You’ve always pictured yourself behind the counter of your very own little shop.

You can see yourself wiping down the counter, prepping the espresso machine, and flipping that open/closed sign around every morning. You can smell the fresh scones and muffins, and you’ve already got your furniture picked out. Maybe you want to brighten business peoples’ mornings, or you’re looking to provide a study nook for college kids. Whoever your audience, you’re set on delivering the best coffee to them you can!

That’s great, and you won’t get anywhere without that passion, but keep in mind that just because a coffee shop involves seemingly irresistible items like caffeine and sugar, you are not immune to failure. Here are some thoughts to contemplate before you commit to a life in the latte business:

Is The Success Of Your Business Your Top Priority?

There are two important facts to know about opening a coffee shop.

1. The process will inevitably involve a substantial investment of your time and money.

2. The failure rate for small businesses in their first year is alarmingly high.

It should go without saying that this business should be your absolute top priority. You can expect to be working long hours, often 7 days a week. Baristas will call in sick, deliveries will fail to show up, and burglar alarms will go off in the middle of the night. It’s important, therefore, that you go in with eyes wide open about the time requirements of this kind of enterprise.

Do You Have A Plan?

Great coffee and tasty bagels do not equate to a thriving business.  You absolutely have to execute a quality business plan. Every aspect of your coffee shop can viewed as a potential operating cost. A business plan ensures you are documenting every expense and really understanding what it’s going to take to turn a profit. Once you’ve got it written, make sure to have a financial professional vet the plan for you. Then show it to as many other local entrepreneurs and successful professionals you know.

These people will inevitably be busy but you’ll be surprised how willing they’ll be to sit down and help you understand the good and bad parts of your business plan.

If you don’t know how to write a business plan, it’s a good idea to get professional help. Think of it as the recipe for your venture – if one thing is off, the whole thing may just be a big mess (and possibly require lots of financial clean up).

If you can, take the find and interview the owner of a “role model” coffee shop that you really love. Maybe it’s the cafe you were in when you first decided that this was the business for you. Reaching the top is always easier if you’re standing on the shoulder of giants.

Where Are You Going To Be Located?

Coffee shops fall into the group of businesses that are generally discovered spontaneously by their clientele. This means that your priority when starting up is finding the best location possible.

There is no other aspect of your business that is more important when it comes to attracting customers. If you’re inconveniently located, it doesn’t matter if you make the best coffee in the world, and bake each croissant individually for each customer – they will simply never find you.

What will you Sell?

Another important question to ask yourself is how you will compose your product line. A common failure of coffee shops (and eateries in general) is having too wide a menu. There really is no reason to have 20 different kinds of bagels (unless that’s going to be your niche), and having more than 4 roasts of coffees will likely mean you’ll have at least one batch that’s stale by the time you use it up.

Not only does an overly broad product line often result in a loss in quality, it is also inefficient.  You’ll end up spending extra money supplying food and drink that aren’t selling enough to make you any money.

Try to narrow down your menu so that it’s lean and simple, but still offers a sense of choice. Ask friends and family what they think of it. If you really want to get creative, you can experiment by adding one new item on the menu on a rolling basis.  If this ‘weekly special’ starts selling like hot cakes (and it’s providing a healthy margin), maybe you can consider adding it to the permanent menu. However, every time you’re adding something great to your menu, you should strongly consider if there is a poor performer that should be chopped at the other end.

Data is your friend here, so find ways of testing what’s selling and what’s not, as early as possible.

There’s No Time Like the Present

You might think you can’t test this stuff until you’ve opened your store. You’d be wrong.

There are always steps you can take to test your ideas before investing in a physical coffee shop location. Farmers markets offer a great way to dip your toe in the market.  You can establish relationships with suppliers and test out different coffees and the demand for different additional offerings (muffins, bagels, danishes, etc). We call this approach Lean Retailing – if you’d like to learn more about this approach to small business, make sure to check out our Lean Retail 101 guide.

If you want to know if you’re ready to start, there really is no substitute for real world action (and real world-data). Good luck!

About the Author

Paul Nugent is a small business advocate, and Head of Marketing at ShopKeep point of sale’s UK headquarters. Paul uses his background in the startup space, along with his POS system expertise, to allow small business owners to make informed decisions within their specific budgets.