Updated: Aug 30, 2020
Let’s get this straight: starting a business is hard.
A coffee shop is a business, therefore, starting a coffee shop is hard.
Running the small business after all the startup stuff is done is still hard. But it presents an entire different set of challenges.
Starting a coffee shop business and running it are two different things.
I’ve talked about in my post The Three Roles Of A Small Business Owner, that the skillset needed to start a business is different than running a business, and even still different than growing and scaling it.
As you start the business, you are creating workflows and finding vendors. You’re doing a lot of one time tasks that you won’t have to do again. Or if you do, it won’t be for a long time.
How to Transition from Starting a Coffee Shop to Running One
The Coffee Shop ‘Starting’ Phase is Process Focused
It can be fun since your ideas are finally becoming reality, but eventually that money runs out.
Tasks in the 'starting' phase are important because you may not get another chance to change them. How you layout your coffee shop and the coffee you choose to carry matters. It can be fun since your ideas are finally becoming reality, but eventually that money runs out. Then you have to worry about balancing revenues with expenses.
The issues arise when you don’t realize that there is a point of transition from ‘starting’ to ‘running’ your coffee shop.
Why is this a problem?
Starting a coffee shop is new and exciting, but if you continue to stay in the mindset of ‘starting’ your coffee shop, you find yourself becoming exhausted, not paying yourself enough, and always chasing new things.
This causes burnout in coffee shop owners. They become unhappy.
How can we prevent burnout and make a successful coffee shop?
Make hard and fast rules ahead of time.
You’ll need to figure out what your running costs will be and then figure your break even point(BEP). This is what your sales revenue will have to be before you start to make money.
BEP = Sales - ( COGS + Fixed Expenses + Labor Costs)
*Remember to include taxes. I would already subtract these from your sales number*
Hitting your BEP in the first 8-12 months should be your goal. This is the ‘starting’ phase. After that, you should be able to switch modes to the ‘running’ phase.
The Coffee Shop ‘Running’ Phase is People Focused
The' running' phase is about how to manage your people. How to effectively onboard and offboard hires, and make sure that everyone is happy and following the processes you put in place in the ‘starting’ phase.
You may think, “Won’t I still need to try to tweak my processes all the time to get more profit and make my coffee shop run more efficiently?”
In one sense, yes. But that is a slippery slope back in to doing all the things. You’ll go crazy.
Your coffee shop business should be out of the ‘starting’ phase. This means that it should be past the BEP and able to show a profit. This is different than end-of-year accounting. Depending on how much you had to borrow (if any) to start the business. It will most likely take several years to pay back your initial investment.
If you are past the ‘starting’ phase and not breaking even, you should decide whether you want to try a new marketing tactic, or product offering, or get out of the business. This is where your business strategy plays a huge part.
Once you are firmly in the running phase, take a look at what simple tasks you are doing every day, week, month, etc. Which of them can be offloaded to employees or managers? Some examples: scheduling, bank deposits, social media, inventory management, vendor orders, and staff management.
In the 'starting' phase, you need to do all the things yourself so you understand how it affects the business. In the 'running' phase, it should be your goal to train people you trust to do these tasks. This will give you the time and energy to focus on growing your business and keep you from getting burnt out.
Coffee Shop Exercise
Calculate your BEP. Are you hitting it? If so, what 'starting' tasks are you still doing? If not, what can you change?
If you feel burnt out, what running tasks can you offload to a manager?
TLDR? Watch the video below.