Whether you’re planning to start your first coffee business or expand to a second location - here’s a few things to consider before diving in…
Bust out that calculator
Do your homework. Having a passion for owning a cafe / espresso bar / bakery / whatever is essential - and so is making money from it.
1) Start with a business plan - check out our guide to putting that together
2) Add some financial projections, make sure they include:
- Setup costs (design, fitout, equipment, opening stock, working capital and a whole stack of other things…)
- Profit & Loss
forecast for the first 3 years (here's a template)
3) Show these to your accountant & to someone in the business to get a reality check.
4) Adjust the numbers after getting feedback and consider if you’re still happy with what they’re saying…this is the time to rework the concept (and your expectations) until it starts adding up.
Have an exit plan
You may not want to consider how you’re going to exit a business when you’re just starting out, but it is important to plan for it. It can, and should, affect the decisions you make in the planning stage - even if you don’t end up selling the business.
Consider when the business is going to reach its highest resale value: when you’ve got at least 2-3 full, (profitable) financial years behind you and you’ve still got at least 4-5 years of your lease left. That gives you a timeframe to stop and weigh up your options.
Location & Lease
Everyone knows location is critical. For a cafe / espresso bar, an ideal location has high foot traffic in the morning. You can also check the demographic mix of a location using ABS data
to see what type of people live in the area, and whether your concept is likely to connect with them.
Spend time researching a site, online and in person, it’s about the only thing you can’t change down the track.
For the lease, longer is better for resale value, broken down into a number of ‘options’ - find a lawyer that specialises in retail leases and have a chat with them before you start negotiating on a site.
Learn your craft
A tradesman has to go through an apprenticeship, a teacher needs a degree, a cafe owner…not so much.
The problem is, consistently tasty coffee is harder to make than it looks from the outside. Read, learn, get practical experience.
Design it properly
Product can’t do it all - hiring a graphic designer to create a ‘brand identity’ and an interior designer to give your space the right feel are, in my opinion, money well spent.
It’s not cheap, but it’s a one-off cost that can make a significant difference in creating a successful, long-term business.
There's obviously a lot more planning to do if you decide to go ahead and take the plunge. For more information and guidance on getting started, feel free to drop us an email firstname.lastname@example.org
- or sign up for our wholesale newsletter at the bottom of this page, to get sent more information like this once a month.
For now, here’s our 1-page checklist to help keep you on-track: starting a cafe checklist