Many coffee shop owners don’t realize the importance of having a good coffee shop business plan. A business plan is basically a document that lists your competitive strategy and execution during operations. Having a compelling strategy will inspire you to great heights of business success and having a well-executed business plan will ensure that your castle is not built on the clouds. It forces you to dream big and at the same time come out with operations to make this dream come true.
Having a well thought out business plan will give you an advantage over your competitors. It gives your potential bankers and investors a big boost in confidence in your vision. They realized that most coffee shop owners cannot put their strategy on paper; mush to execute them well.
In general, the language in the coffee shop business plan should be factual and business-oriented. You can use any brochure of a listed company as a reference. You can say that you are not going to quote! You need to realize that investors are really looking for great deals, and there’s no better way to show them you mean business with a world-class business plan. Use government graphs and statistics to support your research and this will give you instant credibility. A good business plan will basically cover two things, your business strategy and execution.
A strategy
A strategy is the goal you want to achieve in your business in the short term, which is the first year, and in the long term, which is 5 years. Since this is a big topic on its own, I’ll briefly cover the few critical components.
i) Target market
The first thing you should cover is your target market. This includes demographics, where they eat, and how wealthy they are. So you need to estimate the size of the market. This will depend on how large an area you think you can realistically cover.
ii) Competitions
No business exists by itself. If there really is none, it is a sign that there is no demand in the market. You need to list your closest competitor in your chosen niche and their strengths and weaknesses. If you can, also list your income per month and your estimated market share.
iii) Your Unique Selling Proposition (USP)
Your USP is how you position your business differently from other competitors. It answers the question why your customers must be crazy not to do business with you compared to your competitors. It could be its quality food, its service, its cozy atmospheres or its price. Give them a compelling reason why they will flock to your coffee shop.
iv) Target location and justification
The location you choose to start your business really depends on your USP. You can choose to make a fancy cafeteria and naturally a nice and relaxed atmosphere is important. Renewal costs can skyrocket, but you can charge more for your products. You may want to choose a mall to cater to students or workers who want to relax. If you choose to compete on speed and delivery, you’re catering more to the morning crowd who want a quick sip of coffee and quality food.
v) Management team/investors
In this section, you should list who is on your management team or investors. An experienced manager or investor with more than twenty years running a coffee shop is more valuable than a new one. So it makes sense to have someone who knows the operations well.
vi) Risk factors
Every business carries some inherent risks. This can be changing taste and demands, technological changes, legal and regulatory changes, and new entrants. You must anticipate them and take the necessary actions to mitigate them.
vii) Exit Strategy
You can provide some plan for dating in two scenarios. First, he made a lot of money and plans to open more chains. Then you need a lot of financing from investors by selling them some shares. Second, if the business fails, you may want to negotiate to shorten the store’s lease and find ways to sell the coffee equipment.
B. Operations
This part covers the detailed aspects of running your coffee shop business on a daily basis. This is where the rubber meets the road and you need to execute successfully to get your business off the ground.
i) Start-up costs
These are the costs to get your business off the ground. These include renovation, cafeteria design, the cost of buying or leasing equipment, and legal costs like licenses and permits. How much you should spend depends on the USP you’ve targeted.
ii) Monthly income and expenses
After estimating the size of the market in your niche, you can estimate how many customers you can have as a monthly income. You can then estimate monthly operating costs, which include rent, staff salaries, and utilities. You need to estimate how much cash you need to sustain the slow months, especially the first few months of operations.
iii) Transactions
This covers the day-to-day operations of your coffee shop, such as hours of operation, how many staff are in the kitchen and serving customers, as well as the type of furniture you need to purchase. You can also detail the types of cookware to buy and when the equipment needs service.
iv) Marketing
Your marketing methods will depend on your USP and the image you want to represent. If you plan to do a fancy type, you can send postcards or flyers to your local areas. You can also organize special events such as birthday parties or meetings. Your company logo and staff uniforms should also reflect this upscale image.
If your niche is speed and price, you can advertise on a billboard near any transit bus or rail. You may want to offer special discounts for repeat customers.
v) Financing needs and sources of financing
You can start using your own funds, but as your business grows, you will need more financing. If the interest rate is favorable and you have been in business for more than a year, you can approach banks for loans. If not, look for investors who are willing to take some risk. Even if all else fails, you can still get your provider to finance it in the form of discounts or longer rebates. See if you can qualify for any government small business grant.
Conclusion:
After you finish the first draft, you may want to have someone with experience, such as a lawyer or accountant, give you a second opinion. It may take a few more turns before it’s ready to be presentable to investors. It is recommended to review this at least once a year to see if it is still applicable.