Replies to This Discussion

Permalink Reply by Ron Ingber on August 10, 2010 at 5:02am

It sounds to me that you are about two years away from trying to open. If you don't have the time to read through the BX archives, where will you find the time to plan your business?
The business aspects are probably the most important part of the process. (Roasters and equipment specialists - please don't beat me up over this).
Have you written your business plan yet? This can be a 6-12 month project, depending on your current level of knowledge and how much time you have available.
Most of the Barista training schools have day(s) devoted to the business/financial aspects of starting a business - I would definitely check them out.
It is not unusual for a startup coffee business to cost $50,000 to $250,000 (or more) before you open the doors. If you are lucky, a bank might loan you 50% of this. In addition, you should not plan on taking out any money from the business for the first 12 months toward your current living expenses. You need to have this cash available from the start.
Being your own boss in a small business means that everyone who walks through the door is your boss.
Setting your own hours is great, as long as they include 12 to 18 hours per day/ 7 days a week.

I apologize if this response seems harsh, but you are a long way from actually opening a business.

Ron, the Country Guy

Permalink Reply by Jay Caragay on August 10, 2010 at 6:32am

" ...I'll probably find more than enough info to answer the question I have but, I don't really have the time to do that so here goes..."

Take this for what it's worth, but if you "don't have the time to invest" to actually learn about the business, then you shouldn't be in business.

Just over a decade in the retail and service industry and you still don't know what to do? Were you not paying attention all these years? In the past year, you've welcomed a child into your life - are you sure this is the right time to gamble your savings and credit on a business venture you're ill-prepared to start?

Understand that a business can give you all that you desire above. However, it can take everything and more away. Starting a business carries tremendous risk and burden. Yes, the IDEA of a business owner is that you set your own hours and can be your own boss. The reality is that the burden of the business is with you 24/7/365 and it's relentless. Yes, you're the boss but the buck stops here with you. Make mistakes and the whole thing crumbles. In a flash, whatever nest egg you've invested is wiped out and your employees are on the street.

Quite frankly, this economy is brutal. And it's going to get worse. Probably at least three more years of crap - is this the environment you want to risk your savings in? If you've got a good paying job that supports your family, I suggest keeping it. When you're the boss, you're usually the last to get paid - so much for having control over your future.

You've got a ton of ideas - that's great. You only one or two that will work. If they're so easily fleshed, then flesh them out into something. Get it down, figure out the cost to execute. Financing means nothing until you know how much you need to finance. Also, are you planning on footing the cost yourself? Or are you going to a bank? First off, do you know your banker? What kind of relationship do you have with him? Don't have a relationship with your banker? Better get to work on it. Economic times are tough and banks are holding their financing tight. You're gonna have to make a compelling plan and have significant investment yourself before the bank will even consider letting that TARP money loose.

Ron is right. You're not even close to opening. You don't even know what you're going to do yet. Time to start learning and educating yourself. Don't have any financial experience? Go out and buy The Portable MBA to Entrepreneurship. It's extremely dry reading but a very worthy investment. I also like The E-Myth Revisited to set the mindframe for developing business systems to deliver consistent customer experiences. BUY those two and read them, learn from them and prepare yourself.

In the end, as the business owner, it's all on you. Fail and it's because you made the wrong choices. There is no boss above you to blame. Everything rides on your shoulders. Want to bitch because your employees are no better than the worthless hags you worked with at your corporate job? Who's fault is that? You hired them, they're sucking your payroll and running your company into the ground. Learn how to interview and hire the right people - it's critical.

While Ron may be worried about upsetting the roasters and equipment people, I say "screw them" - the business aspects ARE THE MOST IMPORTANT part of your business. If you don't have a firm grasp and control of your business from a financial standpoint, you're guaranteed to be screwed. Take Intelligentsia, for example. While it's got the hype, style and great coffee - what I see behind the curtain is the very savvy business acumen of Doug Zell. He is what makes the difference between a small roaster toiling in some city and the powerhouse that is Intelligentsia. That's a lesson to be learned right there.

Barista training schools are the wrong place to learn business skills. Want to take a course? Go find one at your local university. Learn accounting principles and practices. Study business law. Study how to structure a business. Prepare yourself.

Yes, I understand you want to get started right away. Do yourself a favor by learning and preparing yourself beforehand.

Good luck!

Permalink Reply by Brady on August 10, 2010 at 7:19am

+1 to everything said above by previous posters.

My wife and I began planning a cafe about 6 years ago - perfect location, wide open customer base, great business plan. Knowing what I know now about the business, we'd have had a great and successful cafe. However, we waved off because we were expecting a baby later that year.

Best decision ever.

Our son is now 5, and I've been able to spend time with him as he was growing up. Having seen what kind of schedule cafe owner ship requires (I helped my parents open a cafe 3 years ago), that wouldn't have been possible if we'd opened.

Do not open a cafe to have more time with your children. It sometimes works out that way, but often does not. If your current job doesn't leave you enough time with them, find a new job - one that you can schedule vacations from, have sick days, and leave behind when you get in the car to go home.

My 2 cents.

Permalink Reply by Marek on August 10, 2010 at 11:48am

Have to agree with earlier posts. Perhaps it was just a bad choice of words on your part, but:

I am sure the information is already posted ... If I bothered to look... Isn't the best way to begin a request for help.

Indeed, this subject has been covered extensively and there is a lot of very good information already posted.

Therefore can only suggest that you ... Make the time ...

All the best ...

Marek

Permalink Reply by John P on August 10, 2010 at 1:18pm

Reggie,

I can only echo what has been said and perhaps add a little insight and (harsh) reality.

As much as I love the business, you have to put your family first. When you are in a position to put everything on the line, then, by all means, move forward. And when it comes to that you need to be willing to do the work, to jump through the hoops; if you're not, then owning a business isn't for you. Having a dream is great, but if you start off with confusion, then you are setting yourself up to fail.

After you have at least year's worth of surplus saved to take care of your new child -- on top of what you will need for your business --- then, and only then, should you seriously begin looking for a location. Of course, this should be after a year or two of additional prep, hitting the trade shows, understanding the ins, outs, whys, and wherefores of coffee and espresso, and doing exactly what Jay suggested and hitting the local college and boning up on your understanding of business and entrepreneurship.

There's nothing better than hearing a new success story in our industry, and this may sound harsh, but your post comes off as lazy and naive. Some questions you have to answer for yourself through hard work. Shore up your life first and look at opportunities as something you work to create rather than a means of escape.

Maybe in a few more years you will be ready. Keep working at it. And if you're still not discouraged --

That's exactly the attitude you'll need. Best of luck!

Permalink Reply by Joseph Robertson on August 10, 2010 at 1:34pm

As a busy shop owner, coffee roaster, barista, baker, janitor, let's see? Have I left anything out. Ohh ya, salesman, ( if this looks or sounds like a run on sentence it probably is )
I don't have much time to read questions like this but I really enjoy helping others who have a similar or the same passion as I do. That said, you need to fine tune your business model. You need a clear idea of what you want to create. Hell, how are going to have any idea how much money you need if you don't know what your going to build.
Reggie, if you don't think you have much time now, "I don't really have the time to do that so here goes" then wait till you get in my shoes taking a few precious minutes to answer a question like yours.
Make the time to do lots of research. Study other businesses similar to what you have in mind. Ask questions in person of the owners of these shops. Make an appointment if you have to to see them. That is how I started out. I did not know about BX and this forum when I started so I went face to face as much as possible. I also studied websites to find out what the trend is now with the business model I am interested in, and might be in the near future. Then on to your formal business plan. If you are going to borrow $ then the more detail you collect the better chance you will have in keeping the attention of your lender.
Best of luck with your venture.
Joseph
-- Ambassador for Specialty Coffee and palate reform.

Permalink Reply by Reggie Elliott on August 10, 2010 at 2:16pm

Funny, okay so yes I did seek advice on BX but I like how everyone seized on one phrase and used it to base their entire opinion about someone none of you have actually met.

I didn't know Barista Exchange was the only resource for information of this sort. My bad. I guess me also asking family members, friends, former employers and associates means nothing.

Seriously people.

Permalink Reply by Reggie Elliott on August 10, 2010 at 2:21pm

If I don't have time to read through the BX archives where will I find time to plan my business? Uhm, maybe by spending that time planning my business? Idunno.

Permalink Reply by Andy Atkinson on August 10, 2010 at 3:12pm

Reggie, I have a feeling that these posts have come off more aggressive than they were meant to be. It is honestly truthful information that is meant to help keep a fellow industry person from the -possibility- of getting in to deep and realizing it to late.

However, once (and if) you have made the decision that you are in fact ready to dive down the rabbit hole, I would agree with Jay that financial experience/knowledge is crucial (at the very least get some one who is a financial person on board and have them teach you along the way). You need to fully develop your ideas into something that you can both articulate on paper and discuss in depth with someone who was not in your head when you came up with them (that was the hardest part for me).

Be flexible, understand what your core values are that you are not willing to compromise on (and be willing to end it before you get financially tied down if you feel these compromises might be around the corner), and what you are willing to compromise on to make the plan actually come to life. And what is key to any good plan, contingencies, know when to say "hey, this just isn't going to work out. I'm pulling out before this ruins me, my family, my credit, and my future." You need to identify and outline the circumstances that are your red flags.

Once that BS (by that I mean the gory pencil and paper work, that unless you have a sick sense of fun is pretty mind numbing, but crucial) is out of the way, then your about ready to move on to yet another year, possibly more, of fun work before your ready to unlock some doors.

There are a gazillion more ins and outs and details that you will be crossing along the way to this point, and yes you will have to troll the post archives of BX's wonderful library of knowledge to find that.

Hope that helps.

Permalink Reply by luke hudek on August 10, 2010 at 4:47pm

My advice is this:

READ DAILY

Read everything you can get your hands out that is related to the industry, and I don't just mean the coffee industry but also sales.

Also, do something DAILY that is related to the industry. Whether it is practicing latte art, roasting on a popcorn maker just to get your feet wet (or setting up experimental profiles, I don't know your roast experience), practicing pouring on pour overs, or just trying to get a consistent shot (hell take out a scale and make sure your tamping consistently) PRACTICE PRACTICE PRACTICE every day on SOMETHING coffee related. Remember, consistency is important, and in your downtime you can make yourself more so.


Since I don't think anyone has touched on this yet (I'll double check) you may also want to check out sites like these since you seem to be starting small.

www.lendingclub.com
www.prosper.com

They are private investors groups that can help you out when you go looking for capital. The biggest mistake I made was assuming that 7m style loans would be available in my area when I started out, and it took us a long while to shop for a loan (over 26 types) only to find out we were asking for TOO LITTLE for anyone to care investing in us. Needless to say private investors like that helped a ton.

Permalink Reply by Brady on August 10, 2010 at 6:01pm

Reggie said:

Funny, okay so yes I did seek advice on BX but I like how everyone seized on one phrase and used it to base their entire opinion about someone none of you have actually met.
I didn't know Barista Exchange was the only resource for information of this sort. My bad. I guess me also asking family members, friends, former employers and associates means nothing. Seriously people.

Seriously?

Reggie... you got some actual feedback and advice from some people that have been there. Look these guys up and see what they've done. Mine was pretty brief, but honest. These all took time to write. In some cases, lots of time. Do you think that was just meant to belittle you? Insult you? Come on - we've got better stuff to do than spend time doing that.

You asked for advice. You got it. Try reading past the part where we "seize on one phrase" and look at what's been suggested here. Lessons learned the hard way.

You asked your friends? How many friends have opened cafes and have them fail? How many have watched the people running cafes go through the wringer, divorce, bankruptcy? You know where the used equipment I'm refurbishing right now came from? I have stuff in my shop from 3 different failed cafes.

You asked your family? My Mom says I'm a great singer... the guys in the band know better and tell me honestly.

You want advice about what it means to open and make profitable a cafe? You'll get it here... but don't expect it to line up neatly with the picture you have in your head.

The truth will set you free... but its going to really piss you off first. Not sure who said it, but its true. Get the being pissed off part out of your system, come back tomorrow, and read this stuff again. I know lots of people that would have gladly paid lots of money for the advice you just got. Ignore it if you'd like.

Permalink Reply by luke hudek on August 10, 2010 at 7:36pm

" You know where the used equipment I'm refurbishing right now came from? I have stuff in my shop from 3 different failed cafes."

Taken outa of context, you should also by used if you are able and comfortable to save money....and I don't just mean on the brewing equipment (triples sinks used are still sinks!)

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