If you’re thinking about starting your own business and you love your java, one option to consider is a coffee shop. There’s certainly no shortage of coffee drinkers in the Great White North, as Canada ranked third in 2015 when it came to countries that drank the most coffee. The number of specialty coffee drinkers is also on the rise, so you can definitely attract customers who are looking for a unique coffee experience. Running a coffee shop comes with several perks and challenges.
Perks of Getting into the Coffee Business
The biggest benefit of owning a coffee shop is that you can set it up however you like. You choose the coffee, the pastries, and the decor of your shop, so you can express your creativity and your own personal style. If you truly have a passion for coffee, then running a coffee shop gives you the opportunity to do what you love every day. Coffee shops have a high profit potential, especially if you choose the right location. Most Canadians drink coffee, which means almost anyone who passes by your shop is a potential customer. In a high-traffic area, you could have a steady stream of customers all day. Of course, how much money you make depends on how well you manage your shop, but you at least have control over your business’s success.
Coffee Shop Drawbacks
Opening a coffee shop is a risky proposition. You need to rent or take out a mortgage on a location; in popular areas, this could be expensive. Equipment is also pricey, and you need to pay for licenses whenever you’re serving food and drinks to the public. Since you’re selling perishable goods, any inventory that you don’t sell loses money. While you can’t eliminate your financial risk, crafting a sound business plan reduces the likelihood of losing money. When you own a coffee shop, the majority of your life is devoted to your shop. You need to work long hours and be available at the last minute in case an employee calls in sick. If you’re shorthanded, you could end up making a latte with a design in the frothed milk, waiting on customers or cooking a breakfast sandwich, which means you must be able to do it all. If this doesn’t sound like something you want to do, it’s best to consider another type of business.
Researching the Market
The first step to take when you’re considering opening a coffee shop is market analysis. You need to look at possible locations for your shop, what kind of people live and work in that area, and the competition that’s already there. Location is key to your shop’s success. Ideally, you want your a location that’s easily accessible to a large number of people as they go about their lives. You can scout potential locations by hanging out nearby for the day and seeing how busy the area gets. Ideally, you want a location isn’t already saturated with coffee shops. As you research the market, look for ways that your coffee shop can stand out from the competition. You have a much better chance of success when you provide a unique coffee-drinking experience and target markets that currently aren’t being served. That’s how the owners of Cherry Bomb Coffee had lines for their coffee going out to the sidewalk. The popular Toronto coffee shop combined the experience and tastes of a premium coffee shop with the speed of a take-out shop, making it the go-to spot for locals who wanted premium coffee without the wait.
Create Your Business Plan
Once you’ve done market research, it’s time to create a detailed business plan for your potential coffee shop. Your business plan is a guide to starting your business and achieving its short and long-term goals. It should include estimated for startup costs and monthly expenses, how you plan to market your shop, what sets your shop apart from the competition, and how you expect to turn a profit. Writing your business plan takes time, but it’s the first step in turning your coffee shop from a dream into a reality. It’s also a virtual necessity if you want to get any type of funding for your business. If you go to a bank or credit union to apply for a small business loan, one of the first things you’re going to need to show them is your business plan. Financial institutions only lend money when they believe it’s a sound investment opportunity. A well-written business plan demonstrates that your idea for a coffee shop can be profitable. There’s nothing like the aroma of a fresh pot of coffee, and you can take that in every day when you run your own shop. It has its risks and its difficulties, which is why the research and planning phases are so important. If owning a coffee shop sounds like a dream come true, then it’s worth the risk.