When you first decide to open your own coffee shop, you need to have a plan. A new business will not be successful without structure and a concept in place. Creating a business concept will be especially important if you will need to get extra funding for your business, like many new business owners do. Financial institutions will want to see your concept before offering funding. To help you create your ideal coffee shop business concept, we have put together the 4 essential steps you should take below.
Creating a coffee shop business concept includes describing your vision, narrowing down your target market, designing your marketing strategy and developing an action plan. Your business concept should provide a clear understanding of the brand of your business, along with easily showing where you see your business going in the future.
Describe Your Vision
Your coffee shop business concept should clearly describe the overall branding of your business and also show where you plan on your business going in the future. Therefore, describing your vision in your concept is critical. Anyone who sees your business concept should be able to get a clear picture in their head of what your coffee shop stands for and where the shop will be going on the road ahead.
The vision for your business is important because it describes the overall purpose for your coffee shop. It also acts as a road map along the journey of operating a new business. The day to day activities of running a business can be hectic. When you need extra inspiration and need to be reminded of your long-term goals, you can look back at your business vision and imagine what the future holds.
Your vision is especially important to put in your business concept if you plan on showing your concept to any potential investors or financial institutions. Before an investor or financial institution will provide your business with funding, they will want to see your concept or plan. They will want to be able to clearly see where you imagine your business going in the future. They will likely ask you what your long-term goal is, which your vision should explain.
Narrow Down Your Target Market
Most successful business concepts will also clearly describe your target market for your new business. When you are opening a new business, it is important that you know exactly who your ideal customer is. This will help you for your future steps, like designing your marketing strategy. If you do not know who your target customer is, then you will have a difficult time knowing what marketing strategy will be effective.
Your target market should not be broad. It should be as specific as possible. For example: A target market of anyone that drinks coffee is too broad. This description of your target market would make it difficult in knowing how to market to your audience. Anyone who drinks coffee would likely be a good portion of the people in your area. When you open a new business, you do not want to target to everyone. You want to be specific.
You want to think of your business atmosphere and your vision when it comes to your target market. Imagine you have a drive thru for your coffee shop. Your target market would likely not only be those who drink coffee, but it would also be for the busy professionals who are looking for a quick stop to get their caffeine. You could narrow the ages down to working professionals in between the age of 25 and 50, who work at least 40 hours a week and commute to their job.
The target market we just described is narrower than the initial market of anyone who drinks coffee. It is specific to the concept and idea of a drive thru coffee shop. This description also gives you a better idea of how you could market to that target customer. If your shop does not have a drive thru and has a more relaxing atmosphere, your target market would be described a lot differently than the one we just included.
When you are describing your target market, you want to narrow it down as much as you can. The goal is to have a very clear description and idea of who your target customer is, what they like, what they are seeking and how you can get their attention.
Design Your Marketing Strategy
Once you have narrowed down your target market, you are ready to design your marketing strategy. In order to pick the right marketing strategy, it is critical that you narrow down and get specific on your target market first. You will not be able to create an effective marketing strategy until you really understand your customer.
Understanding your customer will help you know what ways will work best when marketing to your customer. For example: Where does your customer find new businesses the most? Do they use social media? Are they more likely to listen to recommendations from friends? The answers to these questions will show you whether you should focus on social media marketing, word of mouth or other forms of marketing.
When it comes to most target markets for a coffee shop, we highly encourage you to include social media marketing. Your business should at least be on Facebook and Instagram. It is important that your current customers are easily able to find you on social media when they want to recommend you to their friends and family. They will not be able to do that if your business is not on Facebook or Instagram.
Social media marketing actually helps you increase various types of marketing. It helps increase the overall awareness of your business, but it also increases your word of mouth marketing. For example: If a customer gets a new drink they love at your coffee shop, they may post a picture of it on their Instagram Story and tag your business. When they do that, they are then voluntarily advertising you to all of their followers, without you doing any of the marketing or advertising yourself.
People are often much more likely to trust the opinion of those they personally know or follow on social media (compared to how much they trust a brand or business). If someone sees that their friend loves this specific iced specialty coffee at a new coffee shop, they will be more likely to try out the drink themselves in the near future and see if they like it too.
Need some help with marketing and advertising your coffee shop? Check out this blog for some tips and ideas!
Develop an Action Plan
Every business concept needs to have an action plan. This is accurate if you are creating a business concept for your new coffee shop or if you want to create a smaller concept to launch a new seasonal drink menu for your shop after it has been open for a while. An action plan provides you with a step by step guide of what you need to accomplish.
Your action plan should be specific and should outline the steps your business will be taking to reach both your short-term and long-term goals. For example: If one of your long-term goals for your coffee shop is to have a certain amount of regular customers who visit at least twice a week, what steps could you complete to reach this goal?
One idea could be to start a customer loyalty card. Each time a customer makes a purchase, they get a punch on their card. Once they purchase a certain amount of drinks, they get a free drink the next time they come in. This would encourage customers to visit your coffee shop more often and give them something to look forward to (the free drink).
When you are creating your action plan, you want to focus on creating 5 solid action steps for each of the goals you want to work on. You can add more action steps down the road, but you do not want to list out too many steps in the beginning. By adding too many action steps to start, you may feel overwhelmed and less likely to really work through the action plan.
Creating a business concept is essential for new coffee shops or even coffee shops who plan on launching new products. A concept gives you a clear description of your business and gives you a sense of direction. By following the 4 steps we included above, your coffee shop business concept will provide a solid foundation and will carry your business through the years.
Frequently Asked Questions
Marketing does not have to be expensive for a new coffee. In our world today, there are countless inexpensive ways to market for a new business. If your budget is on the lower end, we would encourage you to take advantage of social media marketing and word of mouth. Both of these methods can be free and will only require you to put time into making them work.
It is not required that you have unique recipes for your coffee shop to succeed, but we do highly encourage it. When you open a new coffee shop, you want to give your customers as many reasons as possible to come back to your specific shop instead of another coffee shop. If you have unique drinks that are only found at your shop, they will be more likely to return.
The amount of time it takes for a coffee shop to start making money will largely depend on your expenses, the total cost you spent on opening your shop and how fast you get new customers. However, as long as you have a good location and are willing to spend time on your marketing strategy, coffee shops can generally start generating revenue (after expenses have been paid) within a few short months.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun
My adventure in coffee began when I first launched my first coffee shop back in the early 2000s. I had to figure out so many things on my own and to make it worse within 2 years of opening two large corporate coffee chains moved in just blocks away from me!
As I saw smaller and even some larger coffee shops in the neighborhood slowly lose customers to these giant coffee chains and slowly close up shop, I knew that I had to start getting creative…or go out of business.
I (like you may be) knew the coffee industry well. I could make the best latte art around and the foam on my caps was the fluffiest you have ever seen. I even had the best state-of-the-art 2 group digital Nuova Simonelli machine money could buy. But I knew that these things alone would not be enough to lure customers away from the name brand established coffee shops.
Eventually, through lots of trial and error as well as perseverance and creativity I did find a way to not only survive but also thrive in the coffee/espresso industry even while those corporate coffee chains stayed put. During those years I learned to adapt and always faced new challenges. It was not always easy, however, in the end, I was the sole survivor independent coffee shop within a 10-mile radius of my location. Just two corporate coffee chains and I were left after that year. All told the corporate coffee chains took down over 15 small independent coffee shops and kiosks and I was the last one standing and thriving.
Along the years I meet others with the same passion for coffee and I quickly learned that it is not only “how good a barista is” that makes a coffee shop successful, but the business side of coffee as well.
Hence why I started this website you are on now. To provide the tools and resources for up and coming coffee shop owners to gain that vital insight and knowledge on how to start a coffee shop successfully.
Stick around, browse through my helpful blog and resources and enjoy your stay! With lots of LATTE LOVE!