Jumping into any new business opportunity can elicit a mixture of strong emotions, both positive and negative. The coffee service industry offers a popular product and a steady demand, but it requires ingenuity and effort to be successful.
The excitement brought on by a prospective business owner’s vision for a new, successful venture can often be tempered by the stressors such as financial risk or increased responsibilities. But there are ways to tilt that balance towards the positives.
The nearest guarantee to limited risks and increased chances of success is preparation.
Creating a strong business plan, down to the most detailed coffee shop monthly expenses, is essential for those committed to building a successful, efficient, and profitable coffee business. Let’s break down the items to include in your budget, from the most obvious to the ones you may not expect.
When beginning to calculate the monthly expenses for any business, it makes sense to begin with the foundation.
Understanding the space your business will need and the property costs such as rent, utilities, insurance, or taxes are some of the most fundamental expenses.
Though these may be obvious, they will affect the bottom line just as much as other costs, and therefore must still earn your focus. For entrepreneurs building a new coffee shop business plan, it may be wise to anticipate changes in these costs as the business grows.
Other essentials, particularly for a food and beverage business such as a coffee shop, would include ingredients or supplies necessary to meet the expected demand.
As a business grows, it is likely the size of the staff will follow.
Payroll is another necessary expense that should always be included in monthly expenses, serving as one of the most telling indicators of a well-run business. Are employees paid on time and in full? What specific pay period works best for my business? Has the business accounted for all of the necessary payroll taxes? Are benefits offered to those who qualify?
These are all questions a business owner in any industry should ask themselves.
For owners of coffee shops, payroll may be even more important, given that many of the employees will be paid on an hourly basis rather than a flat salary rate.
For some business owners, calculating payroll can add headaches and result in lost time or reduced focus for other responsibilities.
Because of that, many opt to outsource their payroll responsibilities. While it may be worth easing the headaches, paying a payroll service or software provider would be another expense to calculate on top of employee wages, benefits, and taxes.
One of the toughest factors in growing a business is deciding when and where to spend money on marketing.
Without knowing the direct return on investment, this could be a daunting process. But building a brand does require some of these efforts. Perhaps it is a simple advertisement every so often, or maybe it is a larger campaign with events. For successful businesses, that could mean adding an employee — and another salary — specifically for marketing purposes.
While the amount may vary from business to business or owner to owner, marketing costs remain a necessary calculation. Doing some market research on what similar businesses are, or aren’t, doing regarding marketing could help with sparking ideas and making decisions.
When adding up your coffee shop monthly expenses, prepare for the day when unexpected payments arise.
Some of these costs are not necessarily hidden but are simply expenses that fall from top-of-mind until they occur. It’s important to keep an eye out for those costs and be prepared.
For example, owning a coffee shop will mean maintaining compliance on several fronts, whether it’s health permits or business licenses. As mentioned earlier, insurance costs are often overlooked in expense decisions. You may also need to pay an attorney for legal services such as business deals and contracts, especially at the start.
Lastly, preparation is also necessary for the so-called “rainy-day fund.”
For a coffee shop, this could mean budgeting savings for the occasional equipment fixes or property repairs. It could also mean paying more in payroll after boosting staff hours for high-traffic months.
The volume of necessary calculations can surely make a new business owner’s head spin and can seem overwhelming when beginning the process.
Laying out and understanding monthly expenses will go a long way towards removing the stress of the unknown while setting the business on the path towards financial viability. Some franchises, such as Scooter’s Coffee, offer a proven model to eliminate some of those stressors right from the beginning. From there, talents and work ethic can shine.