Barista Magazine

AUG-SEP 2012

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cashbox straight up coffee business Want to Own Your Own Coffee Business? You'll need to do some homework. (But you knew that, right?) Written by Tracy Allen There are a lot of people in coffee who'd like to make their own business a reality. A trend is bubbling up, one that might lead to more roaster-retailers opening in both hot and untapped cities in the years ahead—that is, if potential business owners can raise capital and make their concepts work. But how did we get here, from Starbucks opening the market, to smaller roast- ers and retailers breaking into the business, then some of them growing by leaps and bounds into new cities, and now, back to a yearning among younger coffee folks for small roaster- retailer ownership? A Bit of Backstory People entered the coffee business maybe five or 10 years ago, starting out as baristas. They got hooked on coffee as a nuanced, exotic, versatile-yet-tricky beverage, one that has a huge capacity for teaching creativity, science and disci- pline all in one cup, and connects them with like-minded consumers. These hungry baristas moved on to barista com- petitions to show off their skills, became leaders as trainers of other baristas, and maybe traveled to origin to learn all they could about farming coffee. Some were also drawn to roasting, which only makes sense, as a coffee's roast affects its taste as much or more than the brewing process. So what's a highly skilled, managerial-level, 10-year-veteran barista to do with all those skills and all that knowledge? Open a coffeehouse or roaster-retailer business, of course. Baristas who have seen their hometown employers grow and expand their businesses into other cities and even across the country, coupled with a personal coffee obsession, creates a pretty good case for, "Hey, I could do that." And who can blame them? The chance to expand one's skills (and income) is motivating. So Now What? If you are among these baristas who are eyeing a roast- er-retailer future, you'll need to find out, to the best of your ability, if your concept and location will actual- ly bring you enough customers to keep you in business. The challenge is to prove the value of your plan to those who do not yet see it or appreciate its differentiation. To find out if your business idea is a smart bet or a risky proposition, you'll naturally need a solid busi- ness plan. Writing this plan, and learning about business finance in general, will be the first of a few upgrades to your current skill set. Anyone who has been down this path can tell you, it is a tough and enlightening voyage. And if you want to attract investors or really impress the banks, you'll do some serious due diligence in the form a fea- sibility study (which also feeds into your business plan). This invaluable tool evaluates the probability of success and risks associated with your prospective business. You'll need to com- pare your unique value proposition (UVP: what you're going to offer people that the competition down the street does not) with the attributes of your location, to come up with a financial forecast for your business. Typically, you' do this for you. The study should: • Start with a few site visits to inspect nuances of potential area locations, the local community, traffic, and location barriers. Keep in mind the proximity of the competition. Traffic counts, so be advised that your state department of transportation can provide you with the percentage of people who walk or drive by. Typically, around one percent of walkers will come into a business, and three percent of drivers will use a drive thru. • In addition, know the three- and five-year plan for the area. Do not take the word of developers or anyone with a conflict of interest; honest insights about these matters is where con- sultants with proven experience pay off. A miss here is almost impossible to recover from. It may sound cheesy, but "location, location, loca- tion" is a big fac- tor in your suc- cess. It has a huge impact on your sales. • For the retail side: Determine the dominant demographics and lifestyle preferences in your area, which you'll need to serve. Also, figure out the size of these demographic groups. This will help you write your menu, since we know the types of coffee drinks and other menu items each group tends to prefer. And if you know what drinks you're serving, you'll be better able to hone in on your average ticket price or average sales. Keep in mind what your target audience will prefer, and resist making decisions based solely on your own preferences to start, especially if you don't fall into the target demographic where your café will be located. • For wholesaling: Determine if there's a need for your cof- fee at restaurants, coffeehouses and high-end grocers. What are these establishments currently paying for good coffee? Can you compete with that and still make money? (Your www.baristamagazine.com 69 d hire a consultant to Baristas who have seen their hometown employers grow and expand their businesses into other cities and even across the country, coupled with a personal coffee obsession, creates a pretty good case for, "Hey, I could do that." And who can blame them?

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