Location, location… and math
Posted: Jan 20, 2010
Earlier this week The Gazette, of Annapolis, Md., ran a well-thought-out primer on what to think about when starting a coffee business. Not surprisingly, the piece suggests entrepreneurs settle on a spot with good traffic, but even more useful is the story’s theoretical examples of the number crunching a prospective shop owner should go through before jumping into the café game. “When exploring a business idea, you should test its feasibility by making a set of assumptions and doing some simple math to find out what has to happen to make the goal a reality,” writer John C. Kelly states.
In short, figure out how many drinks you think you’ll sell, and see how much revenue that will bring in. You can then look to see how long it’ll take to make your investments pay off. What’s more, you should head to other area shops and see what kind of patronage they receive, a step that will let you check your original sales assumptions. This all might seem like common sense, but in the excitement and romanticism of opening a shop, sometimes common sense gets left at the door.
For more hints on coffeehouse bookkeeping, be sure to check in each month with Fresh Cup’s “Café Finance,” written by industry vet Chris Legler. In the January issue, available free online, Legler explores how making a café more sustainable can also make it more profitable.
—Dan Leif
