How to Create a Successful Coffee Shop Business Plan- 9 Components
A business plan is an essential document for coffee shop owners - or those working towards owning one. This document outlines the core business idea and how their shop will operate, expand, and secure funding.
Ultimately the business plan should include information regarding startup costs, projected earnings, target markets, competitors, and pricing strategies. This document is not only a roadmap for the steps to take in launching the coffee shop but also a vital tool to appeal to lenders and investors.
3 Key Reasons to Create a Business Plan
1. Save Money
Startups can reduce costs by having a clear plan in terms of budget. This limits the chances of going beyond the project scope by setting clear limitations with what can be created. Business owners should pay attention to anticipated expenses to save money and time. The plan will also give a breakdown of financials that may not have even been initially considered.
2. Stay Organized
The plan is essential for keeping organized through the process of setting up the business as it provides guidance for which steps to take as the journey progresses. It will not only keep a business in line with their budget but also consistent in the pace of the opening phase.
3. It's Necessary
If a business has stakeholders, other investors, property managers, or financial assistance, a business plan is actually required to be handed over to these parties. A well-thought-out and articulated business plan will increase the startup's chance of receiving funding or other forms of financial assistance.
Essential Components of a Successful Coffee Shop Business Plan
1. Executive Summary
This is the high-level overview of each section of the plan. You'll write it last, however, as you'll need the rest of the sections completed in order to summarize them. After you write a mission statement, keep the executive summary succinct, only including the key point of each section.
2. Business Industry Overview
This section answers the question of why this new coffee shop venture is solving a problem' - or put another way, why this shop is a valuable venture. Provide a short overview of the coffee industry from your own industry analysis, then describe the store location and why it's advantageous to open alongside the other local coffee shops in the area.
3. Competitive Market Analysis
The next step is to create a competitive analysis that outlines how the business will compete with similar food and beverage businesses in the area. Beyond other coffee shops, also include local businesses that would bring in a similar demographic. This requires research, like visiting the other stores, making notes on their offerings, design, menus, etc. Express in the business plan how your unique strategy and implementation of operations will succeed against this competition.
4. Target Market Research
The fourth step is to express an in-depth knowledge of the target market of the business. Define potential customers, as well as the market size (number of customers), and eventually, divide it into market segments (different types of customers). For example, a broad target market is coffee drinkers (especially if specialty coffee is the main offering), though there could be numerous market segments, like parents of the children who attend the nearby school, or the workers in the office spaces across the road.
5. Pricing Strategy
Now's the time for menu information. Consider whether the business will be a specialty coffee house with a strong focus on gourmet coffee, or if non-beverage products will also be sold (like espresso machines and coffee beans). This will have a big effect on the pricing strategy, as the pricing for cups of coffee and products will be outlined here. It doesn't need to be the exact menu, rather a mock menu' with the main idea of what's being sold in these business plan samples.
6. Marketing Strategy
Marketing plans are essential elements of coffee shop business plans. How will the business use social media? What advertising and promotion budget will be effective for the shop's targeted customers? Include ideas for future marketing campaigns, prospective loyalty programs, and other ways to position the coffee shop as the top location to drink coffee.
7. Ownership Structure
Here, the reader will learn of the cafe business owner's roles, any partnerships and stakeholders, the management team, and information about each person (unless it is a sole individual venture), positioning each partner as an asset to the enterprise.
8. Operating Plan
This section details information regarding equipment, supplies, staff, facilities, and more. Will the business use specific pos systems and accept all credit cards? Is there inventory management or accounting software lined up? It's beneficial in this stage to also comment on operating expenses, which can be projected through the use of sales forecasting tools.
9. Financial Plan
The last step of the cafe business plan is to outline financial information. Income statements can be created here to express cash flow projections of profits and losses, taking into account profit margins, gross margin, gross profit, net profits, income tax, and more. Licenses and permits will also play a role in the financials with different types of business models, all revealing how the anticipated cash flow statement will look once the cafe is up and running.
Keys to Success
Applying for a business loan to start a new venture, like a coffee shop, requires a successfully crafted business plan, however, this is not all. When seeking funding or loans from banks or alternative sources, lenders will often require financial statements and projections to prove the profitability of the business idea.
Through the use of forecasting software, startups can start predicting sales and cash flow from day one, to receive valuable information to attract lenders and consumers, while keeping costs at a minimum.