Category Archives: Business Plan

Things to Do When Opening a Cafe

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Opening A CafeThere are countless things to get done when opening a cafe, from getting the premises and renovating it to hiring a team and buying a coffee machine.

Here’s a useful 17 point Checklist of Things to Do When Opening a Cafe:

  1. Write a Detailed Business Plan
  2. Find Partners and Investors to Help Finance and Run the Business
  3. Find a Good Location for the Café’s Business Premises
  4. Negotiate the Lease or Purchase of the Outlet’s Property
  5. Choose a Cool Name for the Café
  6. Incorporate a Company to Operate the Café
  7. Sign the Lease for the Property and Pay the Required Deposit
  8. Get a few Proposals & Compare Costs for Different Renovation Options
  9. Choose a Designer & Contractor for the Design & Build of the new Café
  10. Purchase all Bar, Kitchen and Service Equipment to fit the design plans
  11. Make sure the Electricals and Plumbing are planned at the same time
  12. Confirm the Food and Beverage Menu Items, their Recipes and Costs
  13. Hire all the necessary staff in the kitchen, bar and for customer service
  14. Train the new team in their areas of specialty and Refine their skillsets
  15. Order and Purchase all the Food, Drinks and Stocks needed to run the bar and kitchen
  16. Conduct a Food and Drinks tasting session with the whole team
  17. Do a trial run serving friends and family before opening to the public

If you’ve started or managed a cafe before, this process will be a lot easier than if you’re doing it for the first time.

For new owners who don’t have the startup experience, it would be a good idea to hire a manager who comes with the necessary knowledge to setup systems, train the staff and get the cafe opened.

Start Up Costs for a Cafe Business

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Start Up Coast

The startup costs for a cafe can vary greatly depending on whether you’re buying an established business or setting up a small little coffee shop.

Here are some of the major costs of opening a cafe:

  1. Company Setup – Incorporation, Licenses, Legal, Finance and Tax Fees
  2. Business Acquisition – Purchase of existing business (if buying a business)
  3. Franchising Costs -Franchise fees and startup costs (if franchising)
  4. Property Acquisition – If buying the business premises
  5. Property Rental Deposit – If leasing the business premises
  6. First Month Rental – Be prepared to pay the first month’s rental in advance
  7. Utilities Deposit – A deposit is often required when opening an account with the utility companies
  8. Outlet Renovation – The interior design, renovation and decorating costs will vary according to the plans
  9. Furniture & Fittings – Furnishing the café will be a large part of the start up costs
  10. Kitchen & Bar Equipment – Another major cost to bear in mind
  11. Point of Sale & Service Equipment -Don’t save on these essentials
  12. Marketing & Branding Items – Cups, Uniforms, Menus, Namecards, Flyers, Napkins, Coasters, etc
  13. Food & Beverage Stock Items – A key cost that will depend on the menu items and inventory size
  14. Minimum 2 months Working Capital – As cash to rollover and cover wages and essential expenses in the first few months

The main factors that will significantly affect the total capital required are:

  • The Premises – Buying vs Leasing
  • Equipment – Buying New vs Used
  • Working Capital – Budgeting for 3 or 6 months
  • Rental – The Size & Location of the Cafe

What Type of Cafe Are You Opening?

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Opening a little coffee shop is a lot easier than trying to start a restaurant type cafe with a full kitchen and food menu.

It’s important to be clear about your concept from the beginning as this will affect many areas of your business plan and financial forecasts.

As a retail business, one of the most significant decisions and expenses for the company is the rental for the cafe’s premises. The rent will be determined by the size and location of the property, so entrepreneurs will need to carefully consider the trade-off between paying higher rates to be in a popular area or finding a cheaper alternative in a quieter part of town.

These decisions will normally depend on your cafe’s concept, which in turn affects all the other areas of the business.

Here are some things to consider:

  1. What’s the Concept
  2. Who’s the Target Market
  3. What are the Opening Times
  4. What’s the Premise Size Required
  5. Where’s the ideal Location for the Cafe
  6. Do you serve Premium or Gourmet Coffee
  7. What other Beverages do you Offer
  8. Do you provide a Snacks or Food Menu
  9. How do you Intend to Prepare the Food
  10. Will you have a Kitchen to Make Fresh Meals
  11. Does the Cafe Offer a Take Out service
  12. How many Staff do you need to Run the Cafe
  13. How many Baristas do you need
  14. Do you serve Alcohol or have a Bar in the Cafe
  15. Is Food available throughout the Day or only at Meal times

 

SWOT Analysis for a Café Business

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A vital part of your café’s business plan should be the SWOT Analysis which looks at the various Strengths, Weaknesses, Opportunities and Threats to the venture.

A general rule of thumb is to develop your business and marketing strategy to take advantage of your strengths and minimise exposure to the weaknesses while always being wary of the threats which could affect profits or even the viability of the company.
business
When doing your SWOT, it’s useful to reflect back on your reasons for wanting to open the café. In many cases, the urge to start the business will arise from your potential strengths and/or the opportunity, so these will be easy to do.

However, when it comes to the weaknesses and threats to the business, a lot of people spend too little time in analysing these issues and addressing them, which is why most new businesses fail.

Budding entrepreneurs are optimistically focused on the opportunities and profits when starting a business. If you can, try to spend more time looking at the problems, weaknesses and limitations of your business model, so that you’re fully aware of all potential downsides where possible.

How to Write a Café Business Plan?

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The structure of business plans are almost the same for every company. It’s just the content and strategies that vary from business to business.

Here are 10 of the most important sections in a business plan:

  1. Executive Summary
  2. Company/Background
  3. Management & Team Profiles
  4. Business Activities
  5. Products & Services
  6. Unique Selling Points
  7. Marketing Strategy
  8. Financial Projections
  9. Capital Requirements
  10. Financing Requirements

Depending on your financial position, you may or may not need external investments to open the business. A lot of people who have the money to invest in the startup themselves, often make the mistake on not being as careful in the planning and projections, as there is no one to scrutinise them.

Even if you intend to fund the café with all of your own money, it’s a useful exercise to tighten up the plan and present it to potential investors to see their feedback. By talking to as many people as possible, you’ll get a range of comments to provide different perspectives for you to refine your plan.

Always refine your plan. Your company’s business plan is dynamic and can always be tweaked and improved as you become more experienced in the business.

Do not make the mistake of writing it once when starting up, and then never referring to it again. You business plan should be the blue print for your café that you use as a reference to grow the business and overcome problems along the way.

Write a Business Plan for your new Café

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business plan

Once you’re clear about your goals and objectives for opening a café, it’s time to document an official business plan.

Some business plans can be very long and detailed like a telephone book, while others may be succinctly summarized on the back of an envelop. Where possible, try to avoid waffling on about non-essential information.

Keep it brief but cover all the essential items so that it is a comprehensive solution. It’s fine just to make bullet points of key details without trying to write a literary masterpiece. Concentrate on facts that are relevant and do your research.

Included in the business plan, should be the financial projections for the new business, as well as the capital requirements to fund the venture. At the planning stage, the financial forecasts should try to be as accurate as possible. Along the way, as each of the estimates are confirmed, the financials should be updated regularly.

For example, rental costs will be one of the main expenses for a café. Initially, the plan should have a budget for paying rent, and once the actual premises have been confirmed, the actual true cost should be included to tighten up the business plan.

If you’ve never done a business projection before, ask family and friends for advice from someone who has experience in running a business. He or she doesn’t need to have knowledge in operating a café, although that would be ideal.

In particular, seek feedback from someone who has financial or entrepreneurial experience. Drawing up your business plan will be a lot easier if you get proper guidance and furthermore, the end result will probably be much better than if you tried to do it yourself.