This week, after a protracted search, I've managed to secure a lease for a 3rd location for my company's espresso bars. I've been giving out lots of advice on this blog, but you know the definition of a consultant right?...A guy who tells you how to do something he has never had the guts to risk a penny on himself. Well at least in order to be an actual consultant, I'd have to be overpaid so I'm in the clear because I'm free.
Some of my favourite espresso bars are sparse, filled with recycled, repurposed and vintage fixtures, built with lots of sweat and toil on a shoestring budget. I can think of one in Toronto called Sam James Coffee Pocket which makes me smile every time I think about it, stunningly simple, awesome. So what I've decided to do is build this location as if I was just starting out, new to the business and on a super tight budget. I'm going to disclose the details of the lease, post a budget, keep you all posted on progress with photos, and tell you when I screw up. I'm going to prove to all you out there that I can build a cafe for less than $50,000 and make it look awesome. The process will begin with some preliminary drawings, and budget development complete with equipment and material list. The goal is to stick to my budget, no exceptions. If I find that something has come in over budget, I will cut money in another area, all real life decisions new owners must have the discipline to make.
Why would I do this? I want to show all of you baristas sitting on the sidelines, or folks who are looking for a new career as an entrepreneur that you don't need to go into massive debt to make it happen. The measure of a great coffee shop or espresso bar is the quality of the products and people, not the fixtures and fittings. That being said, I expect to install pebbled limestone flooring, marble counters and oak cabinetry, nothing cheap. Some of the products will be recycled or repurposed, but all of it will be first class finishes when installed and approved by the local health unit of course.
I'll use the label "50 Grand Business Plan" on all posts related to what I've just described, because I still intend to post on other financial issues as they pop into my head.
Please ask any questions you like and I'll answer them a completely as I can. Good reading and get building!
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This is one of the most interesting blog posts I have read, maybe ever. Good luck and I look forward to a tasty Americano for under 50 grand!
ReplyDeleteI am a Master's student at Queen's, and for the past few years my "future plans" have been, not academia, but to open my own B&B. But I've recently begun to think that my interests lie in having a small cafe/eatery (simple sandwiches, baked goods) and I have been giving it some serious thought. This blog has been inspiring and I look forward to following the evolution of Cofffeeco's third location!
ReplyDeleteThe coffee shop business plan will no doubt be the first document any lender wants to see, so it is important to put as much care into its creation as into the brewing of a perfect cup of coffee.
ReplyDeleteDoes the 50 grand include working capital? Or, are does it just apply to start up cost like equipment and renovations? I build a shop for $26,000 in Evanston IL and had a $10,000 working capital loan. After 10 months of business I am nearly through the 10 grand and have amassed about 130 transaction per day on average. I am trying to get some perspective on when I should expect to break even and the such.
ReplyDeleteCongratulations on building so economically. I'm going to try to build for 50 including equipment. I can do this because I've basically accumulated a complete cafe over the past year by snapping up great deals on failed businesses and negotiating leasehold improvements into my lease.
ReplyDeleteWhat is your average transaction amount? To find this, take the average daily number and divide by the number of transactions. Read my post on Break Even Analysis (January) for some basics. Feel free to email me some more details (rent, labour, COGS) and I'll help you out with projections. My guess is you'll need to get the transaction # up to about 180 which isn't as hard as you think. Don't be disappointed, I actually think you've done pretty well and are set up for long term success.
I am sorry Richard, I am still not clear. The $50,000 includes equipment, renovations and working capital for start up inventory, payroll, your salary, rent, loans payments, etc.? I am actually a pastor by trade andI have opened the Coffee Lab on behalf of Garrett-Evangelical Theological Seminary. We are having a critical meeting on Tuesday to assess the success of the business (and my work) and I am in a position where I need to educated my bosses about the realities of the coffee business. I was suppose to produce a sustained profit after 5 1/2 months of business starting this June. We have not done this. My defense is that this is too soon to expect such a strong performance. In addition, my belief is that because we decided to be so economical in the funding of the start up that we are going to face a longer time table for sustainable profits (e.g., positive balance sheet at the end of the month). Your thoughts? Also, thank you for offer to take a look at my numbers. I send those over soon. I appreciate your help.
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