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unique value proposition comes into play here, too. Maybe you can sell more on quality and less on price, if your UVP is on target.) Wholesalers who choose to lure customers with free equipment and other bright, shiny objects may be masking a lack of coffee quality, so don't try to play their game. Lead with coffee. If a poten- tial customer isn't a match for your product, or they don't see your expertise as enough of a value-ad, then move on. • Review your competition and how they serve the local market. There could be overserved and underserved concepts, which help identify any holes in the market. Figure out what makes other local coffee businesses unique, and compare these qualities to your concept. Consumers will make their own assessment soon enough, so try to be objective, and be sure your plan includes a refreshing customer experience. Once your shop is open and subject to public opinion, your reputation will likely stick. Focus on repeat sales built on relationships that will grow over time. This is also known as confidence in product. • Evaluate sales performance of other area coffee businesses versus national averages. Hint: tax liabilities for publicly held companies are public record. A feasibility study will give you the most accurate annual sales pro- jections possible for your concept, which is huge because investors want to know what their return on investment will be. Their bot- tom line is: how much time will it take for you to pay them back? (See sidebar on paying back investors.) As mentioned at the outset, your business plan will include important data from your feasibility study. It is the formal presenta- tion of your business goals, the reasons you believe they are attain- able, and your plan for making a profit. Done right, it can greatly improve your ability to establish and meet objectives in a way that best serves you, your employees and your investors. Some common elements of business plans are listed here. The highlighted points are directly determined by your feasibility study: • Confidentiality Agreement • Executive Summary • Market Analysis • Business Overview • Assumptions and Explanations • Products and Services • Operating Model A quick way to figure out when you'll pay back investors Take the monthly traffic count at your location, and deter- mine the percentage of that traffic that is projected to walk into your shop. Multiply this percentage by what you've determined your average ticket will be, to get your projected retail sales for a month. Add your wholesale sales and then subtract your expenses. Your basic expenses are: cost of goods (in the 30-percent range), labor (low 30s), rent (maybe 12 percent), and administrative tasks (roughly three percent). Whatever is leftover, you can realistically pay to your investors. Your operation will likely run at a loss for 12 to 18 months, so you'll start paying back investors after this period. And once you start writing those checks, eliminate your debt to them as soon as possible. You don't want to pay any more interest than you have to. You'll also need at least a month of sales in the bank for your rainy day fund. Even if you have flood, fire and earthquake insurance, you'll need money to stay open (say, by opening a cart outside your shop) while your business is being rebuilt. Investors often want to see that you have reserve funds. Banks may even require you to have three months of sales in the bank, to show that you're not just making money and burning through it. • Management and Ownership • Funds Required and Their Uses • Mission Statement • Year 1 Sales and Profit Projections & Breakeven • 5-Year Projection • Protection on Investment Analysis If you're a coffee geek, like most everyone reading this magazine, and you're ready to make your mark on the industry, get cracking on your homework. Your feasibility study and business plan go hand in hand, giving you confidence in your potential venture, helping you attract investors, and getting you on a clear, well-considered path that will keep you in business for the long haul. 70 barista magazine