It’s the dream of a lifetime — open your own coffee shop, help people get away, relax, and work remotely, while you bask in the smell of rich, dark roasts. Well, the dream is possible. Coffee shops have become increasingly popular, and research shows that the demand for cafes has grown faster than other food service companies.
They appeal to a wide variety of people, from commuters who grab a cup of coffee in the drive-thru to those who want a place to work remotely. Plus, revenue in the coffee industry has climbed along with demand. Reports indicate that the industry brings in $50.7 billion every year.
As with any new business, starting a coffee shop comes with challenges. Competition and high startup costs are just two of them. However, if you’re interested in learning how to start a coffee shop, our guide can help.
There are plenty of benefits to opening a coffee shop. Here’s a look at what business owners can look forward to:
Starting a coffee shop requires a sound business plan, which is a document that explains how your company will succeed. Its sections explore key aspects of the business, like the coffee shop’s goals, marketing, and finances.
More specifically, a business plan will include these parts:
Once you’ve created your coffee shop business plan, it’s time to move on to structuring your business. What form will your new coffee shop take? There are several different kinds of business structures, but a sole proprietorship or a limited liability company (LLC) is the most common.
The difference? A sole proprietorship is best for small businesses with no employees. If you plan to start small — like a mobile coffee shop or a coffee kiosk in a mall where you’re the sole employee — a sole prop is a good choice. Setting it up is also free.
However, most coffee shop owners hire at least a small staff, which lends itself to an LLC. An LLC provides liability protection. That means if the shop goes under or ends up in debt, your personal assets are off limits to your creditors. If you want help forming your new LLC, consider using a business formation service.
There’s a cost to apply for LLC status. Filing fees vary by state, but you can expect to pay anywhere from $50 to $500.
The next item on your to-do list? Create a coffee shop name. While the options are endless, most states have rules when it comes to how to name an LLC. A name must be unique. Most states have a searchable database on the secretary of state’s website to let you check.
If you plan to LLC, most states require the name to contain “limited liability company” or “LLC”.
Before registering a name with the state, check for a matching domain name. Ideally, the company website and company name will match.
Name your coffee shop
Enter your business name to get started
You’ll have to clear a short list of chores to get your coffee shop up and running as a legal entity:
The startup costs for a coffee business vary. Research shows a small coffee kiosk will set you back about $60,000 to $150,000. A coffee shop with seating and drive-thru runs about $80,000 to $300,000. But startup costs are just part of the financial picture. Consider these costs as you learn how to start a coffee shop:
Startup costs are often the first big hurdle for new coffee shop owners. If you need to raise capital, consider these options:
It’s time to start filling your coffee shop with necessary gear and furniture. Here’s a checklist of coffee shop equipment to consider buying:
Need more? This handy coffee shop equipment list is a good start.
Marketing is an ongoing cost, but you don’t have to bet the farm. Consider starting with social media. You can tailor your channels to the clientele you want to target. If you want corporate clients, LinkedIn is a good platform. For the younger crowd, try Snapchat or Instagram. Consider joining groups on social channels too. Facebook, for example, has a coffee shop owner group brimming with great ideas.
Coffee drinkers need to know your location, so it’s a good idea to add your local business to online directories. The biggest is Google My Business, but there are others, like YellowPages.
When you think of a coffee shop, you probably picture a Starbucks-like experience, with a seating area and a drive-thru. But there are other kinds of coffee businesses. Consider these ideas:
Starting a coffee shop can be an exciting endeavor, but it’s not without its challenges. From picking a company name and business structure to finding a location and creating a menu, there’s a fair amount to do before opening day.
For the passionate, persistent coffee lover, a coffee shop can be a highly profitable business to start.
Starts at $0 + state fee
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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