If you spend enough time working as a barista in a coffee shop, you eventually dream of owning your own shop. Creating a unique environment that serves your local community, with your own style and flair, is incredibly exciting.
And if anyone can make it happen, it’s someone with years of experience working behind the bar at a coffee shop. But starting a small business is far easier said than done.
If you’re committed to making it work, however, the first thing you need to work on is a coffee shop business plan. It’s the business plan that will become your guiding light through the chaos of starting a small business.
Wondering how to create one, and what to include in your startup business plan? Keep reading to find out now.
Why You Need a Coffee Shop Business Plan
A business plan is extremely important for a number of reasons. Inside the business plan is all of the market research, all your plans, all of your future forecasts, all your projected expenses, and so much more.
It’s your entire coffee shop business on paper. And if it doesn’t first exist on paper, it’s never going to exist in real life.
And unless you have rich parents, you’re going to need to secure funding to start your business. This can either be loans from banks or individual lenders, or it can be from investors. Either way, in order for them to write a check, they would need to see a complete, detailed business plan before you ever get a dime.
In the plan, you’ll also list out your startup costs for the entire project. That includes the cost to secure a building, renovate, and fill it with equipment and furniture. Expect to need at least $200,000 upfront, before you ever serve a single customer.
On top of that, you’ll list out your ongoing expenses. This includes payroll, utilities, rent, insurance, materials, and anything associated with running a business.
With this information, you’ll know how much money you need to make each year, each month, and each day. You’ll know how many customers you need to serve in order to break even and to make a profit.
And you need to know all of this information, as accurately as possible, before beginning your journey to becoming a business owner.
Define the Big Five
There are many different ways to create a business plan. There are templates available online that will help you create a professional document. But here’s what you’ll need to include in the plan.
Define the What
The term coffee shop is very vague. First off, you want to articulate what type of coffee shop you will be opening.
Will it be a specialty coffee shop, focusing on quality roasted coffee and the most particular brewing methods? Will it be a sit-down cafe, where people can chat and work?
Will it be a drive-thru-only coffee shop, focused on commuters? Or will it primarily function as a bakery or restaurant, that also happens to serve coffee?
Any of these options can work, but you can’t do it all. Choose your focus when it comes to opening a coffee shop.
Define the Who
When it comes to defining the who, there are a few different categories. First off, define ownership and management. Who will be the owner? Just you, or will it be a partnership? How much ownership will each person have, and how much money are they investing in the company?
On top of that, define the roles of each owner, so that everyone will be held accountable.
Then define what your staff is going to look like. How many employees will you need. How many shift leaders will you have, and who is going to manage the shop.
Define how much each owner and employee will earn in the beginning.
Lastly, define who your coffee shop will cater to. What is the ideal clientele? Is it busy commuters? Is it remote workers on their laptops? College students?
You can’t build a business that caters to everyone, so narrow down your focus so you can serve a particular niche well.
Define the When
In your plan, lay out a clear timeline of when you plan to break ground and how long renovations will take. Write down how long you expect it to be before you break even, and eventually turn a profit.
Define the Where
When you are writing your business plan, you likely don’t have a building yet. But you can still research potential cities or neighborhoods for your future coffee shop.
You’ll want to list out multiple possibilities, along with market research for each area. Is it a trending neighborhood? Is it walkable? Is there another business nearby that will help drive traffic to you?
What is the average rent in the area? What type of person typically lives in, works in, or visits the area?
When it comes to opening a coffee shop, few factors are as important as the location you choose. Do so carefully.
Define the Why
In order to start a business and not fail within the first year, you need a strong why. You need a vision and a mission statement. You need to know why you are putting in all this hard work, making less money than you could be working a normal job.
Clearly define your reason for starting a coffee shop. Define the goals of the company and the impact you want to have. Then, refer back to it often, as you’ll need constant motivation in order to keep going.
How You Will Make Money
One of the most important elements of your business plan is defining how you will make money. You need to know exactly how much each product is going to cost to produce, how much profit each item will bring, and how many you need to sell every day.
List out every single product you plan to offer. This includes all different beverages, food and baked goods, merchandise, and any other revenue-generating items or activities.
Research the average order size for similar types of coffee shops to figure out how much you can expect to make from every customer.
Then, think of ways you can increase the average order value, as that is far more effective than figuring out how to get more customers through your door.
Estimate Startup Costs
The biggest hurdle when it comes to starting a brick-and-mortar business is the cost to start it. Especially for a coffee shop, where a custom-built bar is required, as are tons of specialized equipment.
You’ll need to list out every single expense you expect to incur during the startup process. This includes a deposit and your first months of rent on your new building.
It includes the construction costs to prepare the space. You may need to add bathrooms, a kitchen, a backroom, and new plumbing for your coffee bar. You also might need to upgrade the electricity supply throughout, since coffee equipment uses a ton of power.
Then you need to list out every single piece of equipment you’re going to need. This includes refrigerators, freezers, coffee makers, an espresso machine, grinders, carafes, and anything else that makes a coffee shop function.
It’s a lot of stuff. You’ll need to find suppliers a price out every single item in order to estimate your startup cost. Don’t forget to factor in furniture and decor.
Dig Into the Details
Lenders or investors are going to want to know the details as well. This includes many of the things that are less exciting, but just as important. Here’s what to include in your business plan.
Insurance
A coffee shop is going to need multiple different insurance policies. You’ll need a general liability policy to protect your business in the event someone gets hurt on your property or from your products.
You’ll also need workers’ compensation insurance if you plan to have employees. Hopefully, you plan to have employees, so you don’t have to work behind the bar every single day.
And depending on the specifics of your business, there may be other policies you’ll want to add in.
Financial Software
As a coffee shop, there are multiple pieces of software you’re going to need to pay for and use daily. This includes bookkeeping and payroll software.
Your employees will remind you that payroll is your most important task each and every week. You’ll also need to stay up on bookkeeping so you actually know where your business stands. List out what software and subscriptions you’ll be paying for.
Your Marketing Plan
No business plan is complete without a detailed marketing plan. You can’t make money without customers. And you can’t get customers without marketing your business.
There are many different strategies to use, both physically and digitally. List out which strategies you’ll be using in the beginning and what results you expect to see from your efforts.
If you’ve already invested in branding for your business, including a name and business logo, include that in your business plan. Otherwise, factor in the costs associated with having it done professionally.
Focus On the Business Plan
As you can see, there is a lot to think about when starting a coffee shop. You should allow yourself at least a few months to create a coffee shop business plan before you start doing anything else.
Once you have that, you’ll have the roadmap you need to start making real progress towards your dream of owning your own coffee shop.
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