Coffee shops are busy, popular places that you’ll find in cities located all over the world. So, it’s no wonder why anyone would want to know what the requirements are for starting a coffee shop of their own. Read on to find out what you’ll need to successfully start this kind of business.
What are the requirements for starting a coffee shop? Here’s an organized list:
- Start with a clearly developed business plan.
- Consult with a financial expert.
- Choose an optimal location.
- Obtain the necessary equipment.
- Design your space.
- Begin marketing even before you open your coffee shop doors.
- Hire help that is consistent with your vision.
Let’s dive into these requirements for starting a coffee shop.
Start With a Clearly Developed Business Plan
Starting a business of any kind can be daunting. But, the most important requirement for starting a coffee shop, or other business, is to have a business plan laid out that can be clearly developed. One of the biggest reasons for having a business plan to start your coffee shop is that it helps you to get organized.
Not all business plans will be the same. According to Forbes.com, these plans will vary based on the industry your business is in or the type of funding you are seeking, among other factors. Make sure you do your research as you develop your coffee shop business plan.
The more clear and concise you are with your business plan, the better off you will be when you’re trying to stay on task. A good business plan will make it easy for you to take your idea from paper and turn it into a successful, profitable coffee shop business.
You should be able to refer to your plan when you’re making decisions about your coffee shop. It will also make it easier for you to communicate with prospects for funding sources. And when it’s time to hire staff members, it can help you to find the right people, and to explain what it is you’re striving to present to your customers.
Consult With a Financial Expert
Once you have a plan, you’ll want to see what a financial expert has to say about your expenses and the funding of the coffee shop business. An accountant or a financial advisor has the tools to be able to give you guidance on how to structure your budget and how to raise the funds you’ll need to start a coffee shop.
The financial requirements for starting a coffee shop range quite a lot. The reason for this is that there are different kinds of coffee shops, like kiosks, drive-thrus, those with seating, and mobile coffee trucks. Another reason for this is the difference in the costs of different areas. Real estate prices and rental costs vary widely across different regions. It’s hard to pinpoint a hard-line cost for how much it will money it will take to start a coffee shop. You’ll need to consider all of the cost factors with a financial expert so that you can plan accordingly with your budget.
Just as an example, opening a coffee stand or kiosk can range from about $60,000 to around $100,000. Going the truck route can cost you anywhere from $50,000 up to $150,000. Then, if you want to open an actual coffee shop with seating for your customers, you could be looking at $80,000 to $300,000.
Choose an Optimal Location
Think strategically about the location of your business. A requirement for starting a coffee shop that is successful is that its location is well thought out.
The building you choose to house your business in will certainly say something about your coffee shop. Look for a space that will create the ambiance you are looking to provide. Also, make sure you take a look at the area. You need to know your audience, as well as, what kind of competition is in the vicinity.
Consider how accessible your location is. Ask yourself some questions. Is this location on the way to any majorly visited areas or destinations? What is the traffic like in the surrounding area? Will I need to have a drive-thru to keep up with my competition? Is there ample parking? There are a lot of things you can consider when you’re choosing where to start a coffee shop.
Obtain the Necessary Equipment
An extremely important requirement for opening a coffee shop is to make sure you have all of the necessary equipment to give your customers what they want. Below is a list of items you’ll want to get for your coffee shop:
- Automatic Drip Coffee Makers
- Good Quality Espresso Machine
- Refrigeration Units (counter fridges, display cases, full-size commercial fridge)
- Commercial Coffee Grinders
- Storage Containers
- Food Preparation Appliances (it’s a good idea to serve some food)
- Commercial Blenders
- POS System
- Storage Racks and Shelving
- Utensils, Pumps, Bins, and Other Miscellaneous Tools
This is another place where you’ll want to spend some time doing a bit of research. Check out reviews of some of these items and see what other coffee shop owners are saying about various pieces of equipment. Also, do your best to comparison shop so you can get the best prices on these items.
Design Your Space
Coffee shops are known to have personalities. It’s likely that you have a vision of what you see your coffee shop to look like or feel like. When you start to decorate and design your space, make sure you stay true to what it is you want your customers to see and feel when they step foot into your space. This includes the menu board; read more about designing yours here.
Consider also what the customer will find appealing. If you have a small space, don’t clutter it up with too much stuff where it’s hard for someone to get around in. If you’re in a more rural area, don’t make your shop look like something that should be right in the middle of downtown Manhattan.
It’s also important to consider the outside of your coffee shop. If people aren’t drawn to your shop when they see it, they’ll never come inside anyway. It won’t matter how much time, effort, and money you’ve put into the interior if the exterior doesn’t intrigue those who see it.
Begin Marketing Before You Open Your Coffee Shop Doors
Our first requirement for starting a coffee shop was to create a clearly developed business plan. If you’ve done that effectively, you will be able to start marketing your coffee shop before you are ready to open.
Part of your plan will likely include a menu or at least menu ideas. You can start doing coffee tastings, hand out free samples of your coffee at various places, take advantage of the social media audience, let the local media know about your plans, and hand out coupons in the community. The more people who know about the opening of your coffee shop, the better start you’ll get.
In addition to just getting the word out when you’re letting people taste your products, elicit feedback from those tasters. Use it as an opportunity to find out what your potential customers want from a local coffee shop. Don’t just assume that what you‘ve created is going to be what your audience will like. Ask for feedback and make changes that will help your sales based on what you are hearing.
Don’t wait to market until you open. You want to drive business in before that. Create some anticipation around the opening of your coffee shop. Maybe even plan some special “Grand Opening” activities and make sure the local news knows about it. Prepare your community and make them want to come and see what you have to offer at your coffee shop.
Hire Help That Is On Board With Your Vision
Once you’ve gotten much of the grunt work out of the way, you’ll want to start looking for your employees, in cases where yours is a business that will require more than just you. This is another part of the process that you’ll want to go slowly for and carefully consider who you want to represent your business.
A basic requirement for starting a coffee shop is to have a vision that you can transform into a physical venue. That means that you want to create an atmosphere that goes along with your vision. The people that your customers will be interacting with are just as much a part of the atmosphere as the décor, the furniture, the music, and the coffee smells.
Take the time to get a feel for the people you are interviewing. Try to find questions to ask them that will reveal their different personalities. You want to find employees that are going to help you put a face on your coffee shop that customers will remember and want to see again.
The requirements to start a coffee shop aren’t simple, but they don’t have to be overly complicated. Take the time to create your business plan, consider your finances, choose a good location, find equipment, design the shop, market appropriately, and hire the right people. The time and attention it takes to do this will be worth every second.
Some related questions:
Is owning a coffee shop profitable?
Owning a coffee shop can be profitable, but it’s up to you to make sure that happens. A small shop can definitely bring in enough profit for you to live on comfortably, but it’s not likely to generate so much money that you will be living large financially.
If you want to make sure you’re as profitable as possible, consider these three things:
- Your products are easy to substitute at home. Think about this when you’re designing your menu.
- There is tons of competition. According to Chron.com, 70% of profits in the coffee industry are made by the 50 different coffee shop chains at the top of the list.
- It’s easy for other people to start new coffee shops in your area. Coffee is something many people enjoy. Because of that, there will likely be new shops coming and going in your market all the time.
Do you need a license to start a coffee shop?
The answer to this question is based on where you are located. Different states may have requirements for obtaining licenses or permits to operate a coffee shop. It’s important that you find out what is legally required to start a coffee shop in your area.
Most states will, at least, require that you apply for a seller’s permit before you can open your doors. This type of permit is what the state uses to track the taxes you should be paying based on the products and services that your business sells.
What does a coffee shop owner do?
The role of a coffee shop owner once the business is up and running is very important. Businesses are meant to be fluid, ever-changing and moving. As the owner of a coffee shop, it’s important for you to continue to assess the needs of your customers, the competition in your area, the effectiveness of your menu, and the performance of your staff.
You’ll want to make sure that what you set up when you were first starting a coffee shop is working to generate the kind of business you want. Sometimes, even the best-laid plans have not fully accounted for everything that’s needed in order to be successful. That’s ok. Don’t get discouraged. Simply move forward with the tweaks and corrections you need to make accordingly.
As a coffee shop owner, you need to be a leader for your employees, a marketer for your business, and a contributor to your community. All of these roles will influence how well your coffee shop does. Make sure that you actively participate in all three of these areas so that you can see your business flourish.
For more information and guidance on starting a coffee shop of your own, check out our Coffee Shop Startup Documents.
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.