While you may not address each of these issues specifically in your business plan (e.g., your banker may not be interested in what time you plan on getting up each morning), being clear on these issues now will help guide you as you build your business.
If your goal is to run the coffee bar as an absentee owner, hiring a good manager will be vital to the success of your business. If you plan to work the coffee bar yourself, hiring staff will be a higher priority. If you are a late riser, plan on hiring and training staff who can open the coffee bar. If you have high family priorities, keep in mind that you may need to spend a considerable amount of time in and on your business, especially in the early stages. And if you have a clear vision for your future, it will help you get where you want to go, whether that is lying on a beach in Hawaii or running a multiple location franchise.
Once you know where you want to be, you’ll need to start clarifying the vision you have for your coffee business. You will need to decide whether you want to start out with a franchise, buy an existing business, or start from scratch. Below we have listed some of the pros and cons of each.
2.1 Your vision for your coffee bar
What is the vision you have for your business? Do you want to create a community space where people come to gather in a warm, inviting environment? Or do you see yourself catering to the fast-paced morning-coffee crowd? Are social and environmental concerns important to you? Do you want to make a positive impact at the local or global level? What message do you want to convey to your customers and/or your community? How do you want to differentiate yourself from your competition? Do you see yourself drawing people in using unique foods like scrambled-eggs with Dungeness crab, olive oil cake, or bacon-apple doughnuts with maple glaze? Or do you see yourself promoting quick service at a busy drive-thru?
Do you love art and want to create areas for local artists to display their wares? Do you love music and want to have local music nights? Do you love poetry and want to have weekly poetry readings? Do you love to hear people’s stories and want to have Wednesday night storytelling?
Where do you see your coffee bar being located? What types of things appeal to people in that area? If you lived in San Francisco, you might want to tie in three themes that people in that city love: burritos, bicycles and coffee!
What fun concept(s) could you build your business around?
How serious do you want to be about your coffee? Are you going to provide sampling? Are you going to brew cups on demand using unique one-of-a-kind bean blends? Are you going to get really serious about your coffee and refuse, as one coffee bar in New York does, to offer cappuccinos because the milk overpowers the subtle flavors of the coffee?
If you don’t have a clear vision, spend time creating one ... research what other successful coffee bars are doing, what they are offering, what they look and feel like. Google the Top 10 coffee bars across the country, visit websites, look at menus, jot down ideas that appeal to you.
Recognizing that you will want to create a business that is consistent with your own personal style, the success of your business will ultimately rest on how consistent your business concept is with your specific target market. We will focus more on target market research later in the book but now is also the time to start thinking about the style of coffee bar that will appeal to your specific target market:
Does your target market love social causes? What kind of decor do they find appealing? Are they going to feel more comfortable sitting on an expensive, upscale settee, or lounging in an arm chair you got from the second hand store? Do they like fast service and consistent on-the-run products? Or would they prefer to take time in choosing the perfect, high-quality bean to take home and serve to their friends and family? How important is taste and quality to your customers? How important is value? What is going to keep your customers coming back to you regardless of economic conditions? What concepts are consistent with today’s trends? What concepts are going to withstand the tests of time? What concepts, styles, product and services are going to foster loyalty?
As you continue reading this book and doing additional research, you will want to come back to these questions again. The idea is to fine tune your concept into one that appeals to you on a personal level as well as to your target market. You may find that you have to be somewhat flexible in order to give your business the best chance for success. For example, donating a portion of your profits to help fund a school in Rwanda may not be #1 on your priority list but if, after additional research, you discover that tying in to a global social cause is very important to your target market, makes your customers feel great, builds loyalty and does some good in the world, it may move much higher up your priority list.
3. How Should I Start Out?
3.1 Should I buy a franchise?
A franchise can offer you many benefits, including name recognition and clout in negotiating better pricing. Many franchises also offer assistance in obtaining financing, site selection, coffee bar design, training, and marketing. A good franchise will save you money, give you a proven system, and increase your odds of making money.
However, one disadvantage is that the assistance provided by most franchises costs you in the form of an initial franchise fee as well as monthly royalties. You may also be restricted in terms of product lines and menu items and may be required to get written approval for use of names and logos in any advertising you do. You may be given a very small territory, which limits your ability to expand.
Franchises don’t always deliver what they promise. Many franchisors mark up the products they sell to you, thereby defeating one of the major purposes behind franchising — that is, the chance for franchisees to purchase supplies that were bought in bulk at a lower price than an independent store would pay.
As well, if the franchise gets a bad name or bad publicity, you are often stuck along for the ride.
3.2 Should I buy an existing business?
Buying an existing business can save you the time, effort, and expertise necessary to find a good site, plan and build the coffee bar, and then develop a client base. If the business you are considering purchasing is profitable, you may find you can start earning a profit immediately.
Keep in mind, though, that you will end up paying for someone else’s time, effort, and expertise through the purchase price of the business. This is where you must weigh the trade-off. Ultimately, you will need to decide which option will net you the best return.
Make sure you thoroughly research any business that you are interested in buying. Find out about the marketing systems being implemented. Spend a lot of time in the coffee bar — watch traffic patterns, count customers, look for what is being done well. Look for areas you could improve and estimate how that would influence sales.
In determining areas you would improve, it may help to think of yourself as a customer in the business. What would you look for? A better atmosphere? Better service? Better products? Better marketing? And if these things were improved, would it make you want to come back and bring friends? How much more money would you spend if these improvements were made? Keep in mind that even a 25 percent increase in the average amount a customer spends can result in thousands of extra dollars per year in pure profit.
When considering whether to buy an existing business, remember that it is difficult to change customers’ perception of a business once that perception is ingrained. If an existing business has developed a bad reputation in the community, you may be fighting an uphill battle trying to win customers back.
3.3 Should I start my business from scratch?
Starting a business from scratch has its advantages and disadvantages. One advantage is that you have more flexibility than you would if you bought a franchise or bought an existing business.