New Business Questions

[bsell]

I'm considering starting up a coffee shop or purchasing an established one. I have been in the food business since college, but this is a whole new adventure for me.

I have a couple of questions for those who have already been through this process?

1) Do I need an attorney?

2) Is this a good time to start or buy a new business?

3) Those of you who currently have a shop; have you seen a slow down in business with this economy?

4) Any other tips?

Thanks!!!!!!

 

[John P]

1) Do I need an attorney? Yes.

2) Is this a good time to start or buy a new business? Starting, Yes. Buying... I'd be wary. Know EXACTLY why they failed. Great for buying/leasing real estate. A slow economy is prime for good entrepreneurs.

3) Those of you who currently have a shop; have you seen a slow down in business with this economy?
Not particularly... about 2% difference this month, last month up 6-8% over last year. So just normal business fluctuation. It will vary based on location and your target demographic.

4) Any other tips? Have 15-25% more $$$ than you think you will need. Understand all the ins and outs well before diving in. Don't go in half way, go all in or don't start a business.

 

[Alun_evans]

Same as John P. I would add (under #4)- I think now starting up is a great idea with the proviso that you are going into a new business with some solid experience behind you. It sounds silly I know, but I see so many new entrants into the specialty coffee sector trying to jump the gun by not doing their homework first. Much better to get some miles your belt working hospitality/cafe work first if you have not done already. I also agree you need more in your bank than you estimate. I think I would go with at least 40%+! Sounds alot, but you not only need the buffer for unexpected setup expenses, but also to cover you for an extended period after you open

 

[wmark]

1. Prepare a business plan/budget.

If your costs go astray, reference back to the business plan.

Personally, I think it is way harder to build a business than to buy an existing business. The caveat as mentioned, is why the business failed.

 

[cafemakers]

I think now starting up is a great idea with the proviso that you are going into a new business with some solid experience behind you.

I think this is Alun's kind way of suggesting that it would be advisable to get a little more experience in a situation with less personal financial exposure, such as managing someone else's business, before attempting a new startup.

 

[Alun_evans]

Thanks Andrew- exactly!

 

[bsell]

Thank you for the great suggestions and tips! I'm starting to work on my business plan.

One of the businesses I have been scoping out is an established business across the street from a college with good solid income. The only issue I have with it is it's more cafe than coffee shop. However, I'm still tossing between purchasing vs. starting from scratch.

Thank you for the suggestions in working in a cafe first. I have been in the food business since high school where I worked at a "fast food joint". After college I have been in the distributing/sales side in which I have been in more restaurants than I can count. Now I agree, that my experience in actually working in them has been limited, but I have seen and witnessed what has made some successful while others have failed.

 

[ElPugDiablo]

Regarding buying, you need to know why the seller is selling. Unless you are good at turning a bad business around, don't buy a failing business. It's much easier to succeed with a profitable shop. Make sure you have multiple years of tax returns showing continue revenues and profit growth.

 

[Alun_evans]

Flagrantly pulling this link from another coffee website I participate on. It is brilliant and should be a must read for anyone considering entering the outwardly shiny world of cafe and cafe culture. http://www.slate.com/id/2132576/ The piece is by Michael Idov. I think it is taken from his new book "From the Ground Up".

 

[kidron]

First of all, I'd like to wish you well on your new business venture.

Have you thought of buying a kiosk and renting space in a mall or office building? This would keep your cost down and you would have the option of moving to another place incase things get bad.

I am by no means an expert but I would like to share a bit about what I (think I) know, hopefully to encourage you.

If you do decide to get into the coffee business make sure you have the best tasting coffee in town, don't copy what other shops do, you must have what people want. How many times have I walked into high class coffee shops and found coffee beans stored in hoppers ready to be ground. People just don't get it, storing coffee in hoppers stales coffee that's because there's air in them.

The first thing that I would do is, find a good roaster one that is not in the business of turning coffee brown but knows how to get the best out of a bean. Buy fresh each week only what you consume in that time, if possible have ten or twelve cup portion packs ready to grind and brew. Use only filtered water, one that tastes good, this makes a big difference in the taste. Another problem with coffee is, where do you store it if portion packs are not used. I've seen it stored in a tupperware type container, bad plan, there is plenty of air space above the beans that stales the coffee. I would not buy bigger than one pound bags and I would keep coffee in it's own bag tied up using two elastic bands.