The world is having a new romance experience with coffee. The drink has such a wide appeal that many swear they cannot start their day without a mug of freshly brew coffee. The love is so deeply ingrained that you have entertained the idea of starting a coffee shop. To open a coffee shop has its own rewards. Among them you get to manage your own time, meet and talk to a lot of different people and be your boss. However, before you open a coffee shop, there are critical 5 steps you need to do to ensure your success.
Step 1: Understand your target market
This is the most under looked aspect of starting your kitchen setup shop. Many people rush head long into it only to regret it later when they are forced to close shop. Your clientele will have different dining needs at different time of the day or even day of the year. When they are rushing for time, they may settle for fast food or a quick cup of coffee. There are occasions when the customers may want to find a nice place for dining but not too upscale. They may already have a favorite restaurant to celebrate their birthdays or for special anniversaries.
You need to determine where you fit in this crowded marketplace. In may be determined by a few factors. The first one is your personality. Do you like to interact with people or do you like to work quietly in the background? Do you have the creative mind to change your food and beverages to constantly changing consumer tastes or do you prefer to keep things the same to maintain consistency?
The last step is to understand where the demands are. Every niche has its own market. You need to understand how big it is by studying the consumer buying patterns. The easiest way to do this is to study the competitors. If there are many competitors in the marketplace, which means the product is selling and you need to determine whether there can be one more player. To understand this, you need to study the demographics, income levels and taste preference.
Step 2: Come up with your Unique Selling Proposition (USP)
When you heard the phrase “When you absolutely positively has to be there overnight”, which company brand does it conjure in your mind? Like many people, you will think of FedEx. This is an example of USP at work. USP is the essence of your products or services that you are offering. It can be used as a compelling headline to attract your customers to what you stand for.
There are two ways to find your USP. The first is to look at your customers to determine what you are doing well that cannot be replicated by your competitors. Secondly, you have to determine what your competitor is not doing and try to come out with a meaningful way to serve your customers. Remember that your USP must mean something important to your customers and not merely slogan like “Our customer is No. 1”.
Step 3: Draft a coffee shop business plan
Close to 95% of new startups fail because of lack of planning. This is because the coffee shop owners do not have a clear vision of where they want to take their business to. When they face some difficulties, they do not know what to do and before long, they had given up. That is the reason you need to draft a good coffee shop business plan very much like what the big corporations do
In layman language, a business plan is a piece of paper stating where you want to go and how you plan to go there. There are many more specific things you must incorporate together. These include qualitative and quantitative factors. The qualitative factors to be covered include your target market and your target market share, your USP, coffee shop equipment needs and your marketing plans. The quantitative factors are your financial plan coffee shop. These are the monthly cash flow forecasts for revenue and operating expenses.
A good business plan acts as your compass in your time of doubts. It is also an essential document to show your banker and investors that you have given thought on your business direction.
Step 4: Choosing the right location
An ideal location for a coffee shop would be near an intersection with lots of traffic. Ideally, it must be near some transportation hub. The next best on would be the walking distance from these hubs. An area with lots of office building is also wonderful. This means there are a lot of demands from the working crowd. They will need a place to eat and relax during their breaks. A shop inside a busy shopping mall is also excellent.
Wherever your choice is, you need to see how your competitors are doing. The most important thing is to determine whether another player can come in. Remember, a bad location is a major killer for all coffee shops. So, choose your location carefully.
Step 5: Determine starting a coffee shop funding sources
Normally, the coffee shop owners use their own savings or borrow from family and friends. Many do not realize there are other financial arrangements available. In your first year of operations, you cannot rely on bank borrowings as they want to see some track record first. Instead, you can get some supplier financing on coffee shop equipments and supplies. You can use your business plan to get hold of some investors or even government grants. After one year, you can apply for bank borrowings.