’s also necessary to set realistic goals and milestones for your shop.

The financial part of the plan typically contains sales and revenue projections. If you lack the know-how yourself, hire a trustworthy accountant.

Feel free to first draft a one-page pitch and work your way from there. By doing so, you can easily validate your business idea and assess your market prospects.

Select Your Niche

Once the outline of the business plan is in place, ponder ways of differentiating yourself.

This process revolves around choosing your specific niche. Do you want to serve pour-overs and use top-notch coffee grinders? Perhaps your shop could attract customers with high-grade bean varieties and baked goods?

In any regard, your menu anchors your value proposition and acts as the main selling point. Concrete choices depend on what kind of coffee shop you run.

The list of options includes coffeehouse, coffee kiosk, internet café, café bistro coffeehouse, etc. Do your research and get in touch with local industry players to gain a better idea of what works.

Pick Your Location

Location analysis is what makes or breaks most ready-to-drink shops.

The ideal site is somewhere central and is easy to access. Ideally, it’s clearly visible from the street and enjoys steady foot traffic. Parking space and surrounding amenities and attractions come as nice bonuses.

Another all-important consideration is the neighborhood itself. Your best bet is a well-developed area where some of your target customers live or spend time regularly.

Mind that it may take a while to find the optimal spot. Nevertheless, avoid rushing this decision— your hastiness could backfire spectacularly later.

A Matter of Design

Many people don’t even notice plain and forgettable establishments.

Therefore, you have to ensure the exterior is visually-pleasing and welcoming. Choose one of the popular design styles for coffee shops in 2020. Don’t overlook landscaping and signage either.

Do everything you can to make a strong first impression.

As for interior design, the top priority is developing a floor plan that suits your business needs. Customers must be able to form the line, access your POS system, and sit around conformably.

If you have managed to secure a former restaurant/café space, you don’t have to remodel much.

Seek Funding

For every small and infant business, funding is paramount.

We would recommend having a conversation with your friends and family. See if they’re interested in investing in the business. Failing to obtain their support, explore other bootstrapping tactics or local funding avenues.

Loans are always worth pondering, especially if they come in the form of business assistance programs. They are a great way to offset a portion of the startup costs.

The same goes for the local bank, credit union, and SBA-backed loans. Just remember you need some proof of your profitability and/or traction potential.

Hire Intelligently

Coffee shops aren’t one-man shows.

You need to hire friendly, positive, skilled, and motivated personnel to serve customers properly. So, do your homework and scour the job marketplace.

Avoid merely glossing over people’s resumes. Try to gauge how well they will fit your business culture and philosophy. They also need to help you reach your goals, so don’t hesitate to set high expectations.

We already mentioned an accountant, but we can’t emphasize how important this team member can be. He/she effectively acts as both your bookkeeper and a small business consultant.

Ramp up Marketing Efforts

The worst thing that can happen to your business is staying under the veil of obscurity.

To escape this predicament, work out a marketing strategy ahead of time. Build a strong online presence via a website, advertising, social media, and blogging. Claim or add your business listing via services such as Google My Business.

Download our Marketing Plan Example so you can edit it and create your own

Differentiate your brand from other shops in the area (direct competitors). Make sure people can find you through the internet search nice and easy.

It would be wise to deploy your campaigns a few weeks before opening.

Get Serious About Insurance

Insurance coverage is one of the most neglected components in the business arsenal.

The problem here is that disruption is always a looming possibility. So, do yourself a favor and conduct a risk assessment.

Take into account your policies and the value of your equipment/business property. Common options are general liability insurance, property insurance, and workers’ compensation insurance.

Equipment breakdown coverage is a sound choice too, as it shields you from sudden, unexpected expenditures. It coves machinery repairs, replacements, lost profits, and more.

Hope for the best and prepare for the worst.

Now You Know How to Start a Coffee Shop. Time to Act!

Opening a coffee shop is no cakewalk.

As we’ve shown you, simply brewing superior beverage doesn’t cut it. If you mean business, start strategizing in advance and formulate your plans and strategies.

Make informed decisions regarding hiring staff, location, shop design, and other aspects. Don’t skip any of the steps we highlighted above.

Of course, knowing how to start a coffee shop is just one side of the equation. You also have to be adept and running and managing it effectively. It’s a tall order, but it’s an integral part of small business ownership.

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