Preparing a Coffee Shop Business Plan



Don't let your coffee shop business plan become part of the 61,148 business bankruptcies that occurred last year!

So ask yourself again if you really need a well thought out business plan before you leap off the metaphoric ledge into starting up your own business!















A business plan is your best bet for success if you are entering the service business selling what is a very competitive industry. Remember you better be prepared since you’re up against mega businesses like Starbucks and many others. But instead of fearing them, the smart business owner will learn from them all and use it to their advantage. There can be a tremendous amount of profit from this business and why not take advantage of it if you can! But you better have a business plan and it must be well researched! Without it you’re done, you just don’t know it yet!

Before we get into the nuts and bolts of how to go about a coffee shop business plan lets get one thing clear so you are not wasting your time! You need much more than a lot of heart and desire to make a business work! You need more than a very attractive building and great suppliers! You need more than great service! You need more than one great tasting cup of coffee at the right price! Now I am not denying that all the above is extremely important and gives you a great head start, but you need one more thing! You need customers!

So let’s get started! How do we get these customers to our business and through our doors buying our product? Remember this is the most important element of any start up business and must be a part of your coffee shop business plan. I wish I could give you a simple answer to this but like any successful plan it will take some research on your part. What I will do is give you the road map for you to do just that.

Go to www.census.gov/ and look for subtopics like “State and County QuickFact” and “People & Households”.

The very first tool is the U.S. Census report. There is a tremendous amount of information to be found in the U.S. Census information. Based on the type of customer you have decided to target which I’m guessing is the younger business person on the go. What we used to refer to as the Yuppies. An individual that has money in their pockets, is on the go, and are successful.

Coffee Shop Menu

Go to www.census.gov/ and look for subtopics like “State and County QuickFact” and “People & Households”. There is a lot more valuable information but this will give you just a taste of it. You should be able to find information like retail sales also. How much money is being spent in your area? All great information for your coffee shop business plan.

So when you begin to research the U.S. Census report to build your coffee shop business plan look for that type of data or whatever you have decided to target. The information is going to have it but it will be disguised a little bit. You will need to look for age groups, income, price of homes, numbers of children, education level, etc. If you intend to open your coffee shop in an area that doesn’t match up with the right type of data then look somewhere else. Don’t be so hard headed about a certain building just because you can get a good price on it. There may be a reason that you can get a good price on it! Think about it!

You must have customers! You must have repeat customers! Those customers must spend their hard earned cash on your product!

You must have customers! You must have repeat customers! Those customers must spend their hard earned cash on your product! If you don’t it won’t matter how good the building looks or the coffee tastes! So that is next. Let’s talk about the actual building itself! Your coffee shop business plan must be able to detail why the exact location is going to work. What are the traffic patterns going past your targeted building? When I ask that I really need you to consider every detail. Just because you can see it from the highway does not spell success.

In most cases it won’t even matter since most people once on the highway are not going to stop. You must look at the actual neighborhood. Is the building on a route that your targeted customer is going to drive by? Is the access to the building easy to get in and out of? Is the parking easy to get in and out of? Do you need a drive through instead? Does the neighborhood match up to the type of customer or will they be nervous or ashamed to pull in because the neighboring buildings are less than attractive?

Again, check out the United States Census and you will get so much valuable information that can provide you with real data about the county and city you live in no matter how big or small. You will find the number of children to the ages of those individuals in that area. Take this information and combine it with the educational level and income, which is there also, and you have some very important data for your coffee shop business plan.

For some it won’t matter, but for most a little bit different taste for a lot less money makes a big difference.

Next take a look at how many other coffee shops are in your area. However, don’t limit it to just coffee shops. Take a look at any place that sells a cup of coffee for those on the go. As an example most gas stations now sell this type of product and generally speaking at a very low price. For some it won’t matter, but for most a little bit different taste for a lot less money makes a big difference. Therefore, in your coffee shop business plan you are going to have to give serious consideration to why they would stop at your business versus a convenience store.

Coffee Shop Sitting Area

So what will make your coffee shop stand out once they get through the doors? Will it just be the great tasting coffee that I’m sure you will serve? Will it be the comfortable establishment that you will make it? Will it be something else? If you can figure that out and somehow make it the place to grab a cup of coffee in the morning and a comfortable place to hang out in the evening to enjoy a cup of coffee and maybe something else, you will be successful. All this must go into your coffee shop business plan.

You may have to make several road trips and visit coffee shops outside your area to get some great ideas. What makes them successful? Don’t just visit them once, but go several times during the day to see what is different, if anything. What types of people are coming in? How long do they stay? How are they dressed? What are they buying? Is the person behind the counter nice? Do they seem like they have been there several times before? Take notes without looking obvious. You don’t want them thinking you are some kind of weirdo! Then take all the information you have collected from those successful shops and decided how you are going to attack it within your coffee shop business plan.

Go to your local court house and get the bankruptcy filings for businesses in your area.

Go to your local court house and get the bankruptcy filings for businesses in your area. Does anything stand out to you? Hopefully you will not see any coffee shops, but also look for similar types of businesses. Then go to those addresses and see what the area looks like. Does it make sense to you based on the area that the business would not be able to survive? Is this the same area you are hoping to start your coffee shop?

Your coffee shop business plan is more than a document required by most financial institutions to be considered for a loan. It needs to be your checklist to determine whether your coffee shop will be successful or not. After you go through your entire process of completing your business plan and it indicates that it is a bad idea, you better listen to it. Now that does not mean that you need to scrap your plan. It may mean that you need to make some changes. Don’t be hard headed and stay with something that will not work. You may need to change location or something else.

Once you open the doors how are you going to attract customers? This is another huge part of your coffee shop business plan. What works in today’s fast paced world? Do you need to consider FaceBook? What about a website? Do newspaper advertisements still work? Will you need to have short television advertisements on local cable channels? How about email advertising? Will you need to hire someone to drop leaflets to local homes? What about the radio? You have a lot to consider and I am not in a position to tell you what works. I will tell you that most of these will work except you need to probably have an expert help you. Have you included it in your plan or are you going to wing it?

Maybe you will get lucky even though I wasn’t.

I can tell you from experience in some of my first business I tried to just wing it and found out the hard way it doesn’t work. Maybe you will get lucky even though I wasn’t. Like I began with, you can have a great tasting cup of coffee and a great environment but without customers you will close your doors very soon! Sorry, I don’t know any other way to put it!

Another key element of your coffee shop business plan will be the financials! This is something you are more familiar with; however, let’s just make sure! The common term is called startup costs! What do you need to get started? Go ahead and create a list now of everything you believe you need to get your business up and running so that you can open the doors. This should be kind of fun for you until you add up the numbers and see what it will cost.

Did you include everything on the list to put into your coffee shop business plan including; insurance, licenses, every possible supply, employees if you will have them, equipment, the building and all the modifications, signs, advertising, professionals such as attorney fees, royalties if any, six months to a year of working capital! Yes you read that correctly! You better count of at least six months and up to one year or more of working capital to carry you through if things don’t go exactly as you planned.

Now I am not saying you can’t blow the doors off all the statistics but the odds are that you will have to struggle when you are getting started.

Most new business owners have a pie in the sky view of how successful they will be. I know this because I was one of those new business owners. My most successful business that I earn great money on today took me almost three years to begin seeing a real profit. Now I am not saying you can’t blow the doors off all the statistics but the odds are that you will have to struggle when you are getting started. In many ways that makes it even better when you become successful. I was a Marine and boot camp was Hell on earth, but I can’t tell you how proud I was when graduation day came.

If you don’t know by now you better learn before opening your doors how to price your product so that you can make a profit. Don’t guess at a price just because that is what everyone else charges. Understand what are your fixed expenses (rent, loan payments, insurance, etc.) and what are variable expenses (supplies, labor, etc.). The final piece to this is to know what it costs exactly to make the product. If we are talking about a cup of coffee, how much is the disposable cup and lid, how much is just the coffee that is going into it, how much is the additional sugar, cream, stir sticks, etc. This will then help you understand what you must charge for it to pay your bills and make a small profit. Hopefully it is a competitive price. If not, you better go work the numbers again to make sure you are correct!

Typically in the food service business the product cost should be 30% of less. Less of course is better, but it may mean you’re charging too much if it is significantly less. In the old days when I ran my restaurant a plain old cup of coffee cost me just .04 cents a cup in product only. I served it in a regular coffee cup so the price of a paper cup was not part of that cost. But remember you can’t stop there because in a restaurant I gave free refills. That meant that I had to understand the average number of times someone would request a refill. That took my .04 cents a cup up dramatically to right around .28 cents. So guess what I charged for a cup of coffee in my restaurant? It was one dollar!

Let’s not forget about the final piece to your costs and that is customer flow!

Let’s not forget about the final piece to your costs and that is customer flow! If you serve/sell only one cup of coffee a day there is no question about your future. The reason I bring this up is to make sure you understand how much product you must sell per day to break even. As you put together your coffee cup business plan the number may be one thing, and then as you open the doors and become more familiar with waste and other variables that number will vary up or down. But the point is that based on what you know are going to be fixed expenses and potential labor and other variable costs you should have a good idea of your break even point. If you don’t rework the numbers until you do!

Another piece of your coffee shop business plan will be information about your management team. If you are a small one person operation I guess that means you fill all the blanks. So what experience do you have in running a coffee shop business? What experience do you have running any type of business? If you are submitting your coffee shop business plan to a financial institution for a small business loan they will be looking hard at this. Experience makes a difference in success! Not always, but almost always!

Let me see if I can put it into perspective. If someone sixteen years old was starting off on a long trip from California to New York City and they only had so much money and time to make it there how confident would you be in them making it? Take the same example but this time let’s make it a cross country truck driver. Now how confident would you be in them making it there on time and on budget? Now I am not saying that the sixteen year old wouldn’t make it, but the odds are against them. The bank will see you the same way, so do your homework or don’t submit your coffee shop business plan until you know what you’re talking about. Sorry, just trying to keep it real!

One of the best tools to help you prepare your coffee shop business plan is a software call Business Plan Pro. I have used it and I was very pleased with how it guided me through the process by asking questions. It will also lay out the business plan in the way most financial institutions want to see it. Don’t make things hard on yourself, use inexpensive software tools that are proven to work.


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