How to Start a Coffee Shop: 10 Easy Steps to Start Brewing a Business
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A coffee shop is a fun place to hang out with friends, squeeze in a caffeine fix, and create a sense of community. If you already frequent your local coffee shops, you might be wondering if you have what it takes to start your own successful coffee shop. You need to know how to start a coffee shop the right way before you dive into this business endeavor.
The good news is that you can start a coffee shop in just ten simple steps if you plan ahead. Let's dive in so that you can start brewing up business right away!
Contents
- How to Start a Coffee Shop in 10 Simple Steps
- 1. Create a Coffee Shop Business Plan
- 2. Set a Working Budget for Your Coffee Shop Startup Costs
- 3. Decide on a Business Structure & Get Permits
- 4. Find the Perfect Coffee Shop Location
- 5. Start Branding Your Coffee Shop
- 6. Finding Suppliers for Coffee Shop Equipment and Ingredients
- 7. Create a Menu and Pricing
- 8. Find a Point-of-Sale System that Works for You
- 9. Hire Baristas and Team Members
- 10. Advertise Your Coffee Shop
- Final Thoughts: Start a Coffee Shop You'll Love
How to Start a Coffee Shop in 10 Simple Steps
From your business plan to your branding, here is everything you need to know about running a successful business.
1. Create a Coffee Shop Business Plan
Before you can even think about opening the doors on a new business, you need a solid business plan. This means that prospective coffee shop owners will need to think ahead about how their business will function once they get started.
Here are a few things you need to consider in your coffee shop business plan:
- A description of your coffee shop(s), including what sets you apart
- Your competition in the local area
- Management and organizational hierarchy
- A marketing plan
- Financial information like investment costs, ongoing maintenance, and estimated revenue
Most people can't start their coffee shop business with their own savings, so you will likely need to secure a loan from the bank. Banks aren't in the habit of handing out loans to everyone who asks.
Instead, you will need to prove that you have done your homework and have what it takes to run a successful coffee shop.
2. Set a Working Budget for Your Coffee Shop Startup Costs
Before you can open a coffee shop, you need to know what it is going to cost you. Much of this should have been worked out in your business plan, but this is the time to fine-tune your budget. You will need to purchase equipment as well as set up the ambiance of your space with seating, lighting, and other details that make your space feel inviting.
How much is reasonable for your coffee shop startup costs?
The average coffee shop with indoor seating usually costs around $80,000 to $300,000.
It's quite a range, but your total costs depend on the type of coffee business you intend to open and your location. Some people may be able to find spectacular deals on tables and seating, while others may have high-end tastes.
You can certainly open a coffee shop on a budget, but it will prove to be a lot of work.
3. Decide on a Business Structure & Get Permits
One of the first things coffee shop owners need to do to get their business above board is to decide on a business structure. Most people will settle on a limited liability company (LLC).
This allows you to form a separate business entity for your brand that protects your personal assets if anyone were to sue your new coffee shop business.
For help starting an LLC painlessly, be sure to consult with ZenBusiness.
In addition to LLC formation, you may also need a business license and a few other pieces of paper that prove you are ready to open a coffee shop, including:
- Retail food service license
- Resale license (to skip sales tax on items you will resell)
- Insurance in the event of an injury or damage to the property
- Food handler's permit
- Health permit
The specific permits and licenses you need to start a successful coffee shop will depend on your location. For example, you may also need a sign permit to direct people into your new business, but this can vary depending on state and even county.
4. Find the Perfect Coffee Shop Location
Some of the permits you need will require you to already have a location for your coffee shop business. Really spend some time scouring the advertisements for spaces that could prove to be the best fit for your new storefront.
Location can make the difference between a successful shop and one that doesn't drum up enough business to cover the bills.
You will want to start a coffee shop that is convenient for people to get to during the course of their day. It should be near other businesses where people may wander in for an afternoon pick-me-up.
Many coffee shops will be located near major office buildings or in the center of town.
Another option is to open a coffee shop in a shopping center where people are browsing other stores. Many will do so with a cup of coffee in hand, so it is only natural to put your coffee business in one of these key locations.
Don't get a location too far out of the way, or people may not visit your coffee shop.
5. Start Branding Your Coffee Shop
What helps your coffee shop business stand out in a sea of competition from other coffee shops? Branding can make or break your business, so you will want to spend some real time and money refining your coffee shop brand.
Fortunately, you have lots of options for getting your logo and other promotional items in order.
You can hire a graphic designer to deliver on your coffee shop concept, or you can use online sites that enable you to get unlimited designs for a monthly fee. Especially if you think you will have lots of graphic items to complete and aren't quite sure what direction to take, sites like Design Pickle can be a great option.
Under this model, you pay a flat monthly fee and can get as many designs as you need. This allows you to create your logo, coffee shop menu, promotional flyers, business cards, and more.
The initial investment in your branding might seem costly upfront, but it can save you from endless revisions with a graphic designer who charges by the hour.
Be sure to browse our complete list of unlimited graphic design websites here.
Check out our list of coffee company slogan ideas for help with branding your venture.
6. Finding Suppliers for Coffee Shop Equipment and Ingredients
You're almost ready to start calling yourself a coffee shop owner. At this point, you will need to find a source for everything you need to get your business up and running. An independent coffee shop will need to find a source for equipment like espresso machines, automatic drip coffee makers, blenders, and even coffee grinders.
This equipment is usually one of the most expensive components when you learn how to start a coffee shop.
However, you also need some more affordable items, like the ingredients to create your menu. Search for a reputable source for high-quality coffee beans, milk, dairy-free milk alternatives, and any ingredients needed for menu items other than simple coffee.
Don't forget that you'll also need items to serve your coffee in like paper cups for to-go orders or ceramic mugs for those who choose to sit and enjoy their coffee in your cafe seating areas. Look for stirrers, lids, cups, and carafes for cream.
7. Create a Menu and Pricing
What sets you apart from other coffee shops? You might have already looked at your menu and pricing when you were putting together your business plan, but now it's time to refine it. Based on the coffee beans you sourced in the last step, you need to consider what you will ultimately make.
This is a good time to interview your target market and find out what they want in a new coffee shop.
Maybe they want a place where they can get an afternoon pick-me-up and a sandwich to-go. Perhaps they want fancier espresso beverages. Your coffee shop menu should reflect what the people want and what they will ultimately spend with you.
This is the time to refine your menu pricing as well. Visit an existing coffee shop in your area to determine how to best price your products.
You don't want to be the most expensive coffee shop in your town, but you may not want to be the cheapest and undercut your profits. Try to price yourself somewhere in the middle.
8. Find a Point-of-Sale System that Works for You
You have your business plan and your coffee beans. It's almost time to open the doors to your brand-new endeavor as an independent coffee shop. Before you can start ringing up your drinks and food items, you will need software that can handle the flux of customers: a point-of-sale (POS) system.
Look for a POS system that covers you for the number of registers you will have, the number of locations you establish, and even inventory management. You will also want something that can print out robust sales reports so that you can see where your customers are spending the most money.
Other nice features to have in a POS system include loyalty program management, gift cards, and the ability to order online ahead of time.
9. Hire Baristas and Team Members
Chances are you won't be able to handle your own coffee shop without some help. Every new coffee shop owner needs to consider how they can get the help they need to make beverages, take orders, and keep the cafe in good working order. In other words, you'll need to hire some help.
Post your advertisement in local publications or hang a hiring sign if your location is in a popular part of town where people are likely to see it. Interview each candidate and see what their experience level is with creating espresso beverages and coffees.
This is also a great time to refine your training manual. All independent coffee shops will need to teach their employees how to make their signature drinks and menu items.
Compile a training manual with a standard operating procedure that everyone can follow when they have questions.
It may take some time to compile a training document upfront, but you'll have it forever once it's finished. Onboarding will be much easier with this taken care of.
10. Advertise Your Coffee Shop
Last but not least, it is time to finally open the doors. You have mastered the steps on how to start a coffee shop, and now you need to let people know you exist. Advertising isn't just a one-time thing, though. You will need to keep up with your marketing efforts to create a sustainable business model.
It starts with figuring out what makes your coffee shop unique. You can then list this on your website, in your social media marketing, and more.
A few avenues you might want to explore when opening a coffee shop include:
- Coupons to try new products
- Facebook or other social media ads
- Search engine optimization (SEO) on your website
- Google My Business pages
- Hosting a grand opening event
- Influencer marketing
- Email marketing
Get creative when you are starting out, and you'll find that there are tons of ways to put your brand in front of more people. Opening a coffee shop is hard work, and advertising is a necessary step for people to find you and be willing to take a chance on you for their beloved coffee fix.
Be sure to set aside some money from your business loans or as part of your business plan to get some marketing efforts off the ground.
Final Thoughts: Start a Coffee Shop You'll Love
A coffee shop starting out requires a lot of preparation, research, and even money. However, it has the potential to be a satisfying and lucrative career move if you can keep up with the trends in the coffee industry.
With these ten steps under your belt, you will be that much closer to being able to start a coffee shop.
If you need some ideas on how to name your coffee shop, see our complete list of coffee shop name ideas here!
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