Who hasn’t, at some stage of their lives, had the dream of opening a cafe? Serving up delicious food, sipping coffee from dawn till dusk and chatting with happy customers about the word on the street. A dream… not.
If this is your current idea of running a coffee shop I highly recommend you do some more (in fact, a lot more) research on the reality of being a cafe owner.
Over 54% of cafés and restaurants close down before they even reach their third year. If you don’t want to be one of them, then here are a few things you might want to consider before delving into a the world of coffee.
First Things First – Get Real
Running a café is hard work. Talk to any café owner who has been in the game for at least 3 years and ask for some honest feedback on what it’s really like to be the proud owner of a cafe. They either love it, or hate it. You will be working long hours, including weekends, public holidays; oh, and of course on those days where your friends ask you to come to the beach. But you can’t because your customers rather hang out at your café and have you serve them. You will start early, finish late, cook, make coffee, be friendly all day (even if you really don’t feel like it), and, of course, do lots of dishes. And when the doors close at the end of yet another day of hard work, get ready to clean for another hour or two. And that’s not including all the behind-the-scenes work, like bookkeeping, marketing, hiring and firing and so on. If, after this paragraph, you are still convinced that opening a café is a good idea keep reading.
Start With The End in Mind
Well, operating a coffee shop can be a lot of fun too (yes, even with all the above). Where many people go wrong is when figuring out the why. They jump straight in, just to find themselves feeling stuck and unhappy a few years later, not remembering why they started the business in the first place. In order to measure your success you need a road map. Why do you want to start a business? What is your main motivation? Are your reasons strong enough to get you through the tough times that will inevitably come, or is your motivation going to fade just a few months into your journey as a cafe owner? Be very clear about why you are doing what you’re doing and where you want to be in 12 months, 3 years and 5 years time. Are you planning to run the business long-term, built it up and sell it after a few years or branch out? You might want to consider to work with a business coach that can keep you on track and focused on your broader goals. If you are just in it to make money, don’t do it!
Create Your A-Team
Operating a coffee shop requires skills and expertise in a number of areas. If you are thinking of starting out with a business partner you might want to do a bit more research on business partnerships, as there is a lot to consider before entering into a legal agreement. Being ‘besties’ is just not enough to go into business together. You want to look for someone who can compliment your skill set rather than being good at the same things. Right from the start, be very clear about each partners responsibilities and avoid having multiple people looking after the same area in the business.
If you decide to become the sole owner of your café, ask yourself who you’ll want on your team; you will need motivated people with great skills in different areas. How many team members will it take to run your business efficiently without you over-spending on wages? Are you going to hire casual, part-time or full-time staff? Having experienced people on board, at least in the beginning, is highly recommended. Especially during the first few months after opening day the experience you show in operating your business (speed, quality of product, customer service) will determine your success. This is the time to impress your customers and get the word out about the new kid on the block.
Decide on a Business Structure
Now that you have decided if you partner up or go forth as a lone wolf, it’s time to think about your business structure. Getting this right at the start can save you thousands of dollars later on, as well as a lot of hassle and frustration. The choice of business structure will greatly depend on your individual circumstances and goals, and it is suggested that you seek professional advice from an accountant or solicitor before making a decision.
There are three main business structures commonly used by cafe businesses in Australia:
- Sole trader: an individual trading on their own.
- Partnership: an association of people or entities running a business together, but not as a company.
- Company: a legal entity separate from its shareholders.
More information on the different business structures can be found here: http://www.business.gov.au/business-topics/business-structures-and-types/Pages/default.aspx
Be Clear About Your Range of Products
We all want to be different and unique, and you should definitely have a USP (Unique Selling Point). However, it sometimes pays off to go with what’s already working. Don’t try to reinvent the wheel. Check out other cafes in your city and find out what works and what doesn’t. Make sure you stick to a certain theme and don’t try to offer everything.
Also try to pick one thing that you want to be famous for and do it really well.
The quality of your offerings is very important. But there is one thing that will determine your success even more: Consistency. Be absolutely consistent in everything you do and when it comes to taste, serving size, freshness, as well as customer service. You go to McDonald’s, not because they have the best burgers, but because you know exactly what you’re going to get. Every time, guaranteed.
Build a Brand
Walk into a Starbuck’s Coffee anywhere in the world and you will know you’re in a Starbuck’s; even without looking at the signage. One thing Starbuck’s coffee has really nailed is their brand identity. Who do you want to be (as a business)? What will your cafe be called? What communication style will you choose? Figuring out your identity can take time, but if done well will be invaluable. Especially when it comes to selling your cafe later on. No matter how big or small your cafe might be, good branding will help you grow your business faster and make it more memorable. Get a pro to help you with your business identity. If you don’t know any graphic designers in your circles, get help online. There are some great websites out there where you can hire highly talented freelancers with amazing skills, but without the price tag. Check out UpWork or 99designs to outsource your design needs. Being professional in business is crucial to your success. Look professional and you’re half way there.
Seek Advice From The Right People
When you start a business, everybody suddenly has an opinion. Only seek advice from people who have ‘been there, done that’. According to Entrepreneur Weekly, seeking advice from family and friends is listed as the second largest leading management mistake. Listen to your gut feelings and stick to what you believe is the right thing to do. In most cases you’ll be on the right track. But if you do take advice from others, make sure they actually know what they are talking about.