What advice would you give to a newbie in the business – a barista who wants to start a business based on their accumulated coffee knowledge?
Don’t do it. The coffee business may look like fun in your current position as a barista and you dream of being the boss in charge and controlling all of the little details, but it’s a losing game for the little guy. Unless your business plans are very well capitalized (think 7 figures and more), you’re far better off working for someone else.
Most of the indie poster-businesses of success that are featured in the trade magazines are losing money or barely scraping by financially. I’m not saying that you should base your career decision solely on earning potential, but look at it this way: if you can be a barista or manager for someone else’s business, enjoy the coffee house lifestyle, obsess-on and discuss coffee and then lock up and go home at night for a steady paycheck, why change? Most independent single coffee shop owners are deeply in debt or terrified of losing their entire life’s savings, working 100+ hours a week at at business that will earn them no more than $50,000 a year. There are few exceptions (none that I can think of who haven’t started with deep pockets), so why take on that stress?
If you don’t happen to be sitting on a large trust fund, you’ll need outside investment. Be creative, enroll the participation of large corporations or investment bankers. There is a lot of money floating around out there looking for investment opportunities in the coffee industry — they need you and you need them. Don’t try to bootstrap a coffee cart in your local hospital courtyard. Plan big or otherwise keep your day job.
The act of making coffee is not as easy as one might expect; however, just because you can pull a great shot of espresso, you are not pre-qualified to run a business. The most successful coffee businesses worldwide have been started either by a team of people with coffee and business experience or started by a coffee person and acquired by a business person with or without outside investment (as in the case of Starbucks). All of them were reasonably well-funded.
Without all three: business acumen (not necessarily experience, seniority is not required in the real world), capital and a solid understanding of your product/service, odds of eventual profitability are greatly diminished.
Too harsh? Maybe, but maybe not. I consider it more of a reality check or tough love to keep expectations in-line. Hopefully I’m wrong and we will see dozens of new startup business fueled by nothing but spunk and determination serving great coffee in markets around the world; however, I’ve been in this business a couple of years now and what I’ve seen in these “flesh willing, bank account weak” situations has made me a confirmed cynic.