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  • Thinking of starting a coffee business...

    Hi All,

    Im currently working in IT and have done so for 12 years - the pay is fantastic and up until now, jobs have been a plenty. At the moment there is a lull in the market (of the particular level and type of work Im after ). Anyway at the end of the month I am contemplating unemployment and would really like to do something outside the realm of IT.

    So... I have a passion for coffee. My only experience with making it is a short TAFE course, an Espresso Mastery course at Epic Espresso and now just practising at home with a Sunbeam EM6910. I know nothing about running a business other than the consultancy work I do within IT. However, Im willing to put in a lot of blood sweat and tears.

    I guess my main question is, if there is anyone in the business at the moment, particularly in Perth, that can tell me what effect the global economic crisis has had on their business, if any?

    The other questions I have are:

    - Am I crazy?
    - What figures would I be looking at aside from leasing to startup ie Coffee making equipment, POS, shop fit out etc (Im looking small at the moment)
    - I have a few ideas in mind for location (outer suburbia) but what about product, do I stick to coffee only, coffee + cake, coffee + light meals?
    - What type of fitout, modern / retro / charm&character

    So what is it about your favourite coffee shop that makes it just that?

    Ive drunk a lot of crap coffee in my time and some of those businesses are still going, if I can deliver a good consistent product, I dont see the harm in trying... Im dead serious about this so all critisism accepted.

    P.S - If anyone has a small coffee business in Perth that could do with a part time trainee free of charge, ie ME, let me know. Im extremely keen to learn and no looking to compete with your business (I hope)

  • #2
    Re: Thinking of starting a coffee business...

    I would compare it to sitting in a caravan park haveing a beer watching the Park Manager talking to people in between emptying bins, and you think ahhhhh what a top job he has, until your the sucker emptying the bins working 7 days a week 24 hours a day, and not noticeing you live by the seaside anymore. Sorry to kill the romance of it, and I hope you make a squillion bucks, I just think the headache that probaly comes with it is not worth it. I dont know if you married or not or have a family, but if you do have a good look at them and ask yourself, do I really want to be away from the 12 hours a day 7 days a week while I start a bussiness that might risk there happines and the roof over there heads?

    Thats not coming from any great experience in small bussiness, I have always worked for the government, (defence force, now one of the emergency services) and i really like walking out of work knowing that its no longer my responsibility regardless of what may happen whilst I am not there, and best of all, knowing that every second Friday the government says thanks for coming mate, see you next week. (and knowing how much of a thankyou I am getting).

    Good luck.

    Comment


    • #3
      Re: Thinking of starting a coffee business...

      Originally posted by Scott Whyatt link=1231388049/0#0 date=1231388049
      Hi All,

      Im currently working in IT and have done so for 12 years - the pay is fantastic and up until now, jobs have been a plenty. At the moment there is a lull in the market (of the particular level and type of work Im after ). Anyway at the end of the month I am contemplating unemployment and would really like to do something outside the realm of IT.
      When you say you are contemplating unemployment, is that a choice of yours or not yours to make? If it is your choice, dont do it dude....
      However, if you are facing unemployment through no choice of yours, then its worth exploring. Just be aware that doing this out of passion and doing it as a business can be very different. I often get comments in my workplace that Im in the wrong line and should consider opening a cafe instead... My response to them is exactly that, I put a lot of heart and effort into making my coffee for the morning out of interest but I cant see doing it for a living. Perhaps a good way to get a feel of the industry is to look for a part time or full-time (if available) job in a cafe and go from there.
      When I was retrenched in 2003, I seriously contemplated getting into the restaurant business. Spent a few days working in a charcoal chicken shop and decided that the money may be good (eventually) but the time spent in it wasnt worth any amount of money I could (potentially) earn because it would have been time away from family and to me that was just not worth it. From outside we only see the opening and closing times but the place is run from 7am to midnight for an opening time of 10am and closing of 9pm.

      Comment


      • #4
        Re: Thinking of starting a coffee business...

        I understand both points - I got in to IT because I had a passion, now when I get home the last thing I want to do is turn on a computer for fun, its only ever for work. I now hate IT, but Im good at it so it sticks. Unemployment would be by choice, only because otherwise Id have to apply for roles that Im over qualified for and would put me back 5 years just because there is nothing else out there. The last time I tried that, no one would employ me because they could see that career options at their company were limited and I would leave shortly after starting, through boredom. It simply wasnt a good way to retain knowledge.

        I guess I figure if I can get the business up and running successfully, I can employ good people and have them running it for me while I concentrate on further developing different aspects of the business or other business opportunities rather than staying hands on. This would be a bit more difficult for me as Im a control freak but yes, I have family that I adore and it would be something that would need to happen rather than something I wanted to happen.

        I chose coffee because I want to share my passion with other people. Regardless of whether it is coffee or chickens, Im at the point where I am sick of working for other people, I have ambitions of my own and the drive to follow them through. I want the opportunity to be in charge and if it fails, its nobodys fault but my own. Ownership and responsibility...

        Comment


        • #5
          Re: Thinking of starting a coffee business...

          go for it man. Everyone will tell you its a crazy idea but just do it anyway.

          I would defiantly get a job at a quality, busy cafe though for at least a few months first. You will learn heaps, even if its only on the weekends.

          Comment


          • #6
            Re: Thinking of starting a coffee business...

            Hi Scott and a belated welcome to CS!

            About 18 months ago I had an idea to start a coffee business, though different to yours. Six months later I tossed in a well paid job and did it. I had previously owned and run my own business in an entirely different field.

            Some answers and considerations...

            Cost? Well, if you lease an empty shop, do it up yourself, and *only* serve coffee, then you might get away with $50K. You might add another $20K if youre going to do food. That includes your lease for a year. Dont expect "profits" to cover the rent. You are unlikely to make any profits in the first year - if you survive. Last time I looked, over 50% of businesses fail in their first year. Add another $X for the loss of whatever youre making per annum now. You need to factor that in.

            If you do choose to do food, you simply cant do it by yourself. Again, in your first year, any employees will earn more than you do - if you think you might begrudge that, forget it.

            No matter how good your employees are, how will you know theyre not helping themselves to the till when youre not there? If you can get a business partner you trust, things will be easier.

            You currently have one employer. When you work for yourself all of your customers will be your employers.

            Outer suburbia sounds like you want to opt out, not share your passion. Forgive me for saying so, but you sound disillusioned rather than passionate. You mention you "have ambitions". I suggest you figure out what they really are and consider whether whatever you do next will bring you closer to achieving these ambitions. If the honest answer is, "yes" and the bank balance will allow, then do it. If not, you might like to rethink it.

            Cheers!

            Comment


            • #7
              Re: Thinking of starting a coffee business...

              Originally posted by cuppacoffee link=1231388049/0#5 date=1231403955
              Hi Scott and a belated welcome to CS!

              About 18 months ago I had an idea to start a coffee business, though different to yours.  Six months later I tossed in a well paid job and did it.  I had previously owned and run my own business in an entirely different field.

              Some answers and considerations...

              Cost?  Well, if you lease an empty shop, do it up yourself, and *only* serve coffee, then you might get away with $50K.  You might add another $20K if youre going to do food.  That includes your lease for a year.  Dont expect "profits" to cover the rent.  You are unlikely to make any profits in the first year - if you survive.  Last time I looked, over 50% of businesses fail in their first year.  Add another $X for the loss of whatever youre making per annum now.  You need to factor that in.

              If you do choose to do food, you simply cant do it by yourself.  Again, in your first year, any employees will earn more than you do - if you think you might begrudge that, forget it.

              No matter how good your employees are, how will you know theyre not helping themselves to the till when youre not there?  If you can get a business partner you trust, things will be easier.

              You currently have one employer.  When you work for yourself all of your customers will be your employers.

              Outer suburbia sounds like you want to opt out, not share your passion.  Forgive me for saying so, but you sound disillusioned rather than passionate.  You mention you "have ambitions".  I suggest you figure out what they really are and consider whether whatever you do next will bring you closer to achieving these ambitions.  If the honest answer is, "yes" and the bank balance will allow, then do it.  If not, you might like to rethink it.

              Cheers!
              Wise words Den,

              I too cannot advise too strongly that you must tread extremely cautiously and in the present economic climate the prudent route is to take the pay cut and do what you can do.

              With little business experience, there is a good chance that you will become one of the unhappy 50% by making the same mistakes most newbies do.

              As Den has suggested, youll make nothing for at least a year to 18 months. Can you support that? If you have to borrow to set anything up, forget it. Walk away from the bank.

              Then- allocate roughly 30% in food/coffee costs, 30% labour, 8-12% rent, roughly 10% GST, say 5% for utilities, misc. costs and maintenance, funds for super and workcare payments and the rest is yours. You will only make money by working 70 hours a week and then your employees will likely do better than you do.

              When I taught at the academy, I saw sea-changers every week thinking that theyd make a few cups of coffee for their mates while supervising their staff and then empty the wheelbarrow of cash into the Ferrari each day before driving off into the sunset. Most of them ended up blowing their super and some lost their houses as well.

              If you want to do this, affiliate with someone who knows what theyre doing, do a business management course and spend at least 12 months working in a cafe and/or a good restaraunt (for a boss) before you even think about it...Then still dont do it!

              I have had 4 cafes, 2 of which were really busy but would think very seriously before doing it again and then would do it in a very specific way with minimal food.

              Chris






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              • #8
                Re: Thinking of starting a coffee business...


                I dont really need to comment as the opinions above are all on the money, either "do it right" or "run away screaming"


                ... but this quote ...

                I would compare it to sitting in a caravan park haveing a beer watching the Park Manager talking to people in between emptying bins, and you think ahhhhh what a top job he has, until your the sucker emptying the bins working 7 days a week 24 hours a day, and not noticeing you live by the seaside anymore
                I really love that analogy, and empyting the bins is one of his better jobs compared to putting your arm in a blocked loo and cleaning up after human pigs day-in day-out.

                A cafe is not quite in the same league but I expect the hours are similar and maybe some of the tasks too.

                Comment


                • #9
                  Re: Thinking of starting a coffee business...

                  Scott,

                  Dennis and Chris speak from expereince and I value their opinions.

                  Im currently unemployed (formerly IT).
                  The last (and first) time I was in this situation was 2.5 years ago.
                  I was out of work for 11 months.
                  The most work I found in that time was a few shifts over a few weeks at a small shop doing some coffee and some food.

                  One reason I did it was to prove to myself that my barista certificate was more than a piece of paper.
                  Another was to see what it was really like on the other side of the machine.

                  I had briefly considered starting a mobile coffee business but decided against it because of the costs and risks. (I was previously a banker for 20 years - 15 in lending, so can do the math.)

                  Ive worked in food before with my father.
                  Its hot, dirty and tiring work.

                  Chris mentioned the current economic climate. I think this is the time to keep any job you have not a time to take big life changing risks.

                  Still, providing you do your homework and know all the risks you may be taking, if you decide its worth taking the chance, the decision is yours.

                  Write up a business plan so you can see what it looks like on paper.

                  Comment


                  • #10
                    Re: Thinking of starting a coffee business...

                    Wise words indeed, thankyou for the prudently honest feedback, it is appreciated.

                    Im not easily discouraged and Im also intelligent and cautious. I wouldnt go in to something like this with my head in the sand. Im in the very early stages of consideration, Id work up an in depth business case before spending a cent. Id do everything within my powers to make sure I was well educated and informed on what I needed to do/have to move forward. If it wasnt viable, I wouldnt take the risk.

                    Outer suburbia is not my idea of opting out, there is a need for good coffee in the outer suburban area, a satelitte city somewhat. I live over 30kms from Perth city and if *I* wanted a decent coffee, thats pretty much how far Id have to go unless I was willing to drink McLattes! Hence Ive started making my own. There are a lot of commercial business customers in the area, the idea would be to capture the local enthusiast market. Cautious perhaps.... If I want to compete in the big smoke, I need to be good. How successful would I be competing at the top end, considering I have no experience. Why not start small, why not outer suburbia? While I might not exactly be sharing the passion, it would be a bloody good start towards it if I could make it work. I wouldnt call that disillusioned.

                    If no one tried in the first place, there wouldnt be any coffee shops.

                    Im one of coffees biggest fans, I love to drink it and I talk about it all the time. I wake up at 5am every morning, even on my weekend when I should be sleeping in, excited to get out of bed and see how good a machiatto I can make myself, consume and enjoy. Passionate, I am. Making coffee for Mr General Public may be a different story, Im not to know until I try. It does sounds like a wise idea to find some work as a barista and give it a shot, learn what I can. I may well not like it and walk away. My ambitions include success and recognition, not measured in dollars. If I give it my best and know that Ive done all that I can possibly can, failure would not bring recognition but I would still consider it a success, without trying, Ive already failed.

                    So the smart plan forward sounds like getting another IT job to support myself while doing as much research as possible, formulating a business plan, getting some commercial barista experience and then, only then, start getting serious about it if I still wanted to go ahead with it all.

                    Comment


                    • #11
                      Re: Thinking of starting a coffee business...

                      i like your plan scott.
                      i too allow myself the fantasy of operating a cafe or hole in the wall or whatever. i have a young family and that is one major factor for me that holds me back - and the fact that often fantasies like this (similar to the 4 year olds fantasy of one day going on a plane) often become mundane, or even difficult realities (HAVING to air travel for work). plus the fatc that ive just finished 8 years of uni to pursure a career in a very different industry - one which i love but doesnt make it to fantasy land for me.

                      i have to add though, that working behind a 2 or 3 or 4 group machine for a few months may not give you much more knowledge other than how to brew some (hopefully good) coffee. there may not be time or opportunity to see what happens around you to provide a decent sense of what it takes to manage a cafe. thats definitely been my experience - although i work in an espresso bar/showroom not a full fledged cafe, which perhaps impacts upon this.

                      dont know if any of this ramble has been of any use...

                      aaron

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                      • #12
                        Re: Thinking of starting a coffee business...

                        Well it does sound like the stars in your eyes arent clouding your judgement.
                        Is that mixing meaphors?

                        I dont know how easy it would be to pick up some experience in the real world of coffee while still supporting yourself fulltime in IT, but if you can find a way it will be good.

                        Maybe a bit of volunteering on a weekend at a local cafe.
                        Passionate coffee people are very nice.
                        Maybe you can find a local one willing to help you.

                        Comment


                        • #13
                          Re: Thinking of starting a coffee business...

                          Hey Scott,

                          Dont rule out buying a pre-existing business. Theres plenty of reasons people sell their businesses other than its not making money. Perhaps theyre chasing greener pastures too.

                          Buying an existing cafe would already come with the fit out and kit, plus (hopefully) some regular customers. It might be a chance to make a good cafe, great.

                          -ACog

                          Comment


                          • #14
                            Re: Thinking of starting a coffee business...

                            Like you Scott, I work in IT (hmmm i wonder how many of us here are in that boat?) and I too used to be passionate and love computers, and now have lost that passion.

                            I am passionate about my coffee, and my food, and have been known to spend more time and effort than is considered sane, in order to get the best flavours I can.

                            That said, despite nearly everyone I know telling me that I should be a chef, or perhaps a barista, the thought of ending up without the passion and zest i have for these things, simply because I am doing them out of necessity, not love, is enough to scare me away from it.

                            That said, if you can keep the magic there, go for it. Passionate people make better providers of the things they are passionate about.

                            Comment


                            • #15
                              Re: Thinking of starting a coffee business...

                              Originally posted by Scott Whyatt link=1231388049/0#9 date=1231410090
                              Im one of coffees biggest fans, I love to drink it and I talk about it all the time. I wake up at 5am every morning, even on my weekend when I should be sleeping in, excited to get out of bed and see how good a machiatto I can make myself, consume and enjoy. Passionate, I am. Making coffee for Mr General Public may be a different story, Im not to know until I try. It does sounds like a wise idea to find some work as a barista and give it a shot, learn what I can. I may well not like it and walk away.
                              I love making my morning cup at work and I have my own machine at work and one at home. I very regularly pull double shots so I get to make a coffee for a colleague too and thoroughly enjoy the whole process though I always get comments like "thats a lot of effort for a cup of coffee.." I also volunteer at a cafe which sells coffee for slightly less than market price and Im on once a month for about 5 hours. Having a passion for good coffee and trying to share that with a largely ignorant public can be very frustrating (see the thread titled Barista Venting). There are weekends where I come back from that stint tired out and not wanting to have anything to do with coffee for the rest of the day. Long and short of this is, do give it a go in a cafe as an employee first to see what life behind the machine is like and you might see aspects of the job that you might not have thought of before.

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