5 Things to Know Before Opening a Coffee Business
Taking a passion for coffee beyond your kitchen and into a professional setting can be challenging, but also deeply rewarding. There’s a world of choices, problems, and concepts to confront before you start shopping for coffee equipment. At Seattle Coffee Gear, we’ve made it our mission to help you every step of the way. With that in mind, here are some key things to think about before you open your commercial coffee business.
Your coffee identity
The first thing you should think about when planning your business is what your coffee identity is going to be. This may seem like a simple choice, but how you define your coffee service determines so much of your business plan. Things like floorplan, water needs, electrical requirements, barflow, workflow, and ultimately equipment choices will be impacted by these concepts. Here are some examples of specific kinds of coffee businesses:
The Coffee Shop
Coffee is your bread and butter. From carefully crafted pourover to incredible espresso shots, your focus is on coffee. You have a carefully trained staff that knows the ins and outs of coffee service and how to provide your customers with a memorable experience . Your espresso machine is on your front counter, so that baristas can look toward the customer as they prepare their drink. You have a close relationship with your roasting partner or partners and select coffee roasts based on quality and taste. You or someone on your management team understands how to properly cup coffees and identify “good” vs. “bad” tasting coffee. New employees are trained rigorously on bar process and coffee knowledge, and are hired based on their barista experience. You may offer some food items such as pastries from local bakeries and supporting drink/food options, but your menu revolves around your coffee service.
Coffee is not your central product. You care about being able to offer fresh brewed drip and espresso based drinks, but maybe your espresso machine is on the back bar, or somewhat out of sight. You focus primarily on food/service/other drinks and offer coffee as a supporting item. Perhaps Your coffee purchasing is based on price and availability over specific flavors. Ideally you have someone on staff that manages your coffee service and has barista experience, but you don’t necessarily focus as much on coffee when training new employees as a coffee shop would.
The Coffee Cart/Truck
Your business is small and mobile. You work events and busy street corners or lots. The biggest challenge you face is cramming a full coffee service into a small amount of space. You’ll need to think about this alongside all of the normal questions that come along with opening a coffee shop. This will lead to important questions and choices that you’ll want to answer from the unique position of a small amount of floorspace.
The Office Kitchen
You provide coffee to those working in an office, but want to find a more efficient, satisfying, and sustainable solution than a single cup brewer. You have a wide range of tastes among staff that you want to affordably satisfy, without spending much time on training. You need a machine that can potentially brew many drinks per hour to keep up with the demands of your staff.
Putting it all together
Your business will most likely have unique needs that these examples don’t cover, but generally this should give you a starting point for this thought process. Consider these concepts and work on completing the Coffee Identity Worksheet to get an idea of what your coffee service will look like on opening day.
Build a Business Plan
Having an idea of how your coffee service will look is a great start, but you’ll need to expand that visioning document into a full scale business plan. Understanding how to write a business plan is a complex subject that is covered in entire classes, but a basic business plan should include the following:
Your plan should include a brief summary of what your business is, including where it is, who your customer will be, what your focus is, and give an overview of your business.
You’ll want to provide detailed information about who you and your existing partners are, your location, who your customers are, and what your competitive advantages will be. This is like an expanded executive summary.
This section should outline the reasons for why you will be successful. You want to outline your competition, your market, and why your business will perform well given those factors.
This section will outline how your company will be structured from an organizational standpoint. How will you be structured legally? There are methods like an LLC, sole proprietorship, or private corporation to consider. Who will be responsible for different aspects of running the business? Certain aspects of your business may be handled internally or contracted out, such as hiring an agency to help you find employees. Another extremely important question is how will your business be funded? Bank loans? Personal finances? Private investors? All of this should be covered in your organizational info section.
Product Lines and Services
This section will outline your specific products and services. For a coffee shop, this would be where you will define your coffee offering. The section should be specific, but you don’t necessarily need to build a menu in your initial business plan. Things like what kinds of coffee will be offered, what sorts of food options will be available, what, if any, retail services (selling bags of coffee, etc.) will be offered.
This section will explain what sorts of marketing you have planned for the business. How will you raise awareness of your business and brand? Will you be working with external marketing firms? What kind of “voice” do you plan to have in your marketing? The internet & social media really open the options for modern day marketing.
Unless you are self-funding your business, you’ll need a section with a clear request for funding. This may be directed at a bank for a loan, at private investors, or potentially other creditors. You’ll want to outline how much money you will need and how that money will be spent here.
This section provides details on your financial projections. This is where your market research combines with your budgeting to give an idea of when you’ll be profitable and when investors will begin to see returns.
This is where your citations, appendix, and closing information will be included.
Completing Your Plan
As you can see, building a business plan is an extensive, exhausting project, but it’s an extremely important step to complete. While the above information should help you to get started, you’ll also want to seek more in depth resources for building business plans. There are hundreds of books and sites that can help just by searching “how to build a business plan” in your favorite search engine. You will quickly find there are many resources available to help you with this process, but try not to be overwhelmed and focus on getting started!
Know Your Location and Market
Understanding who you’ll be serving and where you’ll be physically located is incredibly important, and factors in to building your business plan as well. Your location’s floorplan will dictate things like access to electricity and water, both extremely important factors in running a coffee service. Floor plan and layout will also dictate things like line flow, behind counter workflow, and aesthetic. It’s important to keep all of these things in mind while choosing a location.
Knowing where you are located matters as well. Having a clear picture of how people will see and access your business is key. What sorts of businesses exist around you? Do they complement or compete with your business?. Will you have parking available or is your customer arriving on foot? Is there a nice view or just a busy boulevard or back alley outside the window? Is your location cost and forecasted revenue in line? Asking these and similar questions upfront can be the make or break with a coffee business.
Where you are physically will also determine what sorts of rules and regulations you’ll need to follow. Health guidelines and certifications can prohibit you from opening, so understanding your local rules and regs is important before you build your business plan. State and City regulations are not all created equal. Do your homework and don’t make assumptions here. Your state and city government websites are a great place to find more information about specific health code regulations.
Finally, understanding who your customer is imperative. University students may want a place to study and sit for long periods of time. They may be open to waiting for a great beverage, but may also be very price conscious. On the other hand, a busy, suit clad business person may care far more about a quick caffeine fix than a beautiful piece of latte art. Identifying customer groups is more complex than it might seem. For as much as the example above may hold true, simply stereotyping groups won’t help you understand your customer. It’s important to see your business from the perspective of members of the local community. Working with informal focus groups of friends and volunteers, observing how locals utilize the services of other businesses, and observing trends in data obtained from sources like local chambers of commerce can all help with this.
Selecting Your Equipment
This is our favorite part, and for many, the most exciting. It should also be one of the last parts of your planning process. Once you have worked through your location, customer, and market, many of your equipment choices will have been made for you. We can help with dialing in those decisions.
Having a budget is extremely important at this point as well. Once we know what kind of business you’re starting, what your location looks like, who your customer is, and what your budget is, we can assist you with making decisions about your equipment. It is important to keep in mind that espresso machines in particular can be a large expense, so you’ll want to expect to invest in them appropriately if coffee service is a central part of your business plan. Think of your espresso machine as the heart of your coffee business. You can’t have a coffee shop without one. Don’t skimp and cut costs on this central piece of equipment. Then from the espresso machine build out the rest of your coffee equipment set to compliment it and provide the desired level of service and offerings for your unique coffee business.
One easy trap to fall into is leasing or using loaned equipment from a roaster or other supplier. While this may seem like a convenient way to get started, it can lock you into limited menu choices and service options. Not to mention tying your success to that of another business entity. We recommend working to have your own equipment so that you can control your coffee service and menu completely from day one.
Another mistake that some new coffee shop owners make is thinking that a home machine will work in a commercial environment. Machines must be certified for commercial use in most markets. Home machines are generally not certified. An NSF rating is usually required, at a minimum. From a practical standpoint, home machines are not build to handle the volume of any business that offers coffee. Most home machines are built to handle making 3-4 drinks in an hour and cannot withstand the constant use of even the slowest commercial environment.
Installation and Maintenance
Installing and maintaining your equipment properly is an important thing to consider before you’ve even purchased it. You will want to develop a comprehensive service plan before installing your machine, as well as have an experienced technician perform or assist with the install. Mistakes in installation and negating maintenance can jeopardize machines worth thousands of dollars and cause your business loss of revenue due to equipment down time. As part of our sales process, we set you up with vetted local technicians to install your new equipment and and help you plan for maintaining your investment. When you purchase equipment from Seattle Coffee Gear you will have access to support from seasoned professionals to help guide you through this sometimes confusing process.
Putting it all together
This concludes a very high level look at some basic things to consider when starting your coffee business. If you’re working through our comprehensive planning workbook, go ahead and complete worksheet 1. We have yet to cover more in depth topics like staffing, brew methods in detail, finding financing, and so much more, but this article should give you some concepts to consider as you begin to plan your new coffee business. Let us help you make coffee you love, not just for yourself, but for all your future customers.