Monday, October 10, 2016

How to Write a Coffee Shop Business Plan That Stays Relevant Today and Tomorrow

What is a coffee shop business plan and why is it important to get it right the first time? Why must it stay relevant i.e. good today and tomorrow? All these questions will be covered in this article.

coffee shop business plan

Starting Coffee Shop Business


What if I told you that most small coffee shops failed due to poor planning and not updating the business plan? If you are not in control and the original plan is no longer relevant, then you are in for a shock.

But do you know that before starting your coffee shop business, one of the things in your 'to do list' is a business plan?

If you don't know how to write one, find several versions of cafe business plans that you can download for free. Then use it as a template to develop your own unique coffee shop business plan. Or you can buy a personalized plan.

Is this the best way? Not an easy question to answer. If you are budget constrained then it is. Just bear in mind when you take this route, make it a strong business plan.  Then it will have a good chance of success and stay relevant and not filed and forgotten later.

So how to stay relevant?

Before we go into this, let's recap the basic, which is...

What is a Coffee Shop Business Plan?


To put it simply, it is a roadmap to your coffee shop's future.  It forces you to think through your business ideas and strategies.

  • Who are your target customers? 
  • What are your products and services? 
  • Prices that your intended customers are willing to pay? 
  • Who are your competitors? 

These are some of the questions to be addressed in your business plan. Assuming you have your Brand Name & Logo, other things to be considered include:

  1. Securing the right location

  2. Getting the right products and equipment

  3. Recruiting and training staff for best customer service and top productivity

  4. Creating a welcoming ambiance and culture

  5. Space planning for an efficient service

  6. How to make it profitable

  7. Financing - yes, this is key to your success as well

Next, let's go to our main topic of...

Coffee Shop Business Plan That Stays Relevant


What is good today may not be true later. It is hard to predict the future trend, especially in the quick-service industry.

So how can you check if your initial coffee shop business plan's assumptions are correct?

  • By talking to people. 
  • To your customers, your suppliers, and your financiers. 
  • And if they are willing to talk, your competitors.

These actions will bring tremendous value to your business. Put your assumptions to test and interpret the outcome. This will lessen any margin of errors in your business plan, and to stay relevant. You can test all the assumptions that you have made. But, if you are short on time, concentrate on these four categories:

1. Your Customer


Face-to-face meetings can be time-consuming. Instead, use social media to reach potential customers. Twitter and Facebook are good platforms to enable conversations.  But what questions to ask?

Let them know of your intention to open a coffee shop and of your market research to ensure its viability and success. Questions can include the followings:

  • Age group

  • Gender

  • Profession

  • Salary range

  • Their preference

  • Wish-list

  • Their frustrations

  • Home and office location

  • Type of food

Analyze these responses and pay attention to what they like and don't, and reply. Think of how you can give solutions to issues raised in the responses. You can even pick up a few new ideas and suggestions from these questionnaires!

Use these as part of your marketing and business strategy. Then amend the market segmentation and marketing strategy. Let say your earlier assumption was to target the nearby office workers. After the survey, the University students are better prospects. Hence, the necessary adjustment to your market segmentation write-up.

2. Your Competitor


Researching on your competitors will give a good sign of what works and what don't. It also reveals flaws in your competitor’s product and services. Use this as part of your strategy to be better than your competitors and win them over to your cafe!

Keeping tabs on your competitors is a great strategy to grow your business.

If you want more info on how to do research or ‘spy’ on your competitor, read this interesting article " Understand Your Competitors" by Canadian Business Network.

3. Know the Trend


Know the trend by subscribing to several publications and online newsletters. You get the latest news on issues and new products related to the coffee industry and business. Gather all these information and brainstorm how you can put it in place in your cafe business.

'Specialty Coffee Association of America' and 'The National Coffee Association USA' are two good sites to be a member and to subscribe to their newsletters.

Another option is to attend the industry trade shows and conferences. You will learn new trends and issues as well as learn more about your competitors and what they are offering.

Visit their booths and check their product quality and their offers. Observe how they interact with visitors. Don't forget to take their brochures and free samples, if any!

Go Against The Trend - Give Free Coffee


Doing something different and going against the trend can sometimes work.  How about giving free coffees and snacks? Eat and drink as much as you like and be charged by the length of time you spent in the shop. Yup, pay per minute and not per drink.

This is what a Brooklyn cafe, Glass Hour, did and it seems to work. To make sure there is no 'grab-and-go' situation, each customer is charged a fixed rate of $6 for the first hour (with free wifi and video games), irrespective of time spent. After the first hour, the rate is 10 cents a minute. If you stay longer than four hours, you will not be charged for the subsequent minutes/ hours spent. Sounds good.

Do your maths and see if it will work for your location and business plan.

P.S. Still stuck and need a break? Read my '18 Inspiring Coffee Shop Quotes Never Published Before' for some 'Aha' moments.

4. Your Suppliers


Don’t underestimate your friendly suppliers when you prepare your coffee shop business plan. Talk to them, ask questions and get to know them better. You will learn a lot about what’s going on in your area and what your competitors are up to.

They will not answer you directly. So craft your questions well and it will lead to what you wanted to know.

If they are not your competitor’s supplier, they might know of the supplier sources. So network with people in the industry and you will stand to gain more.

What if, after this session, you realized you got the wrong supplier? It is not too late to change. If you have signed a contract, check if you can exit at this early stage.

What's Next?

Your marketing strategy will now change after testing and validating the above four assumptions.

So amend your sales strategy and sales forecast. This will affect your financial plan, hence this too needs to change.

You may also want to read Joe Bastianich's 'Restaurant Man' that serves as an education for anyone wanting to start a coffee shop or restaurant business. This book is funny, brutally candid and a fascinating look at the realities of operating your own eatery.


If You Have More Time


If time is on your side, you can test and confirm your other assumptions on:

  • Start-up Expenses
Revisit your financial run. Review your premise's renovation cost, marketing cost, start-up inventory cost, and equipment and furniture cost. These will change if you adjusted the four earlier assumptions.

  • Management Team
Do you need to review your management team to be in line with your revised sales and marketing strategy? Is the salary at par with the market rate? What is your competitors' salary scale? Do they have profit sharing arrangement with the shop manager? Many business owners failed to consider this when they write their coffee shop business plan.

What Now?

So you finally prepared a strong coffee shop business plan. Everyone loves it including your banker. You filed it and got busy with the next stage of work - to open your shop and start the business. And it got forgotten. Yes? No?

Validating your business assumptions should be an ongoing exercise. It should not stop at business plan stage.

Continue to stay close to your suppliers and your customer. Analyze what’s working and what’s not in your business environment. Revise your strategy, your menu or even your coffee shop layout if required.

Continuous validation will give your credibility. The outcome: you will gain more trust from your banker and your other stakeholders, and even from your customers.

Lastly, I like to share these words of wisdom from Dan Dzen, a young entrepreneur/farmer from South Windsor.

focus on your business plan


So now you know what is a coffee shop business plan. Don't forget to do a continuous audit to ensure it stays relevant and stays successful.

If You Need a Cheap Software


Looking for a cheap business plan software on Amazon? Try this Business Plan Pro Complete v 12. It has over 2,000 business plans and examples included in the program. It is editable for you to customize the overall appearance of your business plan. It is available in both PC Download and PC Disc format.


Cheers, and remember to stay focus.


21 comments:

  1. Visitor Rating: 4 Stars

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  2. Visitor Rating: 5 Stars

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  3. I do not have the intent to open a cafe but this is very detailed article on the key point on what has to be done before actually starting the business. I will recommend this as a guideline for starting a cafe to friend that I know want to open one. Personally I love coffee and like to visit coffee shops and cafes. Very useful information. Thanks!

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  4. Hi SaM, we all love coffee and as the saying goes, 'Without Bread There Would Be Chaos but if There Is COFFEE, There Would Be Joy'. Thanks for dropping by, commenting and sharing.

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  5. I can imagine that this is quite a lucrative route to travel these days thanks to the fashion in coffee shops from Europe. Sure, there are always the big chains to compete with but I've noticed quite a few more local options overtake them in my area - people tend to prefer the more 'freindly' options!

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  6. Visitor Rating: 5 Stars

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  7. Hi Chris. There are many reasons why the friendly corner coffee shops are doing better than the big boys. Their prices are somewhat cheaper, friendly staff and great ambience. Some coffee shops meticulously sourced coffee beans from collective farms. And there are other special touches that set them apart from the other shops and why the locals prefer them over the big boys. Chris thanks for commenting and dropping in. Ending this with one of my favorite quote: "A yawn is a silent scream for coffee"

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  8. Hey Mazlan:

    Your cafe business plan is relevant for more than just coffee shops, I think. It's good, solid, basic information for anyone who's interested in opening any location-based business.

    You've included a great reminder that the plan is just like any other preliminary guidelines list. It does tend to morph when the dream meets the real and dreamers have to be flexible.

    Good job!

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  9. Yes, you are right Netta. The same 'template' applies to all businesses not just for cafe or coffee shop. We tend to forget the business plan once business starts. It is in reality the roadmap or strategy to the business success. So it need to be refered and validated frequently.

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  10. A business plan is integral to any business, but I forget the process applies to cafes too. They are one of the biggest niches (and most lucrative) if done right. I'm curious whether there are any regulations regarding importing coffee from other countries and what that process entails. I'm usually too busy drinking coffee to think about these things. Great post!

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  11. Hi, LDStudio. In the US, importing of coffee (since it is food/beverage) is governed by FDA. Currently there is no restrictions or quotas on coffee. There are publications that list out the process. You can refer to these publication, as a start : "Importing Into the United States", "Marking of Country of Origin", and "The Harmonized Tariff Schedule".Hope this helps. Cheers.

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  12. This is very useful and a good guideline for me as I am in the early stages of planning my coffee shop

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  13. AlicKan, thanks for stopping by and wishing you the best in your coffee shop business

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  14. I agree with you that talking to supplier is another important thing to do. I did that for my business and I learned a lot from them.

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  15. Hi, KLC. Yes talking and getting to know your suppliers will build a relationship that will be an advantage to you.

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  16. Giving away free coffee and charging by time spent sounds interesting. If only they have it here at my place.

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  17. It is tough now to get financing even with a good business plan. But a good plan will stand a better chance

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  18. Yes, LHK. with a good business plan, it will at least pass through the first hurdle.

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  19. Yes, Jack. I too, will go to this coffee shop and enjoy the unlimited amount of coffee!

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  20. This is an important point you raised. Staying relevant. So simple yet many failed to do this for their budiness plan. Thanks for the reminder.

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  21. Coffeefreak, you are right. making your business plan relevant is important and many people overlook this. Thanks for dropping by and commenting.

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