Outside of your regulars, coffee is an impulse buy because the customer saw your sign. Aside from your regulars, most folks do not set out to ‘go to the coffee shop’ like they would to a restaurant (unless you ask them to so more on this later). You need a steady stream of customers outside of your normal morning commute business.

The morning commuters are your bread and butter, the rest helps fill in the revenue holes. These are your impulse buyers. They are going to come to you mainly via your sign outside, so instead of sending out 10,000 post cards to your neighborhood residents, spend that money on a premium location, visible sign and branding your image. You’ll be glad you did:

As far as your signage, get one that is AS BIG AS POSSIBLE. That is, as allowable by your city ordinance and landlord, without being tacky! The bigger the sign is, the more visible it is.

By branding your image, you are identifying your existence within your community. Be sure you have a unique logo. If you cannot design it, get one custom made by a professional! I have seen a lot of cheap looking logos that do not help the image.

Another step in branding your image is to secure your shop’s name on the world wide web by registering the domain name. Try to get all the domain tags: .com, .net, .org, etc. This is for email, and your website. You will be glad you did because it gives you a more professional image. Remember, the more common your business name is, the more difficult getting it registered online is going to be because the name may be taken.

As for your website, get one! If you can do this on your own, more power to you here too. I know just enough to be dangerous but you can get a nice website, even with online sales capabilities done economically. Check around locally, I bet there are a few web gurus in your area.

Here is where you have the chance to have every customer take your name with them when they leave allowing others to see it. Whether you have sleeves custom printed or you use stickers and put one on each cup or protective sleeve, they are all part of your branding. Be sure the design is clear and defines your shop well.

The same goes for stamps. You can have a rubber stamp made to stamp your whole bean coffee bags with. Note that the brown Kraft paper bags are what you’d need for this. If you use the foil bags, your stickers will work well for this too.

Press releases are an inexpensive way to tell the world what you are doing. A carefully crafted press release sent to the right person at the right news outlet can be the best form of advertising for you. Just be sure that whomever is on the press release as the contact person is actually available to be contacted.

Another great form of marketing is your use of tee shirts, caps and other wearable’s. These are walking billboards for you courtesy of the folks that buy them. You can give them away if you want, it’s all good advertising. Yes, they are expensive but I consider this great advertising and an expense under that category. Better, yes if you can make up the cost on them. But put this cost into your advertising budget. See if you can get them locally, if not there are several reputable companies on the internet. You will pay about $15.00 each in the end, but again the investment is very well worth it.

Where would we be without business cards? Think about it: how many people have you run into that do not have a business card for whatever it is they do for a living? Not many that I can remember. This is your time to tell everyone you meet that you are in the coffee business. Everyone you meet should get one of these and a few to spare. Do not be shy about handing them out!

Menus are a great example of simple marketing. These are the take out type so try to keep it simple. Under four pages, printed on an 8.5″x11″ sheet of BRIGHT colored paper and folded in half is best. You can leave them at area businesses if they allow it. You can also put them on your counter by the checkout and anywhere else your customers will see and take them. You can have them copied at any copy place, or see if you can have a local copy shop do them. They should cost about .10-.15 cents each. All you need is a place to make them on a copy machine. Menus printed on a printing press will be more expensive in most cases.

Support materials are also a good way to advertise your products. You can usually get POS materials FREE from any supplier you are using. This goes for tent cards to put on your counter to full color posters to hang in your windows. Check with your distributor. If they do not keep these kinds of materials on hand, a call to the manufacturer can usually get them in your hands relatively quickly.

Vinyl lettering on your vehicle is another form of advertising, and another type of moving billboard. There are several places online that will allow you to use a particular vehicle template to design your lettering. Again, check around locally for better service and pricing. I had vehicle lettering made for my SUV: rear window and both rear side windows or under $100.00. Your vehicle will essentially become a moving billboard.

Vinyl lettering can be gotten for your store windows too, which will be similar to your vehicle lettering. Check with the same source.

Word of mouth is an excellent source of marketing. Customers can be your biggest and best marketing source for you. It can also backfire on you if you tick someone off or if a customer ends up having a bad experience at your shop, for whatever reason.

Make every effort that all customers are satisfied before they walk out of your door. You may never have the chance to do it again and everyone that that dissatisfied customer meets may be told of the unfortunate incident at your store. They may not come to your store if there was ever that chance they would.

Talk to the world online via your blog. This has got to be the best invention since a website and the internet itself started. Where else can you talk about nearly anything and let the world read it? You may just develop a following not only locally, but around the world.

Have event nights. This is great for weekends and ‘dead’ times. Earlier, I spoke about customers coming to your shop if you asked them to. This is where you have that chance. Events that will bring in business are almost plentiful. A few examples are trivia night, open mikes, singer-songwriter and other music performances, book signings and poetry. It can also be just about anything else you can think of that is of interest to others.

A word of caution about playing DVD’s and TV/cable shows: Most of these are copyright protected and although you may not think you are breaking any laws, it can be construed as such. It’s a royalty issue because you are making money on your beverages, in your establishment showing a DVD bought for ‘personal’ use. Just be careful here.

It’s been my experience that this coupon mailers are usually a waste of money in the specialty coffee industry. There are way too many coupons in most of these mailers and most recipients throw them out. I know I do.

Internet advertising is good if you can limit to advertising locally using your zip code. You can reach a captive audience on the internet. It’s relatively inexpensive because you choose what to spend on each ad and only pay per click. This is also good if you choose to sell whole beans online, however if you do not roast in-house this may be cost and inventory prohibitive.

Be careful when using coupons in any form. Coupons tend to cheapen the specialty coffee industry so I do not recommend using them. Bogo’s (buy one get one) are ok for some advertising, like opening a new coffee shop but, you will get your bargain seekers that wait for those coupons in order to patronize you. You could create more monsters!

You will also, occasionally get regulars that bring in the coupons. Even though they are as deserving of the coupon as anyone else is, your aim is to get NEW customers so the ‘coupon’ doesn’t always work. The only way I recommend a coupon is for a first time customer. You can usually get mailing addresses of new residents from your chamber of commerce and do a select, targeted mailing to the new residents only. So there are some easy, mostly economic ways to effectively advertise and market your coffee shop.

Remember, your customer service and quality will always have to be top notch but you can skimp on some advertising dollars by being crafty and conservative.

Tony DiCorpo is a coffee shop owner, operator, barista and entrepreneur. He is also a coffee shop business consultant. He has authored many articles on the specialty coffee business and a business plan package that can be found at tonys-coffee-shop-business-plan.com

Maybe you don’t want all of the heartache and stress that comes with starting a business. Maybe you just want the heartache and stress that comes with buying a business! Whatever your decision is be sure that you are well informed. Hopefully I can give you some direction as to what to look for and what to expect.

Many people have asked me if buying an existing shop is a good idea. I have actually looked at many shops for sale but the biggest issue I always see is that most owners think their shop is worth two or three times more than it actually is. The reason for this phenomenon is that we become emotionally attached to our stores. That is not a bad thing, as it normally keeps us in check.

However, most owners put the store up for sale and even end up selling when they NEED to and their back is up against the wall. The need to sell is for various reasons like divorce, default on notes, lack of enthusiasm, poor sales, there are as many reasons to sell as there are shops for sale. They often have to sell before the business has reached maturity and they try to get what they have invested in it, which is usually more than it is worth. The objective is to sell when they have an offer, as most often the offer will come from an observer that has been watching the business day after day and has a general idea of what is going on and wants to make an awesome offer.

Having said all of this, if you happen upon a shop for sale be observant and make a few visits before you know much. It will tell you a lot. I have been involved in a lot of discussions about buying an existing coffee shop. You have to take into effect the age of the business and the time left on the lease (w/renewal options). That is where half of the worth is at. There is always the case that someone may see value where others do not as well.

You will need to get the financial information from the owner or the broker to get an accurate valuation. A good rule of thumb is that 50% of the yearly gross is the approximate worth of a business. Of course the only way to actually find the fair market value is a valuation done by a business valuator but sometimes these are not accurate either. But that is the seller’s responsibility. I like the following method. It is usually the best way to valuate a coffee shop:

Figure out what the seller’s true discretionary cash flow is: Take the owner’s salary, add back anything a new owner may not spend money on yearly (these are called add backs) like a car lease, a lawsuit, use of a big CPA firm, health insurance for the owner and his kid etc. That resulting number is the true cash flow of the business. That number can be multiplied from 1 through 6 times to get your asking price or value of the business. The scale of 1-6 is mostly proportionate to the age of business and the time left on premises lease. If the business is only two years old, then the price should reflect the lower end of the spectrum and vice versa.

I keep mentioning time left on the lease because it is very important. You could buy a business that was cash flowing nicely, and then the lease is up in a year and the landlord decided for whatever reason to not renew it. You are not in a good position! Having renewal options on the lease and time left on it is very important. If the lease is about up, renegotiating it or signing a new one in your favor may be an option for you if the cash flow is worth it.

Keep in mind that as a new owner, you have to use that discretionary income to base what your debt service is going to be. Debt service is what a new owner can comfortably spend every month on paying off the note to buy your business, including a recoup of the down payment. The objective for buying a business is opposite of buying a house being that it should be paid off ASAP, three years max, so the price should also be in line with future debt service.

I say this because most people do not have the cash to buy a business outright. There will almost always be some seller financing involved, which is good news for you! Most owners consider owner financing with terms to make it more appealing because getting a loan to buy a business is very difficult, even with stellar credit and assets for a prospective buyer. Banks do not see a business as an asset because there are too many working and movable parts, and the equipment is usually not worth what was paid for it.

If you want to figure out what the debt service is for this business, take the true discretionary cash flow and divide it by 33%, as the most a buyer should pay yearly on debt service is 33% of their cash flow. That number is then divided by 12 for the year. The result is the most that your business can afford to pay monthly, including a recoup of a down payment and still pay an owner, and remain solvent.

Here is an example: Let’s say you are dealing with a true discretionary cash flow of $75k per yr. The calculation should be as follows:

$75,000 divided by 3 = $25,000 divided by 12 = $2080 (approx). This is what should be spent monthly, P&I (principle and interest) on debt service. This does not include the down payment recoup, which should come out of the buyer’s pre-tax discretionary cash flow AFTER debt service. As a buyer, getting the down payment back should take 12-24 months based on the business growth and future potential. So say that your final sales price is $150k. The buyer should recoup $75k down payment within 24 months via the discretionary cash flow.

Another thing working in a buyer’s favor is that businesses are not flying off the market right now. If you really want to buy a shop and its solvent, you can make the owners a much lower offer than they would expect, but without being insulting. They just may surprise you. A good place to start is contacting a business broker in your area.

You must also qualify as a prospective buyer. The reason for this is the same as looking for a house: A broker is not going to waste theirs or a seller’s time on a prospective ‘buyer’ that does not have two dimes to rub together. Be prepared to divulge your financial status with documented proof and sign a non-disclosure statement as well. Of course, you are prepared to put down 50% of the purchase price, and have plenty of working capital, right?

If you do buy an existing coffee shop, as a first time shop owner I’d be sure it is not a failing one. The worst thing to happen is to try and turn around a failing shop when you have no working experience yourself in a profitable one. Look for a shop making money, but also be prepared to not change much, if anything if you do buy it. Reality is, if you do change what is working and making money you can open yourself up to losing business. That would not be good!

Then again, it’s always a gamble buying an existing business because what an owner says, what’s on the tax returns, and what is reality may be completely different things. That is where a trained eye and lots of observing come in real handy.

A good way to do a visual valuation is to watch the day to day operations and actually count the customers daily, foot and vehicle traffic over at least a month’s time. Yes, count. Sit inside the store but don’t be obvious. Observe and count! You will become a ‘regular’. This will also give you the opportunity to not only see the customer flow but also get an approximate of what the actual sales are. Sit close enough to hear what customers order and keep a generic tally. That will give you a little more vision of what IS reality.

If this truly interests you, work with a business broker. However, be sure you know what you are getting into by buying or starting a coffee shop business. Have a coffee shop business plan in either case to plan your course by and for ultimate possibilities of success! Good luck in your endeavor of specialty coffee!

Tony DiCorpo is a coffee shop owner, operator, barista and entrepreneur. He is also a coffee shop business consultant. He has authored many articles on the specialty coffee business and a business plan package that can be found at http://www.tonys-coffee-shop-business-plan.com

Your customers will suffer if you don’t have enough
employees or if they aren’t doing their job correctly. Most
customers have a specific level of expectations when they
enter a place of business. If they don’t think their needs
have been met, they are going to think really hard before
they come back in. Even if you offer the best tasting coffee
in town, it often isn’t going to be enough to make up for
poor service.

If you can find qualified employees that have worked in a
coffee shop before that is a nice advantage. However, don’t
be so fast to pass on those that haven’t done so. They may
have plenty of wonderful skills you can incorporate for your
business. You need employees that are responsible, have
great communication skills, and they are friendly. You can
teach them everything else they need to know to do a good
job for your business.

You will find that many people applying for a job at your
coffee shop don’t have too much experience in this area.
Don’t let that get you down though because there is a bright
side to that picture. As long as they have many of these
other traits, you can teach them the specifics of your
business. If they don’t have very much work experience, they
also don’t have a great deal of bad work habits that you
have to weed out either.

The way in which you train your employees is going to affect
how well they perform for you. It is amazing how many
employers expect an employee to learn it all immediately but
they don’t put too much time into helping them learn it.
There are plenty of different drinks to learn how to make
and pieces of equipment to learn how to operate in a coffee
shop. Don’t leave your employees in the dark when it comes
to how to do their job.

If you don’t have a good training program in place for your
employees, you will find your turnover rate is high. That
means understaffed to meet the needs of your customers. It
also means going through that application and interview
process again and again. Employees that are well trained
tend to feel confident that they can perform well on the job
and they stick with it.

You definitely want to be able to keep the good employees
you hire at your coffee shop. To do this, you have to offer
a work environment that is safe and friendly. They should
look forward to coming to work instead of dreading it. Offer
nice gifts and even cash bonuses for good attendance and
quality service. You can have contests too and recognize
someone as the top employee of the month.

Treat your employees well and it will benefit your coffee
shop business in many ways. They will work hard, they will
offer suggestions, and they will let you know of any
problems that they have noticed. Your employees are a vital
part of the success of your business. Make sure you always
let them know how much you appreciate their efforts.

Karyn Lewis is passionate about great coffee. If you are thinking of opening a coffee shop, and avoiding the common mistakes new owners make, you can read more at her recommended at her coffee business website.

Investors want to see a plan that maximizes return on investment. High fixed costs are the enemy of a great profit margin. When business turns down, and it always does at some point, fixed cost assets become liabilities and must be continually fed, even as income declines.

Always present decision-makers with the most streamlined operations plan possible. Do not confuse grandiose staffing and equipment wants with actual needs. In today’s business climate, almost every possible service can be rented, leased, farmed out or performed by contract manufacture. A 25,000 square foot factory that is not running at 100% capacity is an under-performing fixed cost asset, especially if a private label manufacturer will provide the service at a competitive price. The cost to rent, power, insure maintain and staff the facility is ongoing and will be a drain on the bottom-line.

Investors want to see a lean operation with no fat or excess. They will always be open to adding costs as growth and sales traction begin to kick in. Initially, the entrepreneur needs to display that he or she will be a prudent shepherd of the investment required to startup the enterprise. Here are a few areas where fixed costs can be avoided and potential investors greatly impressed.

Facilities

An opportunity killer is a funding request that includes money to buy a facility, office or plant. No startup can accurately pinpoint the growth (or failure) rate of a brand new business. Investors will want to see a plan reflecting realistic goals and space requirements. This almost always means renting facilities until need demands a purchase of facilities.

Manufacturing

There are almost no good reasons for a startup to manufacture their own product. Possibly, if there is a very valuable trade secret involved, but not often even in that case. All contract manufacturing should include a Non-Disclosure Agreement (NDA) as part of negotiations. Contract manufacturing is available and utilized in almost every industry today. Estee Lauder manufactures almost none of the many cosmetic or fragrance products they market. Liz Claiborne and Calvin Klein make none of their apparel. Ikea sells only furniture made in third world facilities.

All of these companies, and many more, realized long ago that manufacturing was better left to factories located where labor, raw materials and government rules were not stifling. These companies concentrate their assets on research and development, design, sales and marketing. So should every entrepreneur seeking to succeed in obtaining investment.

Sale

Every entrepreneur should be able to aggressively market and sell their product. However, no single person, or small partnership, can be in front of every customer that will potentially be interested in purchasing the product on offer. The investor will want to know that there is a sales strategy that offers an excellent chance for success.

In the area of sales, there are industry specific sales representatives: manufacturer’s representatives and agencies available to sell an interesting, market ready product, on commission, within their industry. Commissions are typically standardized within each industry. The gift industry is 15%. Food products are 3% and up, depending on the volume a product can reasonably be projected to achieve. Industrial products are 2% to 5%. Historic profit margins dictate commission rates.

When using sales agents, the entrepreneur should manage the sales force as if they were salaried employees. Weekly calls to review goals, promotions and upcoming meetings. Write letters and e-mails pointing out other agent’s successful achievements. I have used commission sales agents for many years, and recommend them to most of my clients.

I make as many key- account sales calls as possible with my sales agents. If it is my product, I want to control big presentations, even though I will pay a commission on the sale I have principally generated. I attend as many sales meetings as possible. The more I can meet, learn and know about my sales teams activities the better I will be able to motivate, train and energize them.

When commission sales agents do not sell a product they are not paid. This obviously minimizes fixed costs. However, you will want to pay the largest amount of commission as possible. Healthy commission checks mean a very healthy sales base.

As a very young National Sales Manager for Vidal Sassoon Hair Care Products I was confronted with a problem. Our sales had exploded. Growth was so rapid and market acceptance of the Vidal Sassoon brand so overwhelming that our commission payments likewise accelerated to the point that my top management became upset when commissions exceeded their own salaries. “Don’t those guys work for us, why do they make more than the owners”, they asked?

I faced a difficult situation. I offered two options: cut commissions or fire the commission agents and hire a company employed sales force. I reckoned that if I could get sales coverage for 8% cost of sales (including salaries, benefits, travel, etc.), it would make sense to make the transition. Cutting the commission rate would displease the agents and I did not want to risk losing the excellent momentum we had developed.

Very surreptitiously and quietly I interviewed and hired a team of key regional sales managers and we quickly executed a plan of conversion that top management had signed off on. Vidal Sassoon was at the point in their business development that a company owned direct sales force was needed and justified. However, it was a concern as we were greatly increasing our fixed overhead.

Entrepreneurs should focus maniacally on sales growth. Sales are Job #1 in every company, especially a new venture! Be very careful in constructing sales coverage that will support the growth you project while not choking cash flow with a very high selling cost.

Marketing

Hopefully the entrepreneur, or a member of the management team, has marketing experience. If not, the answer is often to hire a consultant. An experienced consultant will save time, money and mistakes. Be sure that the consultant being considered has current industry specific experience, strong references and a transparent history of success.

Fulfillment

I never recommend for a new venture to handle their own logistics (warehousing, pick and pack, shipping, billing, etc.) Dealing with shipping, handling, conditions and the terms necessary to satisfy retailers is daunting. Big box stores such as Kroger, Lowes and Wal-Mart have exceedingly complicated inventory control systems. Special, very expensive software is needed to communicate and expedite receipt of goods.

On average, I can have my inventory warehoused, packed and shipped for about 4% of my selling price (depending on volume). If business is seasonal or slows down I do not have to pay high fixed costs, just a percent of the shipments total invoice amount. If business is booming, my contract fulfillment warehouse ramps up hiring. A good contract warehouse offers a complete menu of services that I can pick and choose from as needed. Their systems will be sophisticated enough to handle the most demanding purchaser of my product.

The first time reader of a business plan typically has a strong reaction, positive or negative, to the overall document. A negative result usually occurs when the Executive Summary contains references to high fixed costs. A positive verdict is more probable when the entrepreneur indicates in every way possible that they are solely interested in maximizing profit and return on investment, not building a colossal infrastructure that will bleed the enterprise dry if all does not proceed perfectly and assumptions are not realized.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Mr. Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.

Corporate Event Management

When involved in corporate event management there are a few things you are going to need to consider:

* Catering and food service equipment
* Invitations or marketing
* Delegating tasks
* Managing your budget
* Effectively running the event and encouraging interaction between guests, or guests and speakers.

Events Listed helps with most of these elements. You have already arranged your food service equipment and this probably means you have decided on your catering requirements and menu.The next step then is to begin your marketing and sending out invitations which we will discuss a bit later.

First let’s speak about delegating tasks. Whether you are organizing a large-scale event or a smaller event, getting others involved to assist is essential. The task manager makes this a lot easier. Need to let people know what is required of them? Then put it on the task manager and tell them to keep checking your web page to ensure they do their part.

You may have already gone over your budget when it comes to food service equipment so go back now and re-adjust your budget, bearing in mind that you can cut a lot of costs with these web-based event management tools and sending out invitations for free. Once you have taken another look at your budget, use the budget manager to ensure that you stick to it this time.

Event Marketing

Now, back to the subject of invitations and marketing for your event. This is a great place to save money to put towards your food service equipment and still be a real hit with your guests.

Web 2.0 technology allows you to create a free events website using many tools that allow you to add photos, video, music, audio and much more without requiring any special IT knowledge or technical skills. Show those delicious foods you will be preparing on the night, have photos of the guests, some video clips related to the theme as well as music and audio. You can even have a countdown to the event on the web page.

When you have created a web page that you know will capture people’s attention and encourage them to attend your event then send out email invitations (no cost and you can be sure they won’t get lost in the post!) with a link to your web page.

When people receive these invitations and go to respond online they will also be able to see who else is coming and start networking immediately through your page, this helps with the last point of encouraging interaction between your guests.

After you have had a super-successful event go back and add photos, videos and anything else from the night for those who couldn’t make it to test your new food service equipment with you.

Tamara Ford is the wife of an Internet Entrepruener who specializes in Event Launch Marketing applying social media and internet marketing strategies. “I initially started writing to help my husband and have since become hooked”. If the content of this article interests you, you may be interested in reading another article I have submitted titled Corporate Event Management or you may want to visit our site to learn more about our free Corporate Function Event Planners.