The economics of managing a coffee shop

The economics of managing a coffee shop

Starting a business from scratch is usually difficult. There are plenty of things you have to worry about, and they all involve money. Everything has a price, and as a future owner, you will have to pay for it. To succeed, besides putting your effort in it, you have to come up with a good business plan. Develop a good strategy, understand the economics of owning a coffee shop, and make your dreams real. Here are the initial costs which you have to take into account before starting your own business. 

Investment to start with : If you have done your homework, by know you know that opening a coffee shop tends to be quite expensive. Initial costs vary depending on the size and equipment of the shop. For instance, sit-down coffee shops cost between $200,000 and $400,000 to set up. On the other hand, a small coffee shop costs between $25,000 and $75,000. Depending on the amount of money you have available, you can choose to have a larger or smaller coffee shop. But this is just the beginning, for there are other things equally expensive. Size is just the beginning.

Fixed costs : Most of your monthly expenses come in the shape of fixed costs. These are the things such as rent, staff costs and taxes. Sometimes you also have to pay for equipment, such as espresso machine. Paying for rent and utilities is something that has to be done every month regardless of your income. These costs also stay the same and usually do not change over time. Your initial goal would be to cover all these expenses, and everything you earn after that is your profit.

Quality over quantity : When it comes to furniture and equipment, it is highly advised that you invest in quality rather than quantity. People tend to remember places by details, such as a beautiful picture on the wall, or a super-comfy sofa. Spend a few extra dollars on arranging the place to look nice and unique. Anything from coffee machine tobentwood chairs should be of the highest quality. You might spend more money now, but it is rather an investment into your future brand. It will all pay for itself very soon.

Take care of your staff : Having happy personnel is a key for establishing a successful business. If you take care of your staff, they will take care of your coffee shop. Your job as a business owner is to make sure everyone gets paid accordingly and on schedule. Once your business starts developing, you can start giving bonuses for holidays. It doesn’t have to be a big amount, but it will still mean a lot to your employees. 

Design the layout of the bar : Workstation is the place where all the magic happens. If your barista has to move around a lot in order to create an espresso, he or she will waste precious time walking around. Try to design a productive workstation, where everything is accessible. Things such as fridge, cups, grinders, accessorize, sink and storage supplies should be in perfect synchronization. 

The bottom line : Depending on the type of coffee shop you are looking for, the initial startup cost can be anywhere from $50,000 to $500,000. You have to understand your initial, fixed and variable costs to establish a successful business. Get ready to spend your startup capital, and ensure you have an additional cash injection for when the boat starts sinking. 

If you come up with a good business plan and have enough money to cover all expenses, your coffee shop will prevail. Put in some hard work and effort, and do not expect to recover invested money overnight. Be patient, determined, and treat your business as if it were your child.