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Need help determining if a coffee shop is the right business venture for you? Understanding the time, effort, money, and challenges you will face to open a coffee shop will help you determine if this is the right business.

webandprintteam.com gathered the following information and tips on what you will need to successfully open a coffee shop.

What is a Coffee Shop Business?

In the coffee industry (coffee shops are part of the specialty eatery industry), LLCs are common and are recommended by most business experts based on the scale of most coffee businesses. When you form an LLC, you’ll get a straightforward business structure that protects you and separates your personal and business assets through “the corporate veil.”

Note: The corporate veil is crucial in business ownership because it protects business owners, shareholders, and partners by shielding them from paying for corporate debts, liabilities, or lawsuits with their own money or assets.

Steps to Start a Coffee Shop

Opening a coffee shop requires getting permits and licenses

The following simple steps will help you understand and navigate the requirements and obstacles you may be challenged with when starting a coffee shop:

Step 1 – Business Research

Research will reveal if there is a need for coffee shops in your area, if you can compete with existing locations, and if you can afford to own a commercial business in your area. Pay attention to competitor research and see if coffee shops in your area are franchises or independent.

Note: An independent business may successfully compete with franchises but not with other independent coffee shops.

Step 2 – Concept Development

Your concept is your cafe’s theme, and a well-planned concept will give your business a competitive edge over other area coffee shops. Consider the following:

What is your target demographic? – Do you want to serve gourmet coffee to millennials or appeal to busy office employees and executives?

Will you offer food? – If you want to add food, pastries, or snacks to your menu, where will you source the food (bakery, in-house, etc.)?

What are area customers willing to pay? – If your coffee shop is located in a working-class neighborhood, it may be challenging to persuade customers to pay $5 or $6 for coffee.

Note: Start planning what your menu will look like and determine the decor you want. A strong and well-conceived concept in this stage will help strengthen your coffee shop’s appeal.

Step 3 – Source Your Coffee Beans

Opening a coffee shop requires sourcing beans

Your coffee shop’s identity and popularity will hinge on the coffee you serve. Typically, coffee shops purchase their beans wholesale from a local or regional coffee roaster, You should be specific when seeking a roaster to source your coffee beans. Consider the following when sourcing coffee beans:

Where is the roaster located? – Purchasing from a local roaster is an excellent way to interest customers while supporting local businesses.

Is the coffee fair trade? – Fair trade promotes the ethical pay and treatment of coffee producers. Look for coffee roasters with fair trade certification.

Coffee varieties and flavors – Does the roaster have the types of coffee you want?

Do you like their coffee? If you like the roaster’s coffee, you will find it easier to sell.

Tip: Choose your roaster wisely. High-quality coffee is the most crucial element of running a successful coffee shop.

Step 4 – Develop a Coffee Shop Business Plan

A business plan helps finalize your concept, plan ownership structure, and project finances, create your menu, and lists your competitive research. A coffee shop business plan is necessary when seeking startup funding. You should develop and include the following 7 components:

Executive Summary
Company Overview and Description
Market Analysis
Services and Products
Management Plan and Ownership Structure
Marketing and Advertising Strategy
Financial Projections

Tip: A business plan can be applied to ongoing business operations by keeping the executive team on the same page for strategic actions and on-task for meeting company goals.

Step 5 – Startup Funding

Opening a coffee shop requires securing startup funds

Starting a coffee shop is costly. You need to secure enough funding to afford the equipment and supplies your business needs and cover operational expenses for the initial 6 to 12 months.

Note: It can cost $100k to $600k (or more) to open a coffee shop, depending on its size and location.

Tip: Seek government-backed loans and funding options at usa.gov/funding-options

Step 6 – Secure Commercial Space

The right commercial space is crucial. A good location will ensure your business sees a steady flow of customers coming in. Complete a location analysis considering the following:

Area Demographics
Target Demographic Proximity
Competition
Crime Rates
City and Municipal Regulations and Zoning

When choosing a space, you should consider the neighborhood and the physical space’s attributes.

Step 7 – Get Your EIN

An Employer Identification Number (EIN) is a Federal Tax Identification Number used to identify a business entity. This is a free service offered by the Internal Revenue Service.

For further information, instructions and to apply online, visit – Apply for an Employer Identification Number (EIN) Online

Note: You need an EIN to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.

Step 8 – Permits and Licenses

So you’ve decided to open a coffee shop. While you begin developing your marketing plan, business plan, and optimized website, you’ll need to focus on securing the following permits and licenses before serving your first customer:

Business License – Coffee shops need a business license to legally operate in the United States. Your city or county will dictate how to apply for a business license and what will be required to remain in compliance with local zoning ordinances.

Tip: Get started on your city’s website, searching for “business license application.” You may be required to apply at the state level.

Cost: Business licenses typically require an annual flat fee ($50 to thousands of dollars).

“Doing Business As” License (DBA) – You may need a Doing Business As (DBA) license if you plan to operate your coffee shop under a different name than its legally registered name. While DBAs are typically registered with your county clerk, depending on your state, you may be required to register your DBA at the state level.

Cost: DBA license fees typically vary from $10 to $100 or more (your location and business structure determine the cost)

Retail Food Service License – Typically, your state’s department of health or other local public health agency regulates the issuance of retail food service licenses (depending on your location, you may need county and city licensing).

Note: The type of retail food service license you need will depend on if you open a sidewalk cafe, a street cafe, or a mobile coffee shop.

Cost: Retail food service licenses cost $100 and up.

Resale License for Sales Tax – If you are situated in a state that charges sales tax to the end consumer, you may be required to obtain a resale license for sales tax.

Tip: Contact your state’s revenue department for state-specific information and requirements.

Cost: Typically, states do not charge for a resale license. You must keep this license current by filing your tax returns annually and submitting collected sales taxes to the state.

Signage Permit – Every city has a set of requirements for regulating a sign’s size, location, lighting, and visibility.

Tip: Check your city’s website for sign permits, regulations, and application instructions.

Cost: Minimum $50 (will depend on size and location)

Building Health Permit – All restaurants typically need an inspection to prove it is in a sanitary condition and fit to serve food.

Tip: Cities, counties, and states have different requirements for building health permits (avoid surprises by vetting all three).

Cost: $50 to $1,000 (varies by location)

Opening a coffee shop requires food handler certifications

Food Handler’s Permit – Employees must have a food handler’s permit to serve food to your customers, showing they are trained and qualified to serve food.

Tip: Your state’s health department or your county’s health safety office will issue food handler permits. Employees will likely need to complete a food safety course to obtain this permit.

Cost: Approximately $100 per employee (varies by location)

State, County, and City Permits

Except for federal taxes, there aren’t any federal regulations for a coffee shop that you’ll have to worry about (coffee shops aren’t regulated by any federal agency).

According to the US Small Business Administration, the licenses and permits you need from the state, county, or city depend on your business activities and location. Industry requirements often vary by state.

Tip: Visit your state, county, and city’s websites to find out which permits and licenses you need.

Step 9 – Attain Coffee Shop Insurance

It is critical for your coffee shop to have the proper protection against property damage or employee/patron injury. State law typically requires many insurance types for coffee shop owners to carry. Consider the following insurance policies:

General Liability Insurance – General liability covers you (as the owner) if you, your employees, your coffee, or other food products accidentally cause harm to a patron. 

Property Insurance – Keep your coffee shop’s interior and exterior covered in case of accidental damage.  

Workers’ Compensation – State law typically requires workers’ compensation insurance to protect your employees.  

Commercial Auto Coverage – Planning on a mobile coffee shop? Or will you use a company vehicle to transport supplies? If so, you will need a commercial auto policy covering your company vehicle and its operator in case of an accident.

Step 10 – Get Coffee Shop Equipment

Opening a coffee shop requires securing equipment

High-quality coffee equipment is crucial for your coffee shop to succeed. Consider the following essential coffee shop equipment:

Coffee Grinder
Coffee Brewers
Frothing Pitchers
Frothing Thermometers
Airpots
Espresso Machine
Hot Water Dispenser
Reach-in Refrigerator
Ice Machine
Display Case
3 Compartment Sink
Tea and Coffee Mugs
Espresso Cups
Cup, Lid, and Straw Organizers
Employee Aprons

Tip: Refer to your business plan when compiling your equipment “shopping list” and invest in whatever your operations require.

Step 11 – Staff Hiring and Training

Consider your management style and whether you want to train “fresh” employees or seek experienced baristas.

Tip: Hire an outside industry professional to train your employees on the finer coffee and brewing aspects. This will save you time that can be invested in other efforts while opening your coffee shop.

Step 12 – Marketing

Before officially opening, advertise your new coffee shop on social media platforms, in local publications, EDDM, and other campaigns to generate interest. Offering discounts, grand opening specials, and customer loyalty plans can encourage customers to visit your coffee shop regularly.

Tip: Your business’ marketing strategy should include multiple ways to reach your consumers; learn how to do this by reading, How To Grow Your Business with Marketing.

Step 13 – Open Your Coffee Shop

Opening a coffee shop requires marketing

After you’ve written your business plan, secured funding, found a location, acquired necessary permits and insurance, and stocked it with equipment and staff, you’re ready to open your coffee shop.

DISCLAIMER: This content is intended for informational purposes only and should not be considered legal, accounting, tax, HR, or other professional advice in any way. You are accountable for your own compliance with local, state, and federal laws and regulations. You should contact a business attorney or other relevant advisor for advice specific to your circumstances.

What You Need to Know to Open a Coffee Shop

In this article, you discovered essential information about what it takes to successfully open a coffee shop and get your piece of the pie in this growing industry.

Knowing the essential requirements and potential pitfalls of starting a coffee shop will help you get your business off to a good start, giving you a clear path to success.

Not knowing the requirements to open a coffee shop will expose you to legal troubles, costly fines, and potential business failure.

Sources:
usa.gov/start-business
sba.gov/business-guide/launch-your-business/apply-licenses-permits
irs.gov/businesses/small-businesses-self-employed/starting-a-business
uagc.edu/blog/how-write-business-plan-step-by-step

Prevent your business from stalling as your marketing falls off track, or because you don’t know the best avenues to market and grow. Knowing how to reach out, gain more customers, and increase your business volume will help you grow your business regardless of the economy’s state.

webandprintteam.com gathered the following information and tips on how to efficiently grow your business, tend to your customers, and increase your revenue.

Marketing Your Business

Your business’ marketing strategy should include multiple ways to reach your consumers. Emphasize or invest in effective marketing methods and dial back spending on the less successful methods. Only through continuous testing will you find the optimal vocabulary, imagery, and strategy that will significantly increase conversion rates. Here are several marketing strategies to get you moving towards a growing, successful business:

Every Door Direct Mail (EDDM)

Growing a business includes advertising and direct mail campaigns

Every Door Direct Mail® (EDDM®) is a targeted bulk mailing strategy offered by the United States Postal Service (USPS), allowing your marketing strategy to reach an entire neighborhood of potential customers without creating a mailing list or knowing their actual addresses. It’s simple; choose the mailing routes you determine as priorities (by neighborhood, city, or ZIP code), and your flyers / postcard mailers will be delivered to each active address on those routes.

You can orchestrate your EDDM mailings in three easy steps:

Step 1 – Define Your Marketing Strategy and Goals
Step 2 – Create or Use an Existing USPS.com Account
Step 3 – Design and Print Your Mail Pieces

Consider these advantages:

Direct mail is interactive, attractive, and tangible
EDDM is easily shared between household members and friends
Your Mailers can be creative and unique
Direct mail campaigns pair nicely with follow-up or interactive digital campaigns

Note: There are 2 types of EDDM®, one being “retail” and the other “Business Mail Entry Unit.” EDDM® Retail won’t require you to have a mailing permit, is limited to standard flats (postcards), and permits a maximum of 5,000 daily pieces. EDDM® BMEU (Business Mail Entry Unit) requires bulk-mail permitting and provides more flexibility regarding what material may be mailed. Check that your printing company can handle printing and potentially mailing for your EDDM campaign.

Guerilla Marketing

In advertising terms, guerilla does not refer to animals, rebellions, or conflict. Guerilla marketing is an unconventional marketing tactic meant to build brand awareness without interfering with the target audience.

This strategy promotes publicity by utilizing methods designed to stir up wonder, surprise, or shock among the general public. There are four types of tactics. Consider the following:

Indoor – Indoor tactics may include additions in preexisting environments. These add-ons can be strategically placing temporary artwork or putting something removable on a structure or statue. These instances occur indoors, like shops, public buildings, or public transportation vehicles and stations.

Outdoor – Outdoor guerilla marketing uses the same concept as indoor, but it takes place in outside areas, like parks, on the street, or in public plazas. Consider integrating promotional swag, giveaways, and functional promo materials (pens, pencils, branded post-its, etc.) as a tactic to further stretch your business’ exposure and produce a more impactful impression.

Ambush Event – Marketers can select a space or location that is guaranteed to have an audience. In-progress occurrences, like sports games or concerts, are commonly used (with the host’s express permission). The brand promotes its product or services in an impactful way, like a flash mob, giveaway, or audience plant.

Experiential – This type of guerilla marketing combines all of the above and encourages your audience to increase interactions with your brand.

Before investing in these efforts, be sure to have a marketing funnel set up and a strategic plan to capture and convert any new customers and attention you attract.

Social Media Platforms

With more than half the global population using social media platforms, it is no longer an option for companies to have an online presence. Businesses of all sizes utilize social media to grow their online presence, gain followers, and directly connect with their audiences. However, the number of platforms available and their different uses can make building your online brand feel like an overly challenging task. Whether you are new to this or well-seasoned, there is always room for improvement. Consider these 5 tips to better your social media performance and successfully market your brand.

1 – Create a Strategy inclusive of your image, online frequency, keywords, hashtags, and overall presentation.
2 – Be Consistent in your online engagement, postings, and audience interactions.
3 – Create Engaging & Interesting Content that your audience is attracted to and wants more of. Posting a story in parts will keep your audience coming back repeatedly.
4 – Engagement is a key factor in your online popularity. Your audience is following you because they relate to you or your product, and they will tell you their thought if you reach out to them.
5 – Track and Analyze Metrics is an absolute must in determining what is works and what falls flat or below expectations.

Creating a targeted and effective social media marketing strategy will help improve your performance online. Utilizing unique ways to interact with your audience will increase your reach. And most importantly, analyzing your metrics will help you determine whether or not you are using the right marketing tactics.

Search Engine Optimization (SEO)

Search engine optimization (SEO) is an essential component of all forms of digital marketing success because online consumers are conducting trillions of searches each year to learn about people, companies, products, and services. SEO is the process of making incremental website improvements that increase visibility following user search queries related to a website’s business, keywords, or topic. Best SEO practices include relevant keyword research, developing superior-quality content that matches consumers’ search queries (efficiently answering their questions), linking to and from high-authority websites, and meticulously tracking results.

The stronger your website’s visibility is to search engines, the stronger your digital properties will perform in attracting attention, commanding a higher level of engagement, and driving revenue. Just consider these statistics:

Search engines are the starting point for nearly 70% of all online experiences.
Organic search drives over 50% of all website traffic.
Google owns over 91% of all search engine market share.
A #1 organic position on Google can result in a click-through rate (CTR) of nearly 35%.

Brands and business owners appreciate SEO marketing because it is an intentional, data-driven approach to matching consumers with companies that can meet their needs and expectations. SEO, undoubtedly, is the most cost-effective way for marketers to reach their consumers in the moments that matter, delivering on the promise to provide answers.

Growing Your Business

In this article, you discovered essential information and tips on several ways to efficiently and quickly grow your business.

Marketing your business directly to your audience with the intention of answering their questions or solving their problems will help you convert more of your audience into paying customers and provide the resources for your business to grow.

Haphazardly throwing out flyers and business cards is not a strategy and will leave your business vulnerable and without the revenue you had hoped.

Sources:
usps.com/business/every-door-direct-mail.htm
federalregister.gov/documents/2012/10/15/2012-25059/every-door-direct-mail-retail
uspsoig.gov/tags/eddm
ooligan.pdx.edu/how-to-guerrilla/
bu.edu/prlab/2022/03/01/5-tips-to-successful-social-media-marketing/
degree.lamar.edu/articles/undergraduate/search-engine-optimization/

Tag: Business

How to Open a Coffee Shop