Is this opportunity as good as it sounds to me?

[Ruby]

I may be able to obtain a building that has an apartment above it and a very nice bar that could be converted to a coffee shop below. The building is on a corner on mainstreet. Ideally we would finish the apartment upstairs and move into the building and the mortgage payment wouldn't be too much higher than our current house. Our utilities would go up considerably as this building is twice the size of our house.

I live in a small town with about 2500 people. There are a few other small towns dotted around. Closest McDonalds is 15 minutes drive. Closest Coffee shop I think is 35 minutes away. There MAY be one in one of the 2 small towns 20 minutes away but I don't think so. It is an average to low average income area

Our town has Dairy Queen, Subway, Casey's gas station, and several bars. We have a junior high/highschool of about 300 students.


My husband would keep his job and we have been living off just his income fairly comfortably.

In order to break even I would need to make enough money to cover extra utility costs, insurance, and any employee I hired. I would have no rent or mortgage to pay.

Ideally I'd make a little profit (12,000 a year would be success to me) but I'm mostly concerned that I would fail miserably and be losing money.

I would probably be open Monday - Friday 6am-10am and weekend evenings for the teenagers in town to have a place to hang out.

Is this realistic? God bless anyone who read through all this and takes the time to give their input!

 

[Randy G.]

Wow... Sounds like a dream.. or a nightmare.
I think that it would be a hard go with such a small town considering the initial investment needed. I would highly suggest getting a professional consultant to crunch numbers. Additionally look into live music, poetry readings, art exhibits, birthday parties, the occasional bris, and any other way you could diversify and cover expenses.

 

[Mr Shave]

Wow... Sounds like a dream.. or a nightmare.

A very true statement +1

Ruby - without a coffee/restaurant/business experience it may be biting off a little too much and exposing your family financially.

Please consider
1. costs to sell current house
2. costs associated with purchasing new home
3. build-out/equipment costs
and the list goes on and on.

If you don't have the bankroll to take on those expenses, I would look into a part time job.

What is the daytime population? Meaning, do people from other smaller towns come work in your town?

Best of luck

 

[Ruby]

Thanks for your insight guys! Initial costs are 15,000-20,000 to finish the upstairs plus the cost of coffee equipment which I'm guessing is another 10-15,000. There is a chance the guy would trade properties with us and also give us 10,000-15,000 cash to finish the upstairs. If that were the case we would be able to do all this without any loans or debt other than keeping a mortgage payment about the same as the one we have on our house. I know starting a business is never low risk but in general my husband and I tend to be very low risk and so I'm pretty content to sit on this dream til we can afford it without any additional debt besides something about the same as our current mortgage.

I'm not sure about the daytime population. I know that a lot of the teachers come in from surrounding towns to teach in the schools in our town. We live in a farming community and we have a grain elevator in town that has a lot of truckers coming in and out of to haul grain. There is also a rock quarry near here that has truckers drive through our town. But I'm not sure how many of those jobs are hiring people that care if their coffee comes from a quality coffee shop or Casey's gas station.

As far as diversifying we would rent the place out on Sunday afternoons and Saturday mornings/afternoons to small groups for showers/birthday parties/etc. There are not a lot of choices for places to rent for parties in our area and I think that would get us a little bit of extra income off it. I also would be selling desserts with the coffee. The place comes with a nice display fridge where I could keep and serve things like chocolate layer cake and cheesecake by the slice. As far as I know there is no where around here that sells a good slice of chocolate cake like you would get for dessert in a nice restaurant.

My biggest concern right now is my lack of business experience and coffee making experience. That seems like a lot of stuff to learn at once. I do have close family with experience running their own businesses so they can help advise some. I'm also not confident that now is the best time for me to devote the amount of time needed to start up a business.

I think ideally we would figure out if this is worth pursuing or not and then keep studying, researching, and planning. Maybe in 6 months to a year we would be ready to make an offer on the building if it is still for sale. No doubt I'd be sad to see it get bought up by someone else but in general commercial properties in our town, especially in this economy, aren't going anywhere fast.

 

[Randy G.]

Thanks for your insight guys! Initial costs are 15,000-20,000 to finish the upstairs plus the cost of coffee equipment which I'm guessing is another 10-15,000. .

$15,000 to outfit a coffee shop? You are dreaming (IMO).
I am guessing at prices, but:
One, 2-group espresso machine = $8,000-12,000 for something worth getting unless you buy used and we call it $5,000 (sounds like a lot, but your business depends on this being a dependable piece of equipment)
Two grinders - $2500
Water filter system - $750
Two drip brewers
Coffee storage bins
Cold Case
Fridge
Dishwasher
Blenders
and remember that a lot of the above (or all) will have to be all NSF certified I would guess.
Tables
Chairs
Pitchers, tampers, mats, cash register, racks for syrups, napkin holders, sets of different sized cups, saucers, and we can keep going...

If you can outfit a coffee shop for $15,000 I am thinking that this is the business you should go into is outfitting coffee shops. Not trying to be a crank, but just trying to give a realistic view of this.

 

[Ruby]

The place has a large cooler, mini fridge, full size fridge, another full size display case type fridge, one vitamix blender, cash register, tables and chairs already included in the price. This was a fully equipped bar and he is including all his supplies and inventory in the price. I don't think it comes with a dishwasher. . . I hadn't thought about that, it does have a triple sink and I was planning on using all disposables for customers. I was planning on trying to find a good used machine (hoping a coffee supplier could help point me in a good direction to finding one) and I think I have access to a Bunn commercial drip brewer I could borrow (from a church that doesn't use it). I still may have underestimated my costs, I was going by what a barista told me the equipment where he worked cost them.

 

[FaustoCoffee]

Depending on what part of the country your in dont over estimate the need for specialty coffee. Im located in a small town in NC and its tough going even with the proper coffee/equipment(but its gong). I like to compare specialty coffee to craft beer. The market is growing but slowly and the majority of folks still drink major brands like Folgers, and the like. They see coffee as something they use once a day and go after the cheapest they can. So think about your potential clientel and dont just think they will have the same tastes you do.

 

[Ruby]

Fausto I'm pretty sure you are right and we don't have a strong need for specialty coffee. There is only one place in our town that you can run in and get a cup of coffee- the gas station. It is BUSY in the morning. They sell more coffee and warmed up frozen breakfast sandwiches than gas. I know I can't compete with the gas stations prices and many people are happy with the gas stations quality.

I definitely think selling in a small town with very little competition makes it a different game than trying to open in a city or college town. I'm still trying to figure out if I have any chance of succeeding.

 

[Mr Shave]

Ruby,

I posted this specially for you

Breakdown of costs to open coffee shop / mobile unit | Mobile Adventure
These are the costs I've incurred building out a mobile coffee truck! There will be a wide range of costs depending on quality of equipment, equipment space already has, and you and your husbands construction skills.

I hope it helps give you a better picture on the "$15k" figure. I would encourage you to make a list of what the bar has and what you will need to buy.
Essentially that is what I used this list for, except I have size, weight, and power constraints.

 

[Ruby]

Thanks Mr.Shave I appreciate that!

 

[PeterCoffee]

dear ruby,
Owning a business like the one you are discussing has to be viewed as a lifestyle business. Your cafe should include food and maybe a small roaster. You should strive to make it the local watering hole.
there are ratio's that will tell you what % each expense should be of your gross sales. In addition you should become conversant in elemental accounting. Things like percentage of profit and how to arrive at this number etc. The time commitment is very high M-F 6 to 10am will not cut it because your hours will be controlled by the demands of the business.
But on the other hand, if you gather all this info(go to the CC and get a business major to help or take accounting 101) and the building could support itself with renting out the store while you lived upstairs
then it might work out. Doing the numbers or even before that learning to do the numbers is your first priority. The numbers will tell the tale. If the HONEST numbers say it might work then you hard work
might do the rest.

 

[PeterCoffee]

just read the post mentioning 15,000.00. That will not be nearly enought. If you avoid the pitfalls of new equipment you could save some money but not only will you need equipment and restoration funds it would be wise to have 6 months of a financial cushion set aside to weather the begining months of your operation. I would guess 50,000 to 75,000 could do the trick with proper planning and a realistic outlook.
peter

 

[HarleyGypsy]

Wow Ruby, your situation is so similar to mine! Only I'm looking at a video/arcade historical building. It has enough room to keep that and add coffee bar/deli/books and local artists work. Except I would have to go in debt to pull it off. I can rent it now with the option of purchasing the building later. I have managed a deli, worked restaurants, and other business background. No specialty coffee experience though, so I've been looking at schools. There is a lot of 3-5 day courses out there and video courses. You may want to check that out too. I think small town stuff is all in the heart, not to get rich! I have been on a constant roller coaster of should I continue building a business plan or should I not? I have been finding a lot of used restaurant supplies so don't give up. Keep doing your homework.

 

[Ruby]

Harley- I don't have any specialty coffee experience either. I definitely would need at least a little bit of training. Although as someone else pointed out people in small rural towns like I live in are still used to Foldgers. . . I think with just a little bit of training and some decent used equipment I should be able to offer something better than the gas station or their home machines.

I'm starting to think the key for me is NOT rushing it. I think after a year of research and crunching numbers I might know enough to buy the building and then open within 6-12 months after that. Those 6-12 months of owning the building but not being open would give us time to finish the apartment above it where we would live and take my time price shopping for good deals on minimally used equipment. I have been eyeing craigslist in two large major cities near me and I'm pretty sure I can get a lot of my equipment in good shape at some good discounts if I have several months to shop around.

PeterCoffee- I appreciate you taking the time to respond and give me your thoughts. I do think I am probably off on some of the costs. I'm nowhere close to being ready to say this is the exact budget I will need. I do think that the dynamics and costs of opening a coffee shop in a very small town of 2500 is very very different than opening a coffee shop in a large city.

 

[ElPugDiablo]

2500 people? I won't do it.