Whether you’re a small business newbie or a serial entrepreneur, there are many things you need to know when starting a coffee shop. Here, we’ve compiled a step-by-step guide to get you started.
Find a location
Location can be a key factor in your café’s success. You’ll need to think about footfall, competition, and other businesses in the area. Ideally you’ll want to find somewhere with a good amount of passing traffic, close to other businesses and amenities. If your search area is broad, you should also think about the locations in which you’re most likely to be able to secure the best staff.
Find your niche
The thought of taking on the big players in coffee can be daunting, but finding your niche can be your route to success. Depending on the amount of competition in your area, it could simply be that your niche is that you are the only specialist coffee shop in the area. However, in busier areas, you’ll need to differentiate yourself; for example, it could be how you make your coffee, using Aeropress or filter, or a specific type of bean. Or perhaps it could be your décor or a theme that makes your cafe unique.
Sort the legalities
You should get registered with HMRC and get insured before you start trading. There are some key steps you need to take immediately in order to be on the right side of the law. You’ll need to choose a legal structure, and register with HMRC. After that, you’ll need to pay Corporation Tax, and you may need to register for VAT. You’ll also need to think about insurance. Some suppliers offer specialist coffee shop insurance, which includes covers such as public liability and employers’ liability.
To consistently serve the best coffee in your area, you’ll need reliable and high-quality suppliers. Remember that your choice of supplier might also be connected to your niche – for example, if you choose a specific type of bean, you’ll need to find the best supplier in that category. You’ll also need to think about things like payment terms, which will be especially important in the early months as you are building up custom and focussing on cash flow.
Most start-up businesses need a healthy cash flow to get things off the ground so it could be worth considering other options than buying your equipment outright. There are a number of different options on the market such as lease-purchase, where you pay instalments for the machine over a number or years and at the end of the agreement you own the equipment and rental, where you never own the equipment and pay for use of it. Read our post on equipment purchase options for more information.
Build the right team
A well trained and motivated team are at the heart of any successful café. There are several specialist barista recruitment agencies, but you need to consider the cost of using recruitment agencies. It’s also worth considering hiring temporary employees, which can be particularly useful during busy seasonal periods.
Market your coffee shop
You can have the best coffee in the business, but you need people to know about it. Your marketing efforts will likely be split across multiple channels, both online and offline. This could be as simple as a great A-board outside, or as advanced as a complete online marketing plan. Social media is also a great way of promoting your café, creating business profiles on facebook and Instagram and posting regularly is a good start to build an online following.
Promote multiple sales
Coffee may be the main motivator for customers coming to the business, but they must leave with multiple sales to be a successful business. As a target, coffee should be no more than 40% of your weekly sales and two item sales per customer transaction means you are getting it about right. So make sure the traditional coffee accompaniments (muffins, cookies, cakes) are close by at the point of sale, and ideally offer cold food, cold drinks, and hot food to ensure the best chance of multiple sales.