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How To Start a Coffee Shop

How to Start a Coffee Shop Successfully

How To Start a Coffee Shop Successfully

 

How To Start a Coffee Shop

(30 Steps To Opening Your Coffee Shop)

 

With 210 million daily coffee drinkers in the U.S. alone, there has never been a better time to open a coffee shop business. The trend of people drinking more coffee daily means this is the best time to start a coffee shop.

Whether you want to open a drive-thru coffee stand business, a mobile coffee business, or you want to open a coffee shop; it’s all here on Coffee Shop Startups for you to explore. 

Want to open a coffee shop?

Yes, but where do you start?

We aim to help break through the noise and provide you with the relevant information you need to successfully open your coffee shop.

Whether you want to open a drive-thru coffee stand or a large café bakery, we believe our examination of important business topics can help you with your business planning, regardless of your overall coffee shop budget. As you explore what type of coffee shop business you want to open, you’ll soon begin to develop your coffee shop concept that works for your target market.

We believe that the more you know, the fewer mistakes you make. And the fewer mistakes you make, the less expensive your coffee business will cost. Our Complete Coffee Shop Startups Kit will give you an unprecedented amount of insight into starting your own coffee shop business. It is the ultimate guide to starting your coffee shop business planning anywhere.

 

Options to Open a Coffee Shop

Starting a coffee shop, mobile coffee business, or a drive-thru coffee shop – is a great way to make money and earn a living.

Opening a coffee shop is the type of business that guarantees that you’ll be active and well known in your community.

There are three main ways to start a coffee shop:

• You can

  start a coffee shop from scratch

• coffee shop franchise

  You can invest in a

• Buy an existing coffee shop

All of these coffee business startups provide viable business options. Inspired by coffee business owners and experts, today’s article will guide you through the necessary steps to open up your dream coffee business. But we’re not going to pull any punches. Starting a coffee shop will take knowledge, determination, and hard work.

The steps we’ll cover include establishing your coffee shop LLC, choosing the right coffee shop location, purchasing the appropriate coffee equipment, sourcing your coffee beans, forming your actual business, and even hiring the right people. We’ll outline them below and then explain them in more detail.

 

Coffee Shop Startups

Steps to Start a Coffee Shop Business Successfully:

• Understand If Starting a Coffee Shop is The Right Thing for You?

  Understand If Starting a Coffee Shop is The Right Thing for You?

• Get your Personal Finances in Order

• Learn as Much as You Can About Coffee

• Explore Local Coffee Roasters

• Write a Coffee Shop Business Plan

• Determine Your Coffee Shop Business Concept

• Determine Your Coffee Shop Menu

• Choose an Excellent Coffee Shop Location

• Look at the Coffee Shop Competition

• Know your Local Laws, Regulations, and Zoning Codes

• Explore Your Coffee Shop Equipment Options Early

• Build a Coffee Shop Budget

• Determine Your Coffee Shop Break-Even Point

• Figure out Your Coffee Shop Funding Mix

• Establish Your Coffee Shop Business Structure (Register Your Business)

• Explore Wholesale Vendors and Partners

• Explore Health Department Regulations

• Revisit Your Finances, Adjust Your Costs

• Complete Your Coffee Shop Business Plan

• Explore a Coffee Shop Point-of-Sale System

• Open a Business Bank Account

• Create Your Coffee Shop Brand

• Setup Your Coffee Shop Website

• Get Your Permits & Licenses

• Hire Amazing Baristas

• Find What Makes Your Coffee Shop Unique

• Determine Your Menu Pricing

• Create a Timeline To Open Your Coffee Shop

• Establish an Accounting System

• Get Insurance for Your Coffee Shop

• Promote Your Coffee Shop

 

Steps To Start a Coffee Shop

Tips on how to start your coffee shop business

 

 

Step #1 of How to Open a Coffee Shop:

Is Starting a Coffee Shop Right for You?

Is starting a coffee shop the right thing for you right now?

Starting a coffee shop can be a worthwhile experience – serving great coffee, empowering your community, and making a profit, are all amazing benefits of starting a coffee shop.

However, the idea of owning a coffee shop can also be “romantic.” We get it! 

You may have a lot of great ideas of just how wonderful it all could be: how you would design and decorate your space, the poetry that will be read on weeknights to attentive crowds, or the music that will be playing as the smell of espresso fills the air…

But then, the “other” reality often comes too quickly – bills, paperwork, taxes, grumpy customers, broken coffee equipment, baristas who don’t show up for work, and personal vacations that need to be pushed back.

Before moving forward with your coffee shop business plan, you should determine whether or not being a coffee shop owner is the right fit for you and your long-term life plans.

There are many reasons why a coffee shop can fail. This element is certainly one of them: not preparing yourself (mentally, emotionally, and financially) for the ownership of a coffee business.

If you think you are ready to open a coffee shop, keep reading!

Step #2 of How to Open a Coffee Shop:

Get Your Personal Finances in Order

When you start any business, you will want to make sure that your personal finances are in order. The investment and risk you take should not put your personal livelihood and family at risk.

In other words, you should not bet the family farm when it comes to starting your coffee shop venture. You will want to make sure you have enough cash flow to keep the lights on at home, pay for your basic living expenses, feed your family, etc.

Understand where and when you will need to draw the financial line. I’ve known several seemingly smart coffee entrepreneurs who have racked up tons of personal debt to finance their coffee shop businesses, putting their families at dire financial risk. 

One way to avoid this scenario is by having a coffee shop business plan that will help you determine just how much money you will need to start your business. This will help you determine the time it takes to open your coffee shop.

Low-cost to high-cost coffee businesses

Some coffee businesses can be started for under $10,000, while some can cost $250,000.  Working on your coffee shop business plan, you will determine your coffee shop budget and coffee shop costs. 

In the meantime, begin to plan out how you will separate your money into two different categories: one for your personal needs and the other for your actual coffee business expenses.

 

Costs of Opening a Coffee Shop 

How Much Does a Coffee Shop Cost?

Before we go further, it’s important to acknowledge the question that’s on everyone’s minds: How much does a coffee shop business cost? 

The answer is that it completely depends on you and your coffee shop business concept.  For example, a drive-thru coffee stand might cost less than a full coffee bar. A bakery & café may cost quite a bit more than a small mobile coffee business. Additionally, key factors like your geographic location, real estate market, labor cost, etc., all play a major factor in your coffee shop business’s cost. 

Traditional Coffee Shop Business Startup Costs

• Small coffee shop with seating:  $40,000 to $200,000

• Large coffee shop with seating:  $75,000 to $350,000

• Franchise coffee shop:               $100,00 to $350,000

• Café & Bakery:                           $120,000 to $350,000

• Coffee Shop Bookstore:             $80,000 to $250,00

We discuss coffee shop startup costs in greater detail:

A large portion of these startup costs will go to the leasing or monthly rent, your coffee shop design and build-out, permits, and coffee shop equipment. While it has been a retail industry standard that your rent should be no more than 15% of your sales, it is not always feasible. For example, if your rent is $10,000 a month, is it feasible that your monthly sales will be about $67,000?

Due to the high cost of rent in some cities, it may be more suitable to set up a mobile coffee truck or a drive-thru coffee stand.

 

Step #3 of How to Open a Coffee Shop

Learn as Much as You Can About Coffee

Coffee is a beautiful and complex beverage. There are over 1000 flavonoids that make up the taste of the coffee. Any combination of these coffee flavonoids can alter the taste and texture of a coffee drink. Consequently, there are many, many, many roasting profiles and blends that are waiting to be discovered by your taste buds. 

Which coffee will you serve your customers?

I recommend spending some time learning about coffee by reading books, attending coffee events, seminars, and local “coffee cuppings” or coffee tastings. Not only will you make new friends, but you’ll often come away with new information, and you will expand your palate.

Make an effort to learn as much as you can about coffee – as a beverage, as an agricultural product. Learn about its amazing diversity, variety of origins, and the people who work so hard to deliver it to us.

The more you know about the coffee you will be serving, the better. This will help you source your coffee beans more effectively.

Whether or not you decide to roast your own coffee beans, learning as much as you can play an important part in your retail coffee business. 

If you decide not to roast your own coffee, each coffee roaster can provide its own unique taste and profile. Matching the taste profile with a coffee roaster can work for a vendor and may take time to decide.

That leads us to our next step.

Step #4 of How to Open a Coffee Shop:

Explore Local Coffee Roasters

It’s all about the coffee. When opening a coffee shop, you want to sell the best coffee that you can. If you opened up a wine shop, you would not want to aspire only to sell mediocre wine, would you? Absolutely not!

Make it a priority to learn about coffee and the coffee roasting process. When you start a coffee shop, you can either roast your own coffee beans, or you can select a coffee roaster who will deliver their coffee to you.

While roasting your own coffee beans can save you significant money in the long run, you probably already know that roasting your beans will take up much of your time and will require extra financial capital, including money for a coffee roaster, equipment installation, and the administrative effort to coordinate purchases and deliveries of green beans.

If you decide to buy your beans wholesale from an existing coffee roaster, then you will want to explore local coffee roasters in your area sooner than later.

My recommendation is to start exploring local coffee roasters early in your coffee shop business planning process. Not only will it be fun and interesting to speak to passionate coffee roasters, but it will also be worth it as you begin to see what kind of coffee options you have as a retail vendor.

Don’t know where to source your beans?

Many coffee roasters will offer a free “coffee cupping” for you to sample their coffee. My recommendation is that you visit several local coffee roasters.

Reach out to local coffee roasters. Ask them what their wholesale cost of a coffee per pound is and what type of support would they be able to provide you if you served their coffee. For example, many coffee roasters offer free training for your staff and other things such as coffee equipment.

 

The Cost of Opening a Coffee Shop 

 

Step #5 of How to Open a Coffee Shop:

Write a Coffee Shop Business Plan

Coffee shop business plans are great because they allow you to figure out your coffee shop business concept, your coffee shop budget, how much money it will take to open your coffee shop. 

If you start a coffee shop business, you will want to start writing your business plan early. Writing a coffee shop business plan is a compelling act. The exercise of writing out your thoughts and ideas cohesively and comprehensively – in a coffee shop business plan – will immediately help you get your coffee shop started.

Business plans can be a powerful tool (and process) to help you plan and launch your coffee business. Additionally, you may also need to provide your business plan to your investors or, at the very least, your property manager.

Having a business plan will also help you figure out your coffee shop budget – and several other essential items important to your success. Finally, having a coffee shop business plan will also minimize your risk of ultimately starting a failing coffee business.

What’s In Your Coffee Shop Business Plan?

Your coffee shop business plan has everything details of your coffee shop concept, budget, business structure, estimated earnings, and more.

Our Complete Coffee Shop Startup Kit provides you with an easy-to-use business plan template to help you get started right away.

For many of us, getting motivated to start a business plan for our coffee shop is a lot like going for a jog at 4:30 am – it sounds like a great idea, but who really wants to do it? Only the truly motivated! But you can and should write your business plan –  and we’ve made it super easy! 

Our Coffee Shop Business Plan Template (Which comes with our Complete Coffee Shop Startups Kit) is easy-to-use and simply melts away hours and hours of work for you.

 

What Do You Need to Start a Coffee Shop Business?

 

Step #6 of How to Open a Coffee Shop:

Determine Your Coffee Shop Business Concept

Developing your coffee shop concept is where you turn your dreams and ideas into action. 

What kind of coffee shop do you want? Do you want to open a drive-thru coffee stand? Coffee kiosk? Or a bakery cafe? 

You can (and should) start developing your coffee shop business concept early and without spending any money. 

Consider detailing your business concept in your coffee shop business plan – and continue to refine it as you grow out your business to suit your budgetary realities.

Opening a coffee shop business starts with daydreaming about your overall business concept. Getting your coffee business concept down on paper will help you plan your way forward and get the ball moving.

Take the time to daydream, visit existing cafes, and local coffee roasters, and diligently plan out your own coffee business. This is the time when you want to decide what you want to serve your customers. 

For example, perhaps you want to serve:

• Bagels

• Croissants

• Cakes

• Donuts

• Nitro Coffee

• Smoothies

Your coffee shop business concept will help you develop your coffee shop budget, which we will discuss shortly. 

Let’s continue discussing your coffee shop menu and why it’s important to your coffee business.

Step #7 of How to Open a Coffee Shop:

Determine Your Coffee Shop Menu

What will your coffee shop offer your potential customers?

Figuring out your coffee shop menu for your business will be the central linchpin of your business planning.

Without it, you won’t be able to determine your coffee equipment needs, your estimated budget, your physical space requirements, and thus, your geographic location.

Spend some time developing your coffee menu board. For starters, visit potential vendors and determine what your competitors will serve.

While coffee (and tea) might be your central focus, other essential products (and money makers) will play an important role in expanding your average ticket price. This may include beer, wine, and food. 

Of course, this depends on what your customer wants… So determining your menu should include what your customers want. This may require some research or extensive knowledge of the customer base you will be serving.   

Keep in mind that your menu can boost your coffee business’s startup costs, increase scrutiny from the health department, and require a more specialized space.

Step #8 of How to Open a Coffee Shop:

Choose an Excellent Coffee Shop Location

Your coffee shop location will maximize your potential coffee shop success – or disable it.

As you would imagine, you need to start early with this part of your coffee shop business plan and evaluate the best coffee shop location for your business.

Consider exploring multiple coffee shop locations in the general area you wish to do business. Find out where your competitors might be. Talk to neighboring residents and businesses. Determine the traffic flow of the area. Look at other “anchor” businesses, living spaces, and organizations like other restaurants, apartment buildings and dorm rooms, colleges, and office buildings. 

In addition to looking at possible coffee shop locations, work on your coffee shop business plan so that you can readily give your plan and proposal to the owner or property manager of your future location.

Make sure you take the time to count customers – this means determining how many customers you can expect during a given time period. Analyze the existing competition and substitutes.

Our Complete Coffee Shop Startup Kit offers a great discussion on your coffee shop property lease and location. It is highly recommended that you listen to it before you even start looking for your own lease to sign.

For a more in-depth look, please read Finding the Best Coffee Shop Location. 

Step #9 of How to Open a Coffee Shop:

Look at the Coffee Shop Competition

Take a look at your coffee shop competition. What are other coffee shops doing? 

Who are the existing competitors in a given area? What will their reaction to your coffee shop business be?

While you may not have direct competitors, the substitutes also play an important role in filling your customers’ needs. Substitutes can include places like IHOP, McDonald’s, any other eatery that serves coffee or soda.

Examine analytically, but don’t be afraid to use your gut feeling about a specific location either. If you’re not getting a good vibe, it may not be a good place to start a coffee business there. Balance your gut feeling with a data-driven approach too.

In fact, you should lean hard on the math, but trust in your gut feelings too.

Once you find several promising locations that you could see opening a coffee shop, you can further explore the terms of the lease, count customers, analyze competitors, and look at whether the tax and labor laws are favorable to your business (We’ll cover that in the next tip!).

Finally, take a moment to examine who your customer base will be and what their “pain points” are. Develop a real understanding of who your customers are, and you will be in a better position to succeed.

Step #10 of How to Open a Coffee Shop:

Know Your Local Laws, Regulations, Zoning Permits

When starting a coffee shop, you can run into unforeseen expenses and hassle. Among them can be any number of things, including extra equipment to satisfy building codes, health department requirements, taxes, and administrative headaches.

The city and county you are in will provide the framework for your coffee shop operations. It’s important to get in touch with them early and determine what their specific regulations are.

Taxes, employment regulations, health, and building codes, and other coffee shop requirements, can all be impacted by where you decide to set up your coffee shop.

If you live in an urban area where many local cities and counties are smashed together (and difficult to tell where the borders are), a small change in location – from one street block to another – can dramatically impact your coffee shop startup.

For example, one city or business district may ban certain signs from being placed outside of your business (yes, this happens often). I have met many businesses who have suffered simply because they could not let anyone know they were there – or that they were open for business! 

Many business districts within a city can also impose additional regulations to promote a cohesive shopping experience. You should just be aware of these. Your taxes can also be impacted. No doubt, some retail businesses fail to collect the right percentage of taxes only to be hit with a big expense.

Collectively, you want to look at all of these issues before settling on a specific location. For example, the city of Seattle currently charges a 10.1% sales tax. They tax some businesses for street parking and other exterior signs… how will these taxes impact your pricing and sales, and your bottom line?

 

Further Reading: How Long Does It Take to Open a Coffee Shop?

 

 

How to Open a Coffee Shop Successfully

Step #11 of How to Open a Coffee Shop:

Explore Your Coffee Shop Equipment Options Early

What kind of coffee shop equipment will you need? Your coffee equipment needs will always depend on your menu.

Your coffee equipment is what allows you to operate your coffee shop successfully. Having quality equipment that works when you need it to will be imperative.

Getting the right equipment for your coffee shop depends on what products you are selling and your sales volume. (Therefore, you will need to calculate your estimated sales before buying your coffee equipment).

Having the wrong equipment will not only cost you more money in the short-run (and long-run) but will also cost you lost sales if your coffee equipment cannot handle the sales you may get. 

Your coffee equipment choices should be based on your menu and the sales volume (including anticipated sales growth) that you expect. Additionally, your coffee equipment decisions may be impacted by your physical space and coffee shop budget.  

*Our Complete Coffee Shop Startup Kit contains an excellent hour-long discussion on coffee equipment that you will want to hear before you buy your coffee equipment. 

Example of coffee equipment:

• Espresso machine

• Grinder(s)

• Scales

• Pitchers

• Refrigerator(s)

• Ice machine

• Blender

• Toaster oven

• POS System

• Coffee roaster (If you will roast your own beans)

Additionally, there are many other pieces of coffee-related equipment, supplies, and fixtures you may need to get and/or build-out before you can open and serve your menu.

These may include your electrical system, your plumbing, and your physical coffee bar, seating, and other elements of your space. Additionally, you will need to find the appropriate Point-of-Sale system that works best for your coffee business.

Extra Tip: When you open a coffee shop, you will want to use NSF-labeled items to ensure commercial grade. 

For more information on coffee shop equipment, please read our post, Coffee Shop Equipment You Need to Start a Coffee Shop.

Step #12 of How to Open a Coffee Shop:

Build a Coffee Shop Budget

(Determine Your Initial Coffee Shop Startup Costs)

How will you estimate your coffee shop startup costs?  

To determine your coffee shop business’s cost, we recommend starting with your menu, concept, and location. Once you have these elements, you can then develop your overall cafe budget. This would include the cost of your equipment, space, build-out, as well as understanding your fixed and variable costs. 

Developing an honest budget for your coffee shop is among the top ways to determine your overall cost for your chosen coffee shop business concept.

Be honest with yourself and confront the anticipated costs directly. If you have a solid business plan and a good way to execute it, you can probably get the money to start your coffee business.

 A coffee business can cost anywhere from $15,000 to $250,000. That’s a wide spectrum in costs, right?  Your costs depend on what kind of coffee business you want and what’s on the menu.  Let’s briefly discuss this.

Coffee Shop Startup Costs:

When you start a coffee shop, the numbers will vary. Some coffee business consultants will give you a range of coffee shop startup costs that can range from:

• Coffee Kiosk: $5,000 – $55,000

• Mobile Coffee Unit:

  $15,000 – $85,000

• Coffee Drive-Thru Stand:

  $20,000 – $150,000

• Coffee Shop:

  $25,000 – $250,000

The truth is that all coffee shop startup costs vary, depending on your concept, your menu, your location, equipment, build-out, and labor needs. Developing your coffee shop business plan will help you determine the exact cost for your business concept and location. Once you determine your overall coffee shop budget, you will be able to create your coffee shop funding mix.

Further coffee business reading: Understanding the Costs of Your Coffee Shop (Explained)

Step #13 of How to Open a Coffee Shop

Determine Your Coffee Shop Break-Even Point

Figuring out your coffee shop break-even point is an important benchmark for you to understand. After all, you start a coffee shop to make money, right?

So, at what point will your coffee shop be profitable?

The point at which you begin to turn a profit is your break-even point. Everything below your break-even point represents your fixed, variable and operational costs and your startup costs.

It’s hard enough to start a business without knowing key benchmarks. But not having any idea of your break-even point will make it that much harder for you to reach profitability because you can make better financial and management decisions.

Determining your coffee shop’s break-even point isn’t just about knowing the numbers. It’s also about understanding your value, your coffee shop branding, customer service, and product offerings that generate value for your customers. This greater value per sale will help you boost your margins and reach your break-even point and reach profitability much more quickly.

It’s worth taking the time to figure out your coffee shop budget and coffee shop break-even point.

We’ve spent a lot of time creating an easy-to-follow and relevant guide that discusses these fundamental aspects of your coffee shop business, including your budget.

Besides, our coffee shop business plan template, as well as our pricing guide, will help you determine your break-even point for your coffee business.

Read more about developing your coffee shop budget. 

Step #14 of How to Open a Coffee Shop:

Understand Your Coffee Shop Funding Mix

Determine how much you will need to borrow, steal, or beg (just kidding on the last two!)

When it comes to developing your coffee shop budget, put everything on the table, and figure out the total costs of getting up and running.

Next, determine your coffee shop funding mix.  Figure out how much you have to invest personally. This means looking at how much capital you will need to borrow and/or save.

My recommendation is that you review your numbers twice, three times, and four times for good measure – then anticipate spending about 20% more to give yourself some “slack.” Knowing your fixed and variable costs, break-even point, the pricing strategy will help you layout your financial picture for you and any potential investors.

Some things may cost more, other costs may be surprises, yet other costs may result from delays (common). Of course, you want to minimize these as much as possible.

Your coffee shop business will need money to run. Cash is the lifeblood of any business and your job, as the business owner, is to ensure that you have enough to see you through to profitability.

Having enough funds until you reach sustainability is critical. Your business plan will help you with this, but you will still need to do that leg work and critical thinking.  Knowing your break-even point, therefore, is an important metric for your coffee shop business.

 

Steps to Open a Coffee Shop (Cont.)

Step #15 of How to Open a Coffee Shop:

Establish Your Coffee Business Structure

You are going to want to create a Coffee Shop LLC – or another legal business entity. Like all businesses, starting a coffee shop requires some paperwork. Setting up your business structure in your state will create a “real business” in the eyes of your state or municipality.

Having a legal business structure, like an LLC, is an important step that will help protect your personal assets and establish important business elements, including your bank account, taxes, worker’s compensation, liability, commercial auto insurance, etc.

Finding the best structure that works for you, your business, and your locality will be important to consider early.

In the U.S. and Canada, many coffee shop businesses often establish themselves as an LLC. However, others are set up as corporations and partnerships.

Consider reviewing what business structure works best for you and the type of coffee business you are setting up and contacting your state’s Secretary of State office. From here you can then register your coffee business with your state and city.

Step #16 of How to Open a Coffee Shop

Explore Wholesale Vendors and Partners

Exploring various food and beverage vendors is often the most fun part of starting your coffee shop business.

Explore the wholesale vendors you will want to work with. I always recommend starting looking at local businesses that sell pastries, cakes, bagels, etc. Of course, you may make all of your pastries and food “in-house,” which is great too. 

Local businesses are often willing to establish local accounts with coffee shops and drive-thru coffee stands. Not only will your account deliver profits for them, but it will help their brand awareness. Buying locally also leaves a good impression on your local customers, who always seem to appreciate locally sourced products.

Additionally, buying locally may mean that your customers may already know the products you are serving and may be more apt to buy them through you. Nevertheless, you will want to determine their contracts – what their daily, weekly, and/or monthly order minimums will be.

When you get the opportunity to meet with vendors, ask as many questions as you can: What is their policy for non-sales or defective products? What are the delivery costs? What are the wholesale and expected retail costs?

The most important aspect of looking at vendors is determining what will your customers will want. Finally, how will you like working with the people at these companies?

All these questions will play a part in your decision-making for your coffee business. Start early and have fun!

Step #17 of How to Open a Coffee Shop:

Explore Health Department Regulations

All coffee businesses require health department permits to operate legally. Your local health department will be a prominent agency signing off your coffee shop’s readiness for business.

You should determine who your local contact will be within your local health department. Start early and determine what you need to do to meet their requirements.

Most health department agencies want you to be successful. Our Complete Coffee Shop Startup Kit offers an informative look at one of the nation’s seasoned health departments (when it comes to opening a coffee shop). It’s worth listening to as it will allow you to think about the important steps to addressing your health department permitting.

By listening to our exclusive discussion, we are confident that you will increase your knowledge base – and determine what to ask your health department in your locale.

Step #18 of How to Open a Coffee Shop:

Revisit Your Finances, Adjust Your Costs

Your coffee shop budget will evolve as you grow.

As you move forward with your coffee business, there will likely be changes and adjustments that need to be made. This is natural and should be expected. You should make sure that you codify these changes in your business plan and other calculations.

Ensuring all your variables are updated and accurate will help you better determine your ongoing and fluctuating needs. Take the time to review your finances and make adjustments to your budget and business plan.

This, in turn, will help you make better financial and purchasing decisions that will help you reach profitability. Stay consistent and adjust your business plan as you move forward with your coffee shop business.

If you need help with your finances, you can use our business plan template, which contains a sample budget for you to review.

Coffee Shop Startups offers:

The Ultimate Guide to Start a Coffee Shop 

Step #19 of How to Open a Coffee Shop:

Complete Your Coffee Shop Business Plan

 

Completing and updating your coffee shop business plan will be more important than you think – which is why we’re mentioning it again. Much of your success will be determined by how well you research and plan out your coffee business. A coffee shop business plan can help with that.

While writing a coffee shop business plan may seem like simply “busy work” to you, it’s really beneficial. A coffee shop business plan will prompt your brain to do the hard and thoughtful work of calculating your business.

A coffee shop business plan will save you a lot of money, time, and headaches in the long run. If you have not started it yet, now is the time to start your coffee shop business plan.

A coffee shop business plan will be necessary for you to develop your coffee shop budget and an essential element as you approach property managers with the intention of leasing from them. There are several different topics that a coffee shop business plan covers, which will help develop your planning. 

Step #20 of How to Open a Coffee Shop:

Explore a Coffee Shop Point-of-Sale System

Every coffee shop needs a POS system, which is a modern-day cash register. Having a reliable coffee shop POS system is essential for your business transactions.

Choosing your Coffee Shop POS system will be an important decision to make on behalf of your coffee business.

Your Coffee Shop POS system can either make your life easier (with accounting or inventory management), or it can slowly bleed your bottom line. 

You may make your decision based on your choice of accounting software, ease of use and implementation, or fees associated with every transaction. Like the other recommendations, it’s always best to start early.

As the owner of the coffee business, you definitely have options. Ensuring it’s the right one for you (and your customers) will have an immediate impact.  

 

Step #21 of How to Open a Coffee Shop:

Open a Business Bank Account

Your coffee shop business needs a bank account. Opening a bank account early – with your cafe or coffee business’s actual name will allow you to better manage your business finances without commingling your money. That is, separating your personal money from your business money.

You probably already know that commingling money is frowned upon by the IRS. Separating your business money from your personal money has its advantages. Come tax time; this will help ease the accounting headaches.

To open a business bank account, you will need to establish your business structure legally. For example, you may choose to establish your business as an LLC – or Limited Liability Company.

You will be opening your bank account by establishing your business structure and obtaining an EIN, which you will have to apply separately. A bank will often want to see your business structure paperwork, such as the article of incorporation as well as your EIN. So you may want to get those documents first and open a bank account. 

Step #22 of How to Open a Coffee Shop:

Create Your Coffee Shop’s Brand

Branding your coffee shop business is really the fun and important part of generating value for your coffee business. 

Naming your coffee business and developing your business brand is essential for your coffee shop business.

From the concept, colors, logo, and slogan, your branding will play a key role in the perception of value that your customers will have and the connection they feel about your business. Your logo and branding will help you develop trust and goodwill in your coffee business.

Spend time and thoughtfully cultivate your coffee brand. If you need help with your logo and other graphics, consider utilizing a professional online service like 99Designs.  

99Designs has a great business model – utilize the power of talented graphic designers to get you the very best logo. Once you submit your logo assignment, you’ll have dozens of graphic designers compete to offer you the best logo.  

Step #23 of How to Open a Coffee Shop:

Setup Your Coffee Business Website

Your coffee shop needs a website. Having your own coffee shop website will be important for your branding – and for being able to share your story with your customers. It also serves as the main platform or “hub” for all of your social media efforts.

And unlike social media sites, you completely control the content, look, and feel of the website.

Additionally, you can offer gift certificates, prepaid cards, merchandise, coffee beans, etc. Having a website and “claiming your brand” is valuable to your business as a whole. You can also utilize your website to strengthen and defend your brand when necessary.

Fortunately, having a coffee business website doesn’t have to cost so much money. For more information about having your own coffee shop website, read How to Setup Your Coffee Shop Website.

 

Step #24 of How to Open a Coffee Shop:

Get Your Coffee Shop Licenses and Permits

 

Before you open your coffee shop, you will need various licenses and permits to operate legally. Different elements will determine the permits and licenses you need to open your coffee shop. These include your business concept, location, menu, and power needs, among others.

First and foremost, you’ll need to register your business as a chosen business structure, such as an LLC. Setting up your Coffee Shop LLC is one business structure that allows you to operate in your state. Next, you will need a permit from your local buildings department.  Additionally, the health department is the most common and widely known agency for coffee businesses, and you will require them to sign off on your business before operating as well. Finally, other permits issued and approved by your local fire department may be necessary.

For a more in-depth look at the coffee shop licenses needed for your coffee shop, read our post, Permits and Licenses You Need to Open a Coffee Shop.

Step #25 of How to Open a Coffee Shop:

Hire Amazing Baristas!

Starting a coffee shop with great baristas is an absolute necessity. Having a barista training program for your new hires (and for your established baristas) is important. Hiring a coffee education consultant can be advantageous. 

Barista training allows your staff to be the best that they can be, allow them to improve their skills, and deliver a consistently good cup of coffee.

Your baristas are important to your coffee business. Investing in your baristas will not only improve morale, deliver more quality coffee, but also reduce turnover.

We’ve written extensively about hiring baristas before so that we won’t delve much into it here. However, we always believe that hiring for personality and trainability is more important than experience.  You might find that you also need to brush up on your barista training skills.

Investing in the quality of your product will pay off immediately with high-quality barista training.

Step #26 of How to Open a Coffee Shop:

Find What Makes Your Coffee Shop Unique

What makes your coffee business special? What’s the mojo that makes your coffee shop irresistible to customers?

To start a coffee shop with a strong position in your market area, you will need to determine just what separates you from the rest.

As a coffee business in your community, you should be aware of the tremendous value you provide to your customers and your community. But what is it?

Capture the essence of that difference and write it down. Teach it to your employees. Make it a part of your mission. And deliver it every day to your customers.

Develop an understanding of your competitive advantage and what your Unique Sales Proposition will be.

Focusing on your USP will help you strengthen your position in your marketplace, help you train your employees, as well as provide you a place to focus your marketing efforts.

Give some time to understand your unique sales proposition and build your coffee business around it. Detail your USP in your business plan.

How to Open a Coffee Shop

Step #27 of How to Open a Coffee Shop:

Determine Your Coffee Shop Menu Prices

You want to a coffee shop to make a profit. Your pricing will play a key role in your ability to turn a profit. Yet, in some markets, customers can be susceptible to your prices. Any adjustments can and will impact your sales and repeat customers.

Getting the “pricing matrix” right will be important to your ultimate survival. Unfortunately, many smart coffee people simply “eyeball” their price points. We believe this to be a big mistake.

The difference between 2%-12% in lost revenue can determine whether or not your business survives or whether you can hire extra help… or whether you can take a vacation this year!

We prefer a data-driven approach to pricing. In our Complete Coffee Shop Startup Kit, we provide a good discussion of your pricing options that we recommend you read. Implement those strategies that we provide in a manner that works for you.

Step #28 of How to Open a Coffee Shop:

Create a Timeline To Open Your Coffee Shop

Develop a timeline for starting your coffee shop development. As with all business planning efforts, establishing goals and benchmarks tied to an approximate timeline or calendar will be important to your strategic planning. Having a timeline will also help push you to get started and keep you motivated. 

Figuring out which items still need to be completed (and those already completed) should be written somewhere on a calendar.

Having a timeline will help propel you to start your coffee business more effectively and efficiently. We recommend giving yourself an end goal (or date) and working backward.

Be realistic. Balance your timeline to put a little pressure on yourself but not so much that you get overwhelmed and paralyzed. Start small, but start.

If you are consistent and work every day on a strategy that you put together in a business plan, you will start seeing progress quickly.

Step #29 of How to Open a Coffee Shop:

Establish an Accounting System

How much does a coffee shop owner make? Your accounting effort will help you determine how much money a coffee shop brings in and where your money goes.

For starters, accurately paying your taxes and tracking your expenses will be important to determine your net income. Our recommendation is to start early – from developing your budget, to tracking expenses, to incorporating some accounting software.

Whether you utilize software like QuickBooks or get a bookkeeper, establishing an accounting system before opening your café will be important. Setting up an accounting system also means setting up an inventory system. Your accounting system should help you keep track of your income and expenses, inventory, losses, and payroll.

Maintaining an updated accounting system will not only help you pay taxes but will also help you make decisions about where to allocate resources. Additionally, it will help you better maintain your inventory and determine where your biggest gains and losses are coming from.

Additionally, you will want to look into a POS (Point-of-Sale) system for your coffee shop. Here are our Coffee Shop POS recommendations for coffee shops. Many POS systems will integrate your bookkeeping software.

Step #30 of How to Open a Coffee Shop:

Get Insurance For Your Coffee Shop

You want to protect your coffee shop business and your employees. This includes general liability and workers’ comp insurance for starters. You will also want insurance that covers your equipment from theft or damage.

In every state, you will need to get worker’s compensation insurance. This will not only satisfy the requirements in your locale but also serve to protect you and your business assets from an accident.

Avoiding accidents will be important through hiring competent people, training, and developing best practices, but “accidents do happen,” so Worker’s Compensation is essential.

You should be proactive with your business about getting workers’ compensation insurance and general liability insurance for your business. Not only is it the law, but it will help you sleep better at night.

However, don’t take our word for it. Ask an insurance agent in your city to help you determine what is right for you and your café (for general liability insurance) and check with your state’s Worker’s Comp agency. 

 

How to Open a Coffee Shop Successfully

Step #31 of How to Open a Coffee Shop:

Promote The Heck Out of Your Coffee Shop

Promoting your coffee shop business takes a lot of work. Opening a coffee shop or any coffee business requires a deep commitment, financial investment, time, and emotional and physical energy. It requires passion and excitement to maintain your momentum during the planning phase. Share your passion! Find creative ways to promote your coffee shop.

Without a doubt, plan your coffee shop’s grand opening and enjoy your journey!

We believe starting a coffee shop is a labor of love.

While money and profit may be part of the benefits of owning a coffee business, maintaining a successful business requires knowledge and planning. However, maintaining your passion and excitement about your business is also critical to your long-term success. 

 

 

Open a Coffee Shop Business Checklist

 

Starting a coffee shop business requires many elements to work together. This list of tips isn’t complete, but it’s a great start!

Go through them again and see where you can make some headway with your specific coffee shop business planning.

Take note of where you need to take some time to learn about the topic as much as you can. Remember, when it comes to your dream coffee business, the more information you have, the more empowered you are! 

Here at Coffee Shop Startups, we provide additional resources to start your own coffee shop business planning.

Whether you want to start a bookstore cafe, drive-thru espresso stand, or mobile coffee business, the important topics to new and aspiring coffee business owners are always being published or updated in our Kit. We encourage you to seek the knowledge you need to start your own café or retail coffee business.

Finally, when you are ready to move to the next level, consider getting our exclusive Complete Coffee Shop Startup Kit.

Our Complete Coffee Shop Startup Kit comes with exclusive and important audio interviews – packed with knowledge and wisdom everyone should know about – before they start their coffee business!  

Additionally, it comes with several important guides (delivered in an e-format) to help you plan, strategize, and open your business.

Cumulatively, we feel like it’s the most comprehensive online resource to help you start your coffee shop business planning. Open your coffee shop with confidence.

 

 

30 Tips To Open a Coffee Shop

 

As you can see, there are plenty of steps when opening a coffee shop. While you may be unsure where to start, my recommendation is to start where you are.

We aim to help you process your thoughts and ideas in a manner that allows you to better plan and execute your coffee business strategy.

Take your time and be methodical about checking off the items on this list. By working on an item on this list every day, you’ll be closer to achieving your goal.

 

Remember:

• Work every day towards your goal

• Research as much as possible before you start

• Get the help you need

In this post, we have covered a lot of ground regarding starting a coffee shop business. We’ll outline the list below and follow them with some common follow-up questions.

Ultimate Coffee Shop Business Guide

Steps to Open a Coffee Shop (Summary):

 

 

 

 

Steps to Open a Coffee Shop

 

Additional Questions:

 

What are the requirements to start a coffee shop?

Before starting a coffee shop, it would be helpful to research the requirements to open a coffee shop in your area or city.

Each city and agency will have business regulations and steps you’ll need to follow and take, including the appropriate licenses and permits you need to obtain before opening. A list of local agencies may include your health department, buildings department, licensing department, and fire department. Your requirements will be based on the type of coffee shop business you’ll have, your menu, and other essential factors.

Despite the differences between states, counties, and cities, there are often standard requirements to start a coffee shop from one jurisdiction to the next. We’ve covered this important topic in our post, Requirements to Start a Coffee Shop.

 

Should I register my coffee shop as an LLC?

Registering your coffee shop is an essential step in opening up your business. Establishing your business structure will depend on several important factors specific to you, your investors, your business concept, growth strategy, and taxes. A coffee shop LLC can benefit owners significantly, provide the necessary protection, and pave the way for some essential business functions.

Previously, we’ve outlined how establishing a coffee shop LLC can have significant benefits. Indeed, you also have other options in setting up your coffee shop, such as with a corporation, non-profit, or a sole proprietorship.

We’ve outlined the steps to establish your coffee shop LLC for in-depth reading.

 

How Long Does It Take For a Coffee Shop to Make a Profit?

How long your coffee shop turns a profit depends on several important factors, including your total coffee shop startup costs, your operational costs, and your total revenue. By estimating your income and applying it to your expenses, you’ll be able to determine your coffee shop’s break-even point.

Determining how much money your coffee shop will make is an essential element of your coffee shop business planning. Creating strategies to improve your coffee shop profits is an ongoing challenge for coffee shop owners.

For a more in-depth post, please read How Much Do Coffee Shop Owners Make?

 

 

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Start Your Coffee Shop Planning

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Coffee Shop Startups is the premier coffee shop business resource for aspiring entrepreneurs. We provide the most comprehensive way to research and plan your coffee shop business.

Our Complete Coffee Shop Startups Kit is packed with everything you need to know before you open your coffee shop business. With hours and hours of one-on-one interviews, you’ll hear from real-world coffee shop business owners and experts.

When you purchase The Complete Coffee Shop Startups Kit, you receive an invaluable collection of exclusive resources designed to help your coffee shop business grow.

These tools will get your coffee business on the right track and give you the motivation to move forward with confidence.

There’s never been a better time to start a coffee shop business. And there’s never been a better resource to help you get started the right way.

Now’s the time to take action – but only you can do that.

 

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