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Last updated on October 7th, 2023

coffee shop2

Executive Summary

Your executive summary is the first part of your business plan, but you usually write it last because it is a summary of all the important parts of your plan.

Your Executive Summary should quickly grab the attention of the reader. Tell them what kind of coffee shop you run and what its status is. For example, are you just starting out, do you have a coffee shop that you want to grow, or do you run a chain of coffee shops?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the coffee industry. Discuss the type of coffee shop you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Overview

In your business analysis, you’ll explain what kind of coffee shop you run.

For instance, you might be in charge of one of the following:

  1. Take-Out or Drive Through: Most people who go to this kind of coffee shop are on their way to work or somewhere else and just want to grab a cup of coffee quickly.
  2. Café: This type of coffee shop is usually more formal and serves coffee and food like pancakes, baguette sandwiches, pastries, and desserts.
  3. Hipster Coffee Shop: Most of the people who go to this type of coffee shop are locals who want to relax in a place with music, WiFi, and good coffee.
  4. Traditional Coffee Shop: The traditional coffee shop has a calm, cool atmosphere and serves baked goods and many kinds of coffee drinks.

In addition to explaining the type of coffee shop you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

  1. When did you start the business, and why?
  1. What important steps have you taken so far? Some examples of milestones are reaching your sales goals or opening a new store.
  1. Your legal structure. Is your business set up as an S-Corp? An LLC? A one-person business? Tell us about how your legal system works.

Industry Analysis

In your analysis of the coffee business, you need to give an overview of the business.

This may seem pointless, but it has more than one use.

First, learning about the coffee shop business makes you smarter. It gives you a better idea of the market you’re in.

Second, market research can help you make a better plan, especially if it shows you market trends. For instance, if there was a trend toward drinking decaffeinated coffee, it would be helpful to make sure that your plan includes a lot of decaffeinated options.

The third reason to do market research is to show your readers that you know what you are talking about. This is what you do by doing the research and putting it in your plan.

The following questions should be answered in the industry analysis section of your coffee shop business plan:

  • How much money does the coffee shop make each year?
  • Is the market getting smaller or bigger?
  • Who are your biggest rivals in the market?
  • Who are the most important market suppliers?
  • What changes are happening in the business world?
  • How do you think the industry will grow in the next 5–10 years?
  • What is the right size of the market? That is, how big a market could there be for your coffee shop? You can figure out such a number by figuring out how big the market is in the whole country and then using that number to figure out how many people live in your area.

Customer Analysis

In the section of your coffee shop plan called “Customer Analysis,” you must describe the customers you serve and/or expect to serve.

College students, sports fans, soccer moms, techies, teens, baby boomers, etc. are all examples of customer segments.

As you might expect, the type of coffee shop you run will depend a lot on the customer segment(s) you choose. Obviously, baby boomers would want a different atmosphere, different prices, and a different range of products than teens, and they would also respond to different marketing campaigns.

Try to figure out who your ideal customers are based on their demographics and how they think and feel. In terms of demographics, talk about the ages, genders, locations, and levels of income of the customers you want to serve. Because most coffee shops mostly serve people who live in the same city or town, it’s easy to find this kind of demographic information on government websites.

Psychographic profiles tell you what your customers want and need. The better you can understand and describe these needs, the easier it will be to find new customers and keep the ones you already have.

Competitive Analysis

In your analysis of the competition, you should figure out who your direct competitors are and then focus on them.

Other coffee shops are their main competitors.

Indirect competitors are other things that customers can buy from you that aren’t your direct competitors. This includes restaurants, grocery stores, and people who make their own coffee at home. You should talk about this competition to show that you know not everyone who drinks coffee goes to a coffee shop every day.

In terms of direct competition, you should list the other coffee shops that you are in direct competition with. Most likely, the coffee shops right next to you will be your main competitors.

Give an overview of their businesses and list their strengths and weaknesses for each of these competitors. Unless you’ve worked for one of your competitors, you won’t know everything about them. But you should be able to learn important things about them, like:

  • What kinds of clients do they work with?
  • What kind of goods do they sell?
  • How much do they cost (high, low, etc.)?
  • What do they do well?
  • Where do they fall short?

For the last two questions, try to answer them from the point of view of your customers. And don’t be afraid to stand outside your competitors’ stores and ask customers as they leave what they like and don’t like about them.

The last part of your competitive analysis section is to list the ways in which you are better than your competitors. For instance:

  • Will you sell coffee that is of high quality?
  • Will you sell types of coffee that your competitors don’t?
  • Will you make getting your products easier or faster for customers?
  • Will you give better service to your customers?
  • Will your prices be better?

Think of ways you can do better than your competitors and write them down in this part of your plan.

Marketing Plan

Traditionally, a marketing plan has four parts: the product, its price, where it will be sold, and how it will be promoted. In your marketing plan for a coffee shop business plan, you should do the following:

Product: In the section about the product, you should repeat the type of coffee shop you wrote about in your Company Analysis. Then, give specifics about the products you will be selling. For example, will you sell things like café latte, cappuccino, espresso, or macchiato in addition to regular coffee?

Also keep track of any food or drinks you sell that aren’t coffee.

Price: Write down your prices and how they compare to those of your competitors. In the product and price sections of your marketing plan, you show what you have on the menu and how much each item costs.

Place: This word means where your coffee shop is. Write down where you are and how your location will affect your success. For example, is your coffee shop near a gym, office building with a lot of people, etc.? Talk about how your location could get a steady flow of customers. Also, if you have kiosks or plan to have kiosks, explain where they will be located.

Promotions: The last part of your plan to market your coffee shop is the section on promotions. Here, you’ll write down how you’ll get customers to your place of business (s). Here are some ideas for ways to promote your business:

  • You can bring in more customers by making your coffee shop’s front store more appealing.
  • Giving out samples of coffee outside the coffee shop
  • Putting ads in newspapers and magazines in the area
  • Trying to get in touch with local blogs and websites
  • Flyers
  • Collaborations with local groups (e.g., gym members get a free cup of coffee with each pastry they purchase)
  • Local radio advertising
  • Banner ads at local venues

Operations Plan

In the other parts of your business plan, you talked about your goals. In the operations plan, you talk about how you will reach those goals. Your plan for operations should have two different parts.

Everyday short-term processes include things like serving customers, buying supplies, keeping the store clean, and so on.

Long-term goals are the steps you want to take to get there. Some of these dates could be when you hope to have served your 10,000th customer or made $X in sales. It could also be when you plan to hire your Xth employee or open a new location.

Management Team

A strong management team is a must if you want to show that your coffee shop can work as a business. Show the backgrounds of your key players, focusing on the skills and experiences that prove they can help a company grow.

You and/or the people on your team should have worked in a coffee shop before. If so, talk about this knowledge and experience. But you should also talk about any experience you have that you think will help your business do well.

If your team isn’t strong enough, you might want to put together an advisory board. There would be anywhere from 2 to 8 people on an advisory board. These people would act as mentors for your business. They’d help answer questions and give advice on how to plan. If you need to, look for advisory board members who have worked in coffee shops or run retail and small businesses successfully.

Financial Plan

Your 5-year financial statement should be part of your financial plan. For the first year, it should be broken down monthly or quarterly, and after that, it should be done annually. Your income statement, balance sheet, and cash flow statement are all a part of your financial statements.

Income Statement: A profit and loss statement, or P&L, is what most people call an income statement. It shows how much money you made and how much it cost you, so you can see if you made a profit or not.

You need to make assumptions when making your income statement. For example, how many people will you serve each day: 100 or 200? How much will sales grow each year? 2% or 10%? As you might expect, your assumptions will have a big effect on the financial projections for your business. Do as much research as you can to try to back up your assumptions with facts.

Balance Sheets: Balance sheets have a lot of information on them, but the most important things to know are that they show your assets and your debts. For example, if you put $100,000 into building out your coffee shop, you won’t make money right away. Instead, it’s an asset that you hope will make you money for years to come. In the same way, you don’t have to pay back a check from a bank for $100,000 right away. Instead, you’ll have to pay that back over time.

Cash Flow Statement: Your cash flow statement will help you figure out how much money you need to start or grow your business and make sure you never run out of money. Most business owners and entrepreneurs don’t know that you can make money but still go bankrupt if you run out of money. For example, say a company came to you with a huge catering contract worth $100,000 that would cost you $50,000 to carry out. Well, in most cases, you would have to pay that $50,000 now for things like supplies, equipment rentals, employee salaries, etc. But let’s say the company took 180 days to pay you. During that period of 180 days, you might run out of money.

When making your Income Statement and Balance Sheet, make sure to include some of the most important costs of starting or growing a coffee shop, such as:

  • Location Build-Out, which includes fees for design, building, etc.
  • Cost of things like coffee grinders, espresso machines, blenders, and refrigerators
  • The cost of ingredients and making sure there are enough supplies
  • Staff payroll or salaries paid
  • Insurance for a business
  • Fees and licenses
  • Legal expenses