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Wednesday, October 14, 2009

That Elusive Golden Ticket

All my research so far indicates it will cost between $250,000 and $375,000 to open a cafe (including operating expenses for 6 mos to a year). It's true what they say, however; you have to have money, to make money. No bank will give a small business loan to an entity that doesn't have at least 20-25% down. So the question becomes, where does one come up with $60,000 to $75,000? Contrary to popular rumor, there are no federal or state small business grant programs. Angel investors are one way to go, but this brings the problems of where to find one, and that angel investors often become silent partners in the venture--this can lead to problems down the line.

A pair of potential partners have emerged--one is a friend who I never knew had the same dream as I do. Both are gay, which would put 66% of ownership in minority hands, opening up doors for grants that would otherwise be closed. There's a lot to talk about, however, before we enter into this engagement--I want to be absolutely sure everyone is on the same page as far as commitment, what we want to do, what will be involved, etc. Going into business with friends can be dangerous. Of course, the problem of initial funding still exists. I'm fine with taking out a loan--that's how 95% of small businesses get started, after all--but where do I find the initial down-payment? There has to be a way. It's got to be out there. After all, hundreds of thousands of people do this every day.

Things I need to start (aside from incorporating, but it's easy enough to get set up as an LLC--costs a couple hundred bucks at most):

1. Business space (obviously). There are several prime locations available in the neighborhood where I'd like to open.

2. Coffee/espresso machines (obviously). A few hundred to a few thousand dollars, based on how fancy I want to get. Probably shouldn't skimp on this, but going with something sleek and pretty that costs $50 grand probably isn't necessary, either. Need to make sure a grinder is included (or purchase one separately). Pre-ground coffee at a coffeehouse is a no-no.

3. A distributor for coffee, milk, cream, desserts, tea, sugar, sweetener, flavored syrups, etc. (obviously). No clue where to start on this. More research needs be done. Some could be obtained through Sam's Club/Costco, but others (coffee especially) needs to be gained in bulk sizes bigger than those you can buy at wholesalers.

4. Furniture. Since we're looking for a homey, mismatched-living-room look, visits to thrift stores and estate sales can yield wonders here for low cost.

5. Shelving. See above, or visits to Sam's Club and/or Costco for low-cost shelving.

6. Insurance. Research to be done here. Get by with the minimum at first (albeit with a good umbrella policy) and add more as we can afford to.

7. Accountant/attorney. I have a couple friends who are lawyers. I can talk to them about keeping them on retainer, or the ability to hire as needed. Julie's accountant is apparently a miracle worker, so I can talk to him. This is mostly for tax reasons--I can keep the books well enough (I've had to deal with inventory and cost management as a restaurant manager, before).

8. Odds and ends. Cannot overlook things like toilet paper, paper towels, napkins, flatware, plates, bowls, cups (3 different sizes, both "here" and "to go") cleaning supplies, an "Open" sign, counters and display cases, soap, etc. "To go" cups can be had through the distributor. Flatware, toilet paper, paper towels, napkins--Sam's club (cheap). Glasses, mugs, plates and bowls, thrift stores (dirt cheap).

9. Cash register and credit card system. Again, research needs be done. I've never dealt with this before (when I managed at Bruegger's, we didn't yet accept cards), however I'm sure this isn't complicated to get set up. The cost? No idea. I presume it's a monthly fee combined with either a % of transactions or a flat per-transaction fee (which would be why many places don't accept cards for less than $10 or $15).

There's a lot to be done. I found a site with resources including templates for cost analysis, business plans, expenses, the works. It's a start. I also picked up The Complete Idiot's Guide to Starting and Running a Coffee Bar, which I didn't know existed. Hopefully it's useful.

More later. Just thought it was time I posted something substantial here.

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