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Permalink Reply by Jason Haeger on August 17, 2009 at 8:23pm

I'd like to third the first two posts in this thread advocating the possession of a very clear idea about what your business will be, and what it will be about. Everything else revolves around this. It's the foundation, and nothing can exist without it.

Drive-through isn't necessary, but it's worked well for Al. If that's what you want, then do it. It also has a lot to do with your market, its size, and which niches you are after within that market (if you live in a smaller area, the market size will dictate this more than anything else, and matching your business to the market's needs).

Spend more on coffee than on decor. People are drawn in by atmosphere, but they return for the coffee. You are selling products. Make those products the best that they can possibly be, or don't even bother.

I agree that you need to nail down your startup costs to a T. Double it. Have that before starting anything. You WILL spend more than you budget for. You WILL need to dip into the reserve stash. That's why it's there. You will NOT be turning a profit as soon as the doors open, so plan paychecks for yourself and your employees in addition to running the store for at least 6 months in the reserve stash.

Plan to live there for the first six months to a year. It's your baby. It's your life's investment. Nobody else will care as much about it as you do. (if they do, then it's time to reevaluate if this is the right step for you. It may be, it may not be, but there is no "testing the waters". It's all in, or a change of plans)

Invest in yourself and your staff. The value of good training is underestimated far too often. Your business is only as good as the products it is selling.

There is more, but I'll we'll leave my additions to this great list at that.

Al Soto said:

1st- Find the best coffee you can serve, coffee that you are passionate about.
2nd- Know your competition and who you are marketing to (How big is your population, how many other shops are there). What will make you unique and different from other shops.
3d- Try to have shop with a drive thru window. I am only drive thru with a little outdoor seating, but I wished I had built a small indoor sit down, but I am not sad that I am a drive thru.
4th- Get excellent dependable employees. The hardest part of opening a shop (I have been open since 12/08) was finding quality dependable help.
5th- Nail down your startup costs and then plan to spend more.
6th- Nail down your menu and what you will charge. Good rule is 65% mark up. If a product cost you $1 to make charge about 65% more.
7th- If you have the money hire a consultant (Jason Haeger here on barista exchange was an excellent source for me).

Hope that is a good start.

Al

p.s. - thanks for the plug. :D

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Permalink Reply by Casha Garcia on August 17, 2009 at 9:09pm

My goodness that is such an open ended question with so so so many answers varying in a vast array!

"Really the only point I want to drive home is that Jay is absolutely right, know what you believe is right when it comes to coffee, your "coffee morals" if you will and build your business plan around those morals. There's nothing worse then waking up one morning and realizing you work at a "non-Starbucks Starbucks."
- Bryan

Jay also had some great things to say which I'm right on board with...

The thing I would say is stick to what you know- Do you want to be the coffee house that serves a LARGE VARIETY of items which are good (but not great) with status quo service OR do you want to be the coffee house that people can't get enough of because you sell what you sell (coffee) and you do it THE VERY BEST (in all aspects of the business)!

Take it one day at a time and don't get discouraged when things don't go exactly the way you planned, because "the way you planned" NEVER happens in business (especially in this economy). Learn to be flexible, LISTEN TO YOUR EMPLOYEES (they are the ones who are the FACES and VOICE of your business), LISTEN TO YOUR CUSTOMERS (establish great relationships and you've got 'em hooked- ??what would make you want to come back??), Learn to delegate because there will be more to be done than you can do on your own, CONSTANTLY reevaluate what you are doing and why you are doing it, control the CONTROLABLES, and lastly SLEEP WHEN THE BABY SLEEPS!!! I'm sure there are tons more bits of tidbits of advice that I've skipped out on, but I didn't want to complicate things.

Best of luck to you!!! And remember.... Have fun, if you're not having fun, it's not that worth it! (don't expect it to be fun all the time though- there's a balance and when you're in "the zone" so to speak, life couldn't be sweeter!)

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Permalink Reply by Jay Caragay on August 17, 2009 at 10:17pm

Some of the things Casha wrote reminded me of a few more thoughts:

- Always pay your employees on time. Once you've proffered a payroll schedule, stick to it. Pay on time and be sure there's money in the bank for them to draw upon. Nothing kills morale more than wild pay schedules and bouncing paychecks. Sure, those things can happen if things get screwy - it's your job to make sure it doesn't get screwy. In ten years, I think things have gotten screwy for us maybe three times. Which is three times too much.

- Be prepared to make less than your employees. It's the nature of the business. I pay my staff more than I make per hour and there were many times when my staff made more than I did. It's the way it is. Be prepared for it.

- Be The Boss. Remember, this will be your business. You're "The Boss." Get used to it. The people that work for you are your employees. Remember and respect that reality. You can be friendly with your staff but don't be "friends" with them. Remember that at some point in time, you will need to enforce discipline within your ranks and even fire someone. Don't confuse the situation. This is not to say you cannot hang out with your staff, go out to eat or drink with them - just don't do it too much.

- Have standards and be ready to enforce them. Whatever your standards may be, know them and enforce them with lots of zeal. Yes, your staff will rebel. They will try to push the limits and will even go "off book" from time to time, be ready to enforce your standards and your rules. It is your role and they will expect you to be strong and enforce discipline within the ranks. If you don't, they will see that your standards are flexible and your commitment isn't strong and then you'll have anarchy, or worse: insubordination.

- Be prepared to Fire people. Firing sucks. It's absolutely sucks. Nothing makes me feel more ill than having to fire someone. But fire someone is what you will have to do at some point in time. Be ready for it. Prepare yourself. It will suck and that will be okay because you know it means something. Remember if you don't, it will be much worse. When you have an employee that is bringing the rest of your staff down, that person needs to be eliminated. If you don't act, your good people will leave and you'll be screwed. Better to fire right away and keep your good people - plus it will demonstrate that you listened to their complaints.

- Be prepared to be alone. Being "The Boss" means that you are very much alone. All the actions of your staff and your company are on your shoulders. You bear the greatest burden. You suffer the most pain. However, you cannot share that pain or burden with your staff. You are The Leader. Your people expect you to live up to your role and lead. They don't want to hear your problems. You are there to listen to their problems. They don't want some whiny sissy for a boss. Be a whiny sissy with someone who loves you in the privacy of your home, not to your people.

- Remember that every decision you make will impact the lives of your staff. Make good choices and lead properly, the company prospers and so does everyone along with it. Crash and burn and your staff is out on the street.

- Know that you will never truly have a "day off." While your crew is out shopping or sunning by the pool, you will never escape from your business. It will be all-encompassing. Work will never be "done." It will always be with you - even when you're on your so-called "vacation." It will be on your mind and when the phone rings, you will fear the words: "The shop is on fire."

- Don't spend all your money creating a "job." Remember, this is business, not a job. Develop systems and standards so that you do not always have to work the bar. You need time to work ON your business rather than IN your business.

- Plan Think Time. One of the most important aspects of running a business is to spend time thinking. You need time to think, plot and plan. Make time for thinking.

- Read. Voraciously. Read everything that you can: books on business, periodicals, trade rags, etc. I find myself cramming reading in-between as much as I can. I've got books scattered all over the house, the car and wherever I am. Out at Chik-Fil-A? I've got a Trump book and Food Arts magazine in the car. There's a copy of "Heat" and a stack of trade rags and equipment spec sheets by the toilet.

- Read "The E-Myth Revisited" like it is a religion. Get yourself a copy of "The Portable MBA in Entrepreneurship." Learn principles of accounting. Read about foodservice management. Respect and read as much as you can about the business side of your business.

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Permalink Reply by Paul Yates on August 18, 2009 at 3:57pm

Wow. Jay, you and the others are really giving me some good advice, as well as Becca. Thanks. I am starting to feel a bit overwhelmed with the planning, possibly because I tend to "overthink" things. I hate dealing with unknowns, like "Will I be able to support my family on what I earn?" They tend to make me freeze, and have a mini panic attack. I like to have all the answers ready, and I am realizing that writing a business plan, and having a clear idea of what I want to do with my shop, does not mean I will be able to answer all the questions I have.

One thing I am currently working on is developing capital. I intend to speak to my bank about a business loan, but I am also considering private investors. Any advice on building startup capital, with a view to have enough to support myself and 3 others for a year's time, hopefully enough for the shop to generate enough to support itself?

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Permalink Reply by Jay Caragay on August 18, 2009 at 4:47pm

Paul-

I'm in a bit of a different situation than you. I'm single, unmarried and have no kids. Therefore, I don't have to worry about supporting anyone buy myself. As such, I can do things and take risks that others might be unable. For example, last year a friend of mine wanted to start a restaurant. He's a new chef and there was an opportunity to operate on weekends in an existing restaurant that would allow him to get his feet wet and start rolling. Problem was, when I ran the numbers, my pessimistic projections (and I always tend to use very pessimistic projections) bore out that each of us would make a minimum $25K per year.

For me, the idea of an additional $25K per year is just play money. I'd probably buy a rotary evaporator or a (very) used Ferrari with the extra cash. For me, it would be "mad money" but for my friend/partner, it would be all he would make. Suddenly, $25K seems very small for a married guy with two daughters. Granted, it would be the least amount we would probably make - and we'd probably make nearly twice that much, but the risk was that we would only make $25K. I told him that he had to decide whether or not we would go for it. In the end, he decided against it and I helped him land another job at another restaurant.

What I mean by all this is that you have a family to consider. Be sure that you run accurate numbers and base your Go/No Go decision appropriately. If I crash and burn, no big deal. If I was married with kids, different story. Know your numbers and know your business. But don't get caught up in "Analysis Paralysis" where you're continually analyzing and pondering without action. Realize that you will never have all the answers and that there will always be risk involved. Your job is to mitigate that risk as much as possible - and even then, you could still lose everything. Be ready for that.

I've been in business ten years and I still don't have all the answers I need. Remember that you will need to make decisions with incomplete and inaccurate information. That's the job. You need to be able to adapt, and if you can anticipate - all the better.

Another example - I'm in the midst of building a new coffee location. I don't have all the answers. I've tentatively set the opening for October 1st. Everything seems to be running amok. Haywire. Contractors are incommunicado. Financing is in the works. Equipment is being finalized. Lots of questions, some answers and a bunch of details that are still left incomplete or inaccurate, yet we keep moving forward. Nothing will be perfect. If you wait to have all of your ducks perfectly lined up in a neat little row, you'll still be trying to line them up ten years from now. Time to move forward.

Startup capital? There are a million ways to do it. Banks, investors, etc. "Any way you can" is my usual line of thinking when it comes to capital. That's a very complex subject that's hard to drill down to a couple of sound bites. Realize that banks are reluctant to loan money right now, plan accordingly. As far as expense planning, consider how much it costs your family to live per year and base your numbers off of that. Can that number be fifteen percent of your business' revenue? Then maybe you've got it.

For example, if it costs your family $65,000 to live for one year, can your business generate $390,000?

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