Barista Magazine is your home for the worldwide community of coffee and the people who make it.
Issue link: http://baristamagazine.epubxp.com/i/131903
ILLUSTRATION BY ELEANOR DAVIS Make the case. This is the hardest part. Making a no-brainer case to potential investors depends on making them feel that not investing in your start-up will cause them to miss out on a big return that other investors would kill for. To do this, clearly communicate your background as an industry veteran and/or thought leader, or as a proven team builder and motivator, and a winner in just about everything you've done in the past. You get the idea. If six-figure start-up costs are out of your range, set your sites on a more realistic starting point. You can always grow from there, as long as your initial business model is solid. One of my favorite restaurants started out as a stand at a farmers market. It had a line half a block long on weekends, with people willing to wait 45 minutes for the best biscuits and gravy in town. Its owners now have two booming brick-and-mortar restaurants. Another route to financing is to recruit partners and cofounders. Somebody you know in the industry with a better track record (or simply a more established name), could be willing to jump onboard with your idea, and could help you expand upon it—with business savvy and investor pull. Plus, start-ups with a few partners can look more attractive to lenders because the talent pool is deeper and responsibilities are spread out. Most businesses in this in-between range are started by groups, not by individuals. Don't be afraid of investors. They probably don't want to own your great idea or roll up their sleeves and get to work. They just want to make a fair return on their money. Don't think of them as co-owners per se, though their guidance and involvement could be invaluable—in addition to their cash. Think of them as people who are there to help you succeed—and as folks you want to pay back fast, to avoid racking up too much of your payments in interest charges. If you really can't get your company going now because you can't pare it down and you can't get it financed, then start down a path that eventually will lead you there. Work in a coffee business as an employee and keep your eyes open. Work hard, learn more at every opportunity, and look for potential partners that you could team with in the future. If you do get financing, overestimate your capital needs. You will be surprised by how quickly expenditures add up and how much Don't be afraid of investors. They probably don't want to own your great idea or roll up their sleeves and get to work. They just want to make a fair return on their money. time it takes for a new business to catch on and build a regular customer base. Plan on having six to nine months of working capital from the start. Many new coffee or food-service businesses see a major downswing in sales after the initial excitement of the grand opening. This is when capital becomes critical. There can be a lull before word of mouth, advertising, and creatures-of-newly-formed habits create momentum for your business. I've seen start-ups with cash in reserve that have started blowing it because they thought the honeymoon phase was business as usual. Never let initial success go to your head. Success is only determined by time. If you've got a coffee dream, there's a way to realize it. You might start by making a name for yourself as a star employee, then find some partners to join the party and make your niche—or regional chain—come to life. Just take it one well-thought-out, perfectly planned step at a time, so you'll be best equipped to find those willing to invest. www.baristamagazine.com 73