Start & Run a Coffee Bar. Tom Matzen
on expensive new cars and toward spending on smaller quality items such as gourmet coffees. This also helps explain why coffee is somewhat recession-proof.
(c) Fantasy adventure. People are looking for a fantasy adventure in their lives; gourmet coffee tastes from around the world help provide the coffee drinker with a sense of the exotic.
(d) Egonomics. People want unique items. Custom roasting coffee allows for just that.
(e) The vigilante consumer. People are becoming aware of socially and environmentally responsible practices including organic coffees. One need only look at the success of the Body Shop, with 2,400 locations worldwide, to see how profitable these socially conscious practices can be.
3.2 Organic coffee
Organic coffee is coffee that has been produced without the use of synthetic fertilizers, pesticides, insecticides, or other harmful chemicals that threaten the long range sustainability of soils, ecosystems, and groundwater supplies.
Not only is the planet demanding that we clean up our act but today’s consumers are demanding that companies be environmentally responsible and offer consumers environmentally friendly products. Recent studies have shown that approximately 65 percent of customers are willing to pay more for a company’s products and services if they believe the company is environmentally and socially responsible. Yes, that is 65 percent!
This means that if you are not committed to environmentally friendly practices in your coffee business, you will lose customers. Appendix 1 discusses in more detail organic coffee and environmentally friendly alternatives and programs you can implement in your coffee bar to help capture this market.
4. Coffee Bars
According to the Specialty Coffee Association of America, the US coffee bar industry includes about 25,000 stores with combined annual revenue of about $13 billion, or an average of $520,000 per coffee bar. This means there is an average of approximately one coffee bar for every 12,000 people. While some industry analysts predict saturation at the 10,000 mark, we believe the number to be significantly lower than that especially when compared to European countries such as Italy, where there is one coffee bar for every 300 people!
Coffee bars today tend to take advantage of two very distinct cultural trends, having two very distinct target markets.
The first targets are the on-the-go, hurry-up morning coffee crowd; people hurrying to work, rushing to drop their children off at school. These coffee bars recognize the increase in value we put on our time and focus on fast, efficient service. They are generally located in convenient, on-the-way-to-work areas with many offering drive-thru service. Keep in mind that with 65 percent of all coffee being consumed in the morning, large fast-food restaurant chains are now competing for that morning gourmet coffee dollar with companies like McDonald’s serving quality premium coffee at all their drive-thrus.
The second type of coffee bar takes advantage of the trend toward local cocooning. These community coffeehouses place importance on relaxation and conversation with the emphasis on warm, inviting, comfortable spaces; places where long conversations can be enjoyed over the perfect hot latte.
1
Preparing A Business Plan
A business plan is a road map of where you want to go in your business, the various routes you will take to get there, the stages along the way, and most importantly, where you will be when you have arrived at your destination.
— Douglas Gray & Diana Gray
1. Why Prepare a Business Plan?
Many entrepreneurs — whether experienced veterans or first timers — often miss the vital step of preparing a business plan when preparing to start a business. As a result, many fail in their efforts to achieve wealth and fame through their business. It is critical that you take time to prepare a business plan so you are clear on where you want to go with your coffee business and are better prepared to deal with the challenges that inevitably will arise along the way.
Why is preparing a business plan for your coffee business so important?
(a) Preparing a business plan will help crystallize your reasons for getting into the coffee business and your goals for the business. If you do not have a strong sense of “why?” and “what?” you will be without focus, direction, and satisfaction in your efforts.
(b) Preparing a business plan will help crystallize your concept. A clear, concise, well-thought-out concept will form the foundation for every decision you make: everything from choosing which color to paint the walls of your coffee bar to what kind of biscotti to serve with a cup of coffee.
(c) Preparing a business plan will help crystallize your vision of the opportunities and the limitations of the market you are in. Where is the most potential in the coffee industry? Who will your competitors be? How will you compete against them?
(d) Preparing a business plan will help crystallize your vision of exactly who you will be serving. If you are not clear on who your customers are, you will not be able to meet their needs and your business will not succeed. The knowledge you acquire about your target market will be invaluable to you in your concept and marketing efforts.
(e) Preparing a business plan will help determine what products you will offer your customers. Once you know the demographic and psychographic characteristics of your target market, you are in an excellent position to decide what products will appeal to it.
(f) Preparing a business plan will help determine what services you will offer to your customers: Home delivery service? 24-hour ordering service? Wholesale service? Drive-thru?
(g) Preparing a business plan will force you to look at the dollars involved, from initial setup through your first few years in business. Budgeting and financial planning will be vital to your success.
(h) Preparing a business plan will force you to look at the risks involved in owning your own business. Eighty percent of businesses fail in the first five years. This is usually because of lack of planning and preparation, lack of capitalization, and a lack of management and marketing skills.
(i) Preparing a business plan will help you outline the exact steps required to get your business up and running smoothly and profitably.
(j) Finally, preparing a business plan will hopefully inspire and motivate you to take action! Knowing what you want to do isn’t very useful unless you actually do it.
2. Your Vision for You
Take out a pen and a piece of paper, or sit yourself down in front of your computer as you read through the rest of Part I. Write down your thoughts and answers to the questions we raise. Taking action now will give you a good head start on your business plan and will help you formulate what exactly it is that you want to do and how you are going to do it. Take action now.
Your vision of your business lays the foundation for your business. Your vision is what will give you a sense of direction and give your life a sense of purpose as you build your business.
What is your vision for —
(a) Your day-to-day activities? What will you do on a daily basis? Do you see yourself serving customers? Do you see yourself networking with other business owners in your local area? Do you see yourself being a positive force in your community?
(b) Your lifestyle? Are you early to bed, early to rise? Do you see yourself working six days a week? Do you want annual holidays?
(c) Your time? How do you want to spend your time? Think of leisure, family, work, fitness, and private time for yourself.