Coffee is a popular drink that millions of people enjoy on a daily basis. If you’re thinking about opening your own coffee shop, this article will help you to write the essential parts of your business plan. It’s important to consider all aspects of the business when creating a plan so you can make an informed decision before moving forward with any investments.
Lets get right to it.
Why Do You Need A Business Plan For Your Coffee Shop?
So to start off, why do you need a business plan for your coffee shop?
Many new small business owners make the mistake of skipping this critical step, thinking that a business plan isn’t important. But it is actually a critical part to a successful business.
Because without a business plan, you’re not going to be able
- to raise funds
- find a partner and
- have clarity in building up your cafe
When it comes to raising funds, you must have a business plan to raise funds from your friends, family, or even the banks. They want to know what kind of plans you have for you to be profitable.
It might take you a year, two years or three years, but they want to see exactly the plan of action. That way, they have much more confidence to put their hard-earned money in you.
Finding A Business Partner
If you’re looking for a business partner that can help you build this business with you, you must have a business plan as well. Why is that the case? Because you must align your own vision with your partner’s vision in this whole coffee shop business.
If that the alignment is not there or if the vision is not the same, then it’s really hard to be able to bring them on board as well. There will be a lot of tension as you want to do one thing and they want to do another thing.
A business plan puts your vision on paper and they can see if that is what they envision the coffee shop to be like as well.
To Have Clarity In Your Coffee Business
Now what I mean by that is because when you have a business plan, you’re thinking about all the fundamentals: from the location, to the strategies to SWOT analysis, to your competitors, to your pricing, and all these things that you must consider.
And on top of that, when you’re building your business, you’re going to be slammed with left-right center of different types of problems.
And when you’re hit with different types of problems, it’s very easy for you to be buried in the noise without seeing exactly what you need to do without remembering all the strategies, which is a reason why when you have a business plan, you can see through the noise and to really focus on what will drive your business forward. So that way you can have a profitable and successful coffee shop.
Now as a disclaimer, I’m only going over all the essential parts of a business plan. So then that way you can be up and running as soon as possible.
Now without further ado, let’s dive right in.
1.Your Coffee Shop Business Concept
The first component you must-have for your coffee shop business plan is your concept.
Now what I mean by concept?
It means that what is the vision that you have that you’re building out, whether this is a mobile food truck that is only serving the most artisan cup of coffee? Or is it going to be a sit-in coffee shop that only serves three to five people? Or is it going to be a big coffee shop that you’re going to have a lot of people come in study and have meetings for you to actually identify that and really write down what your concept is.
It allows you to build out this entire plan to the tee.
That means that if you’re looking for just a mobile coffee shop, the equipment might be very different. That means your startup capital would be very different as well. And that allows you to actually be a lot more accurate when it comes to forecasting the number of resources that you may need.
And it also allows your investors, your partners and yourself to stay on course, and to set the tone throughout this entire business plan. So make sure you have your concept and visually laid out in front of you as clear as possible.
In addition to your concept, you must identify what is the problem that you’re trying to solve in a marketplace. Because ultimately, your job is not to create a coffee shop, your job is to provide a solution to an existing problem. And what does that mean?
That means that when people want to meet for business meetings, when people are looking for places to study, and they don’t have that place, the only place they can go to is Starbucks. And that’s what Starbucks is solving to be able to have a nice place for people to have business meetings, to be able to have a place where people can come and study.
And that’s the reason why Starbucks Mojo is your second home for you, you must identify what is the problem you’re solving for your specific concept as well.
2. Your Coffee Shop Business Team
The second component of building a coffee shop business plan is your team. Specifically, we’re going to start with you first.
Now for you, you need to identify exactly what you’ve done in the past and what you can actually bring forth to this specific business. So for example, if you have management experience from the past, you can talk about that and the strengths and what makes you so special and uniquely qualified to open up this Coffee Shop, because that’s really the pyre the chance of your coffee shops success.
Now for a lot of our viewers I know that you may not have the experience to begin with, then you must be resourceful. What does that mean?
That means you count on the people, you know, and look at their networks. So for example, if you have an uncle that is doing important export, and they know how to import coffee beans, that’s a really big plus, that you can put into this section as well. Because you would have that resource which I don’t have.
And that would make you that much more likelier to have success over me, someone that doesn’t have this kind of resource. So definitely sit down and really jot down all the different people that you know, their background, and how they can help you and propel your coffee shop forward.
The second part of your team is not you must include other partners that you may have, or the management team that you have created to build this coffee shop business with you. Same thing with thumb as well, you need to highlight their strengths and what they can actually bring forth to this business, whether it be management skills, or their network, or the resources that they have is very important for you to highlight those items.
So then that way, it gives a confidence to your potential investors to the banks that, hey, you know what, this guy has a pretty solid team, I’m willing to invest in him. And at the same time, it really also challenges you and your partners to really count the resources that you may have, send them this video, show them and let them write down exactly all the networks and resources that these networks may have in order to help with your coffee shop business.
As an example for you with our previous business 720 sweets before we sold it, we have a really strong team. And the reason why we had a really strong team is that each of the individuals, we brought in different strengths to the business, we all put in different things to the business that made us a very solid team in order for us to get a lot of good funding.
Now as an example, for you one of our partner, he is the biggest distributor for bubble tea supplies in Western Canada. What does that mean? That means that we always get the cheapest cost of ingredients. And that means we don’t need to actually pay premium for our cost of good salts. And that allowed us to actually attract more investors, and funding from the bank because of the relationships that we have within our team.
So for you, you must look at what your people and your team is bringing to the table. And when you don’t know, then you must ask them what is the reasoning? What is it that they’re bringing to the table to strengthen your coffee shop business, whether it be resources, whether it be capital, whether it be just pure talent.
3. Your Coffee Shop Business Target Market
Third component you must identify in your business plan for your coffee shop is your target market.
Now who is your target market?
It is the people that you’re trying to help. Once again, I always come back to this when you are trying to create a solution to someone’s problem. Whose problem are you trying to solve?
For example, if you’re trying to create a cafe for students to come hang out for late night, so then that way, they don’t need to be stuck at home and they want to be able to focus, then everything within your coffee shop must align to that.
To give you a few examples: Wi-Fi must be free and must be strong, because a lot of people are going to come with their laptops, and they are going to be on your Wi-Fi network. And on top of that, you must have outlets. Why? Because people need to charge the laptops.
These are little details that you must focus on because you’re trying to give a solution to someone’s problem. The problem is the fact that these students don’t have a place to study and to focus. And on top of that, you must offer food items, the food items not are quick grabbing go eat. So then that way they can really focus on their study.
And these are just little examples of things that you can do to better serve your customers.
Now it is time for you to identify your customers identify exactly who they are. So then that way, you can actually serve them the best that you can.
For us as 720 Sweets. We have identified our customer avatar and actually created a sheet like this, her name is Michelle. And we identify exactly who they are, from how old from what school they go to, from what are some of their desires, some of their passion, what they’re passionate about, and to really have a good idea on who we’re trying to serve.
Now, everything we do from marketing to designs to the chairs are all catered to Michelle because this is the problem that we want to solve for them.
Same thing for you identify exactly who is it that you want to solve, solve and really come back to the concept idea, the concept of the problem you want to solve and who to solve that for when you identify this to the tee.
Then it gives confidence for your audience and actually, for your investors and your partners to actually invest in you when you have this very specific.
If you want to learn more about the fundamentals of building a food business: how do you align your values with your customers’ values, so that way you can connect with them, connect with them. So then that way they become a loyal customer and in turn for you to explode in sales, then you must check out our link below.
It is a free hour of masterclass that, you should definitely check it out. Because that’s where we are able to teach you show you the fundamentals of building a profitable restaurant and food business, definitely check it out below.
4. Your Coffee Shop Business Location
The fourth component you should definitely consider when building out your coffee shop business one is location.
Location, location, location, a lot of people talk about location. But how do you distinguish between locations?
There are two different types of location first type is a Destination Location and second is a High-Traffic Location.
Destination Location vs. High-Traffic Location
Now the difference between the two is that usually with Destination Location, the rent is much cheaper because there are not much traffic around that area.
So for example, it might be a neighborhood tucked in the corner around the block coffee shop. And those are really just not but not that much walk in traffic. So the rent is much cheaper. And you need to be able to have reasons of what entices people to come by that neighborhood coffee shop, it could be because you have very good artists and coffee that really attracts people who drive all the way just to have your coffee, or versus a high traffic location.
For example, having a coffee shop right on the downtown core, that itself would have a lot of traffic and in turn potential customers for your coffee shop. However, with that amount of traffic, that rent is much more higher than that.
So for you, it’s always looking at the prices versus the walk-by traffic.
Another thing you should consider is the density. What does that mean?
Because a lot of people are now working from home and they’re wanting a good cup of coffee, then you would want to be able to consider having a location that is in a residential density location. What does that mean?
That means that you must surround yourself in a lot of different residential area. So then that way, much more people are willing to be able to order takeout from you.
Now as an example, with 720 Sweets, our first location, we know we wanted to serve University School students, however, having a coffee shop at the university is very expensive.
And that’s reason why we had to make a decision whether to actually have that risk of putting in five to $6,000 per month, and to have that traffic and to really bet everything on that.
Or should we be situated a little bit further away from the university and have cheaper rent, we chose a ladder, we chose to have a coffee shop at our location our ice cream shop 10 minutes away from the universities still close by yet, the rent was substantially cheaper.
So that allowed us to actually try newer things and to still be assessable for university students.
On top of that, the reason why we chose that location is that it is situated right outside of a bus stop that goes straight to the university. So that’s why we really find that spot as a really good alternative to having a coffee shop inside the university.
5. Your Coffee Shop Business Sample Menu
The fifth component that you must-have for your coffee shop business plan is your sample menu.
Now I know a lot is still in the air and you’re trying to figure everything out and you don’t know exactly what you’re serving. However, it is super important for you to actually have an idea of what you’re proposing for your menu.
According to exactly who you’re trying to serve your target market, you should actually allow yourself to build a menu that is for them.
And let me give you an example of why that is the case…Because – for example – we want to serve the students that is lacking a place to study. Now for the people that are coming in at 9pm 10pm. They’re looking for a sandwich or a soup to eat late at night or just noodles, then those would be good items to supplement your coffee shop that you’re offering. That’s how you’re going to be able to come up with that menu.
And on top of that you need to identify how much are you selling these items for what are your costs and what are your margins so that way you can really do a financial forecast of how long does it take to make your money back. Oftentimes if you’re just selling coffee as an item, you’re going to have to sell a lot of coffees in order for you to make back your money.
And that’s the reason why even for Starbucks, they’re selling cookies, they’re selling muffins, they’re selling chips, a lot of different things that they’re selling along with coffee as well.
So for you, for you to come up with this proposed menu, look at exactly who you’re trying to serve, and locate exactly what they need. In order for you to come up with this proposed menu.
Another way for you to get more accurate data is for you to survey people that you are planning to serve. Ask them whether this would be a good item, ask them how much are they willing to pay for it and actually go to your competitors coffee shop and see exactly what they’re offering, see how much they’re charging, see what is popular and what is not popular for you to get a better insight on what you should offer to your customers.
6. Your Coffee Shop Business Design
The sixth component that you need for your coffee shop business plan is design.
Design is practically my favorite component of all time because I get to be able to have whatever I have in my mind to share with my investors and with my partners. That’s exactly why this is a very crucial component for your business plan. Because you want to be able to show people that you’re working with exactly what you have envisioned in your mind.
What are some of the color schemes? What does the vibe look like? What’s the ambiance within the coffee shop? How does your coffee, mobile coffee truck look like?
These are things that you can actually work very closely with a designer in order for you to come up with that color template, come up with a logo, come up with what the uniform looks like, and really come up with the basic foundation of this whole vibe, what you’re going for.
So then that way, you can actually submit this business plan to investors to partners to help them, bring them into your world. That’s the whole point of designed to be able to actually bring what’s here, out on a piece of paper as an example for you.
Whenever we sell locations for ice cream shop 720 Sweets, we always design renders for every single location. For every single proposal for every single country that we’re entering, we always have designs and renders because that really just shows our partners we’re dealing with vendors exactly what we’re trying to build. And it also allows me to see exactly what I’m trying to build and whether it is in line with what I believe in as well.
So super important for you to do the same.
7. Your Coffee Shop Business SWOT Analysis
The seventh component for your coffee shop business plan is your SWOT analysis.
Now I know this sounds like a cliche, but everyone is working on a SWOT analysis, but it is super crucial when it comes to building your coffee shop.
Why is that the case? Because we need to identify what our strengths are, what our weaknesses are, where the opportunity lies, and where the threats are as well.
Strengths of your coffee shop business
To dive in a little bit deeper for each one is that for your strength? What makes you different? What makes you more successful than all the other competitors?
Is it because you’re really focusing on the ambiance, and you know exactly who you’re serving, and you want to create this massive experience all just for the students? And if that’s the case, that is what’s going to make you special within your neighborhood.
Weaknesses fo your coffee shop business
Now, what are some of your weaknesses? If you are once again, if you’re focusing just on students, we all know that students don’t have a lot of money, more disposable income, and they’re going to sit in your coffee shop for hours on end, then we know that as part of your weakness over your competitors grabbing go.
For us. It’s really about exploring and understanding where our opportunities and where our strengths are, where our weaknesses are.
It’s okay to have weaknesses, but we need to be aware of them.
Opportunities of your coffee shop business
Next up is opportunity. Where does the opportunity live?
Let’s say for example, if you have an uncle, that is that knows how to do franchising, and you know, you can count on him and as an advisor to coach you along the way. That becomes your opportunity where your competitors don’t have because now you’re building a business building this whole concept. And once it is a proven concept, then your uncle is going to be able to help you expand to other cities as well. That is an opportunity that is strictly for you.
So identify what opportunities you have in the marketplace.
Threats to your coffee shop business
Now lastly, threat. Let’s say for example, you’re choosing a location that is going to be retail we developed soon. And you choosing a location that already has three different coffee shops as well. These are threats that you need to put in your SWOT analysis because it just allows you to have a full picture of the business that you’re trying to build.
Identifying all these different types of strengths, weaknesses, opportunities and threats allows you to have this overall picture so that way you can run your business successfully. On top of that, this is exactly what investors and your partners would want to see because ultimately, they’re not looking into investing a business that is like 100% bulletproof, they want to be able to see that you as the owner as the founder are aware of different exposures that you are exposed to.
So that way it is bigger picture and you’re going to be able to get that funding you need.
8. Your Coffee Shop Business Marketing Plan
The eighth component you need for your coffee shop business plan is marketing.
What is your plan to gain that initial traction? What is your plan to gaining people to buy from you?
What is your plan to going to market, whether it be Facebook ads, whether it be influencer marketing, whether it be stunts, whether it be just promoting on university grounds, these are all different strategies that you must put on your business plan, because this is a way to showcase to your investors, your partners, even yourself a roadmap for yourself of Hey, now that we built this coffee shop, how am I going to get customers, you don’t want to build a coffee shop and then wait for people to come in?
No, we don’t want to be like that. We don’t want to be a sitting duck, we want to be proactive. We want to have a plan and strategy on how we can actually promote our coffee shop even before we build this coffee shop.
And that’s the reason what distinguishes people who are very successful and people that build a business and are not too successful and not that close on in the first year. You want to avoid closing down in the first year, which is the reason why you must plan for success.
Understand what would bring in the customers identify your list. So then that way it gives not only yourself the confidence, but also your investors and your partner, the confidence to invest in you.
So if you want to learn more about marketing, the different strategies that we used at 720 Sweets and how you can actually get people to talk about you for free then definitely check out the link below. We created an hour of free masterclass, that shows you exactly how we do that.
9. Your Coffee Shop Business Financials
The ninth and final component of a coffee shop business plan is the financials.
Yes, I know this is a topic that everyone’s waiting for. Everyone’s excited about this. I know it’s dry. I know it’s difficult, I know, probably you don’t want to deal with this. However, this is the most important part of this whole business plan that your investors and your partners would look at. And it is also the most important for you, when you actually have all the information there. And I’ll tell you the reason why.
Because if you don’t know your numbers, you’re basically swimming in the dark, you don’t know for every cup of coffee you sell, whether you’re making money or not. You don’t know every month how much you need to make in order for you to breakeven, you don’t know when you’re actually going to be able to make back your investment.
And without understanding on all these Then why are you creating coffee shop?
Ultimately, this coffee shop should be a vehicle to provide for you to have freedom of choice, freedom of time and freedom of financial burden. And that’s the reason why you creating this coffee shop.
So understanding your numbers is key in doing that.
What kind of numbers are we talking about?
We’re talking about either the startup costs of how much your equipment costs cost you? How much are packaging? How much is Cost of Goods Sold? How much are labor, how much is everything going to cost you.
And if you don’t know these numbers, then it is very important for you to go out and find these numbers.
If you don’t know how much people are willing to pay for your menu item, then make sure you go out there and survey people to get the best numbers possible.
If you don’t know how much and what is the cost of per pound of coffee, then go to suppliers and ask them how much does it costs, the more accurate you are in identifying all the different costs for your coffee shop, the better it is for you to actually map out how and when you’re going to make back all your investment.
And when you are presenting this business plan to investors, they will challenge you, they will rip it apart and they’ll poke holes in you. And it is up to you to always come back and revise come back and revise as they give you more and more feedback.
And the more this is bulletproof, the more that you’re accounting for, because the last thing you want is for you to be in business running for a year, two years, and you still don’t know why you’re losing money.
That is the worst thing that can happen.
And believe it or not more than 80% of the people that are running their business, they don’t know their numbers, they don’t know why and how to turn their business around because they didn’t focus on the financials to begin with.
So there you go, guys, the nine components of a coffee shop business plan that you must have in order for you to actually get funding for you to find partners and for you to have clarity in building this coffee shop business you must have these components.
And if you’re serious about building your own coffee shop business, then I highly recommend you to attend a free masterclass in the link below as we talk about how do you Align your values and create the values so then that way you can start attracting your loyal fans and to communicate and to Connect with the people that you’re serving. And lastly for you to Explode in revenue.