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Permalink Reply by Jeremy Perrine on May 13, 2010 at 2:46pm

I would suggest, from my point of view on your situation, that you need to make a list of everything people here have suggested and you make a plan to accomplish them all. Once you've done that, then work on starting your business.
The more you know before you start, the higher your odds of success go.

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Permalink Reply by Ron Ingber on May 13, 2010 at 3:34pm

"One post said $25,000 in advertising..I haven't spent that in 17yrs of business,"

The only reason that I suggested a huge advertising budget is that any new shop trying to establish itself in this particular city (Athens, Ohio) will have to compete with a well established, highly respected and high quality shop right near the university.

Otherwise, I agree that the advertising number is very high.

Ron, the Country Guy

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Permalink Reply by Mike McGinness on May 13, 2010 at 5:26pm

17yrs and not spending $25k on adverstising. 17yrs first as an ice-cream shop then a few years ago adding espresso if I understand correctly from your bio. 17yrs and still open which is saying something. Yet still only one location? How profitable? Can you take a couple weeks or month off and not have it fall on it's face?

Sometimes I wonder if we Indies make a big mistake over-looking a real ongoing regular repetitive comprehensive hammer it into your target market's brain advertising budget. I know I don't. But it's how the Big Boys do it, and one reason they are the Big Boys.

Ok might say you don't see places like Intelli' spending big bucks advertising on the boob tube. Nope, their target market isn't couch potatoes. Instead they spent huge bucks on other forms of advertising like training World Class champion baristas. Think their target market would stand in line for an hour or two or three if the word was out Mike was pulling such and such shift at such and such Intelli' location? Hell yes.

Brewed Expressions Coffee House said:

One post said $25,000 in advertising..I haven't spent that in 17yrs of business,

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Permalink Reply by Jay Caragay on May 14, 2010 at 5:11am

I skimmed through many of the responses and I think you should take much of their comments to heed.

20 years old? While I applaud your enthusiasm, realize that you have a ways to go before you open your doors. First off, start educating yourself about business management, accounting and business law - those will go the distance as you start putting your business together. You state that you work at a coffee shop now - what caliber coffee shop do you work for? Is it a place where you're learning about the coffee business and what it takes to run the business? Are you striving for a supervisory or management position? No? Then you should be.

At 20 years old, you have no experience. Time to get it. And better that you learn, make mistakes and grow on someone else's dollar than your own. Making mistakes under a caring mentor is far better than making mistakes that could collapse your company and your investment. Find the best coffee place you can find and beg for a job there. You need to work for great people who will show you how a great company works. Develop your vision for coffee and your coffee shop.

Know that in today's environment, loans are just not happening. You could put up 60% of your costs and it's still unlikely that a bank will grant you an SBA loan. Some of my advisors are in constant contact with bankers and the question to them is simple: "How many SBA loans have you closed in 2010?" So far, no one has closed any SBA loan. TARP money is just being wasted by the banks.

The good side to that is you're years away from opening or needing the capital. Use that time to educate yourself and prepare. Many of the questions you ask above are elementary and a demonstration that you don't know much about the business and are ill-prepared to open a shop any time soon. Take your time to learn the business so that you can make informed decisions about what you need and how much you're willing to pay.

With that said, how much does it cost to open a shop? Anywhere between $15,000 to $2.5mil (I've heard of people spending both of those extremes). It all depends on you and the deals you strike. Figure out your vision and what you want first, then you start planning and then you can determine just how much it's going to cost you.

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Permalink Reply by Jay Caragay on May 14, 2010 at 5:21am

miKe mcKoffee aka Mike McGinness said:

Ok might say you don't see places like Intelli' spending big bucks advertising on the boob tube. Nope, their target market isn't couch potatoes. Instead they spent huge bucks on other forms of advertising like training World Class champion baristas. Think their target market would stand in line for an hour or two or three if the word was out Mike was pulling such and such shift at such and such Intelli' location? Hell yes.

I don't know if I would agree with your assertion on that one Mike. Most customers give F-All about who's a Barista Champion. Let's face it: "barista champion" means essentially nothing to most people and is hardly a guarantee of anything. It's only recently that Intelligentsia moved away from their legacy brewing methods to that pioneered by others in the industry.

But what makes Intelligentsia successful? Doug Zell. He's a smart man for business. I'd even say he's a shrewd man. He's taken chances and came up a winner. Have a look at Intelligentsia's branding. It's slick and smooth. It says a lot about their company and people respond to it. There are many facets to why Intelli has been successful, but hiring barista champions is really only a small facet of what they do that creates their success.

Remember that Intelligentsia is a company that sends people out to origin, traveling the world to source coffee, they have an extensive wholesale business, they operate two roasteries, a training center in NYC and soon-to-be six cafes in Chicago and Southern California, and employ untold number of people across America. Bear in mind that a company cannot operate as such without serious business systems and discipline. While the average barista/coffee geek looks at Intelli and admires the hype, I see a serious machine running in the background keeping everything together. It is what I admire most about Intelligentsia.

Emulate that business discipline and it will go far towards helping in your success.

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