Was ready to open a small espresso bar but....

[meli]

I have spent approx 3 months wacking my brain out on p&L and so forth trying decide how much money you need to have in your bank account the day you open with this type of business. I currently work at the competition (not a chain shop) and have set my sales based on the worst possible business condition that could happen at the new place. The problem isi the bank cut my legs off today by 11k and I am now looking at doing all of this with 29k TOTAL. I am just devastated after all of this work and planing. How much money do I need? With 29k after I pay for all equip and so on, I have about 4k in my account. My rent is $900 on 750 sq ft and very modest furnishings. My first month of sales ia based on ringing the register 72 times a day which is a pretty dead business but I always deal with worst case rather than the pretty possibilities. The shop I work out now sells about 200 pounds of coffee a month but coffee is not their main reason for the shop so it could be worlds better if proper attention was given to it.

Should I pack it in and forget this dream?

 

[meli]

Ugh! I needed to check for typos and failed in my haste. Please excuse them

 

[Rowley]

don't worry about the typos.

Double check your expenses, there are plenty of people on thsi forum that may be able to help. (be careful who you choose.). and that may cut costs... other then that try to run your numbers again with cut costs or try to get more money from the bank.

Also note that the location of the cafe matters alot on sales.

 

[meli]

My Machine costs are around 10k for:
Nuova Simonelli espresso machine (2 group)
MDX espresso grinder
Bunn 220v brewer
6 airpots
undercounter frig
dishwasher
mop sink
handsink
bunn coffee grinder
iceomatic under counter ice machine

I am just devastated by this. I know my sales projected are much lower than they could potentially be. The bank is not going to give me more money, I have explored that already.

Perhaps I should consider the Espresso Cart business? I have the money to swing that...at least I think I do. The problem here is that there is no foot traffic in the entire area I live in. People here are used to driving for what they need.

For those of you who have gotten to this point and had the bottom drop out from under you:

How long does it take to get over this? I admit, I am taking it pretty hard.

 

[cafemakers]

There is certainly no shame in putting off your plans for a little while longer in order to secure additional financing or build your reserves. Inadequate capitalization is the #1 killer of new businesses, and you will find that despite your best planning of worst case scenarios, there will always be another 10 expenses and overruns that could not have been foreseen.

In addition to the capital that you put aside for your equipment, build-out, supplies and inventory, don't forget that you will need to have enough cash available to pay the utilities and your payroll while the business operates at a loss for a good 6-12 months (I prefer the longer of those two numbers as more realistic).

Making matters worse, many new business owners place themselves in the difficult situation of eliminating their own income while getting started. If this is the case, make sure that your starting budget includes pay for yourself to cover your basic expenses FIRST, or what is already a difficult task may become a personal financial hardship.

Your dream is a good one and it deserves a solid foundation in order to succeed. Don't worry, it will always still be there for you while you make a little progress towards it each day.

 

[meli]

Unfortunately it only got worse and I am not having to shelf this idea for quite some time now. Thanks for the input others have given me but the capital is just not there for my own shop at this time. I sincerely doubt it will be in the near future as well as we do have quite a large family so savings are hard to come by or unheard of.

I'll be ok after I weed through the disappointment. Swallowing the "it just wasn't meant to be" is still really rough right now.

 

[jpscoffee]

Very sorry to hear that, but congratulations on being wise enough to wait for the right time.

Merry Christmas

 

[ldockall]

It has taken me over a year and a half to open, tentatively scheduled for this week. Take your time and get it right before opening the doors.

Good luck!

 

[GA_John]

Two thoughts come to mind regarding your financial shortfall. First, you could get a money partner. A partnership can have advantages that you may not have considered. A listening ear to bounce ideas off of, perhaps some business experience that you can draw from, expertise in other areas that you may not be as strong in and in a worse case scenario, you could go to if you find you need a couple more bucks to get over the hump.

Business Partners are like a spouse, so be careful in who you choose for one. Be clear about what their expectations of getting their ROI back is, and what your intentions as well as business practices are. (For example, just because they are an investor means they and their friends can drink and dine for free. Let them pay and they can share in the profits)

Or rather than buying the equipment, get a lease and save some of your capital.

Just some thoughts and good luck.

GA_John