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Starting a cafe business: six mistakes to avoid

By Samuel Williamson

3 min read

The research is clear: Australia loves caffeine and startups. Cafe industry revenue is expected to total $8.2 billion in 2016-17, and Australia ranks 8th out of 38 OECD countries when it comes to starting new businesses. But as much as we love starting, we’re not the best at following through – almost 97% of Australian startups either exit or fail to grow.

How can you ensure your small business strategy is brewed to perfection? Start by avoiding these six common mistakes.

1. Being all things to all people

Pick one thing and do it well. Jumping into the competitive food and beverage industry is intimidating, and while it’s tempting to please every type of person, simplicity in both your menu and branding is key.

With a clear vision, you will budget stronger, advertise smarter and employ staff who will deliver on your goals. Find the element that will make your cafe stand out – like mastering the art of the bagel or putting a spin on the traditional ploughman’s lunch – and build from that.

2. Ignoring the gap

In a saturated market, it’s easy to fall behind – or never make it off the ground – if you can’t find a gap.

So it’s no surprise that some of the most successful food startups came out of left field, like Bangladeshi restaurant Bang Street Food, which saw a niche and ran with it. Avoiding what’s on trend and carving out a unique place in the industry is critical to your startup’s success.

3. Leaving your plan unchecked

Revisit your business plan – including financial projections and marketing – regularly, especially in the early months and years. Make it part of your routine to review your business plan and follow these simple tips to make it stick.

4. No exit strategy

It’s hard to think about the end when you’re just starting out, but an exit strategy is essential for every startup. Just like an investor, business owners must be clear on what will happen should the business fail. Will you hand over the reins to your family? Should you sell on the open market or liquidate? Ultimately, the best exit strategy is one that suits your business and personal goals.

5. Abandoning your books

Tracking staff hours on spreadsheets and scribbling daily takings on scraps of paper remain common practices among sole traders. But this ad-hoc financial reporting can have dire consequences.

Cloud-based accounting software like QuickBooks Online can help you manage invoicing, monitor payroll and vendor payments, and track profits and losses. It ensures your staff get paid on time and keeps every dollar accounted for. Reporting tools can also track your growth, and they are particularly useful when revisiting your business strategy.

6. Thinking you can go it alone

Two common problems are rife among Australian entrepreneurs: a lack of startup experience and poor networking. Recruiting great mentors or reaching out to experienced people can provide the support and confidence you need to achieve your goals. In fact, 70% of business owners who use mentors will survive twice as long as those who don’t.

Take the time to find someone who has been there before – whether they launched their own startup or manage a cafe. Make sure they’re available for regular contact and, most importantly, that your personalities are a positive fit.

A cafe needs more than great coffee to be successful. Do your research, seek out helpful mentors and avoid these simple mistakes for your best shot at making it.

To read more articles related to running your business, visit here.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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