Running a business in tough times #2

We have not upgraded any equipment since we opened.

I bought our LaMarzocco 4 group used and took 3 weeks to rebuild it – Same with our FETCO 52H This is not something that I recommend for the average person entering the coffee business. I have successfully completed the Nuova Simonelli service school, so the rebuilds were time consuming but not a problem. Would I like a brand new Aurelia or GB5, new Mazzer and Mahlkonig  grinders – sure I would.

We run LINUX on 8 year old PC’s we picked up for a song when a local firm upgraded their PC’s

Our roaster was built for us, but other than that – I have a very full plate maintaining all of the used equipment that we own.

This was a choice that we made going in – I did not want to have a high overhead with new equipment leases etc. We did a lot of our own build out to keep the cost down also.

Given the economic meltdown that the country is experiencing – I still think small business owners can make it, if they use their heads regarding costs during start-up and beyond.

The cost of green coffee has risen to unheard of levels. At one point last year our green coffee cost was up over 280% from when we opened 4 years ago – most of that rise has been within the last 2 years.

Have a business person that you trust read over your business plan and give you straight feedback. Seeking the advice of someone that you trust is key – they don’t have to  be in the same business – but if they have built a business over time, the basic concept of understanding costs and how to price a product would transfer to your situation.

Location – you need to put a lot of thought into it. It took 2 years for us to nail down the spot that we wanted. We held out for lease concessions from the building owner and held our ground during negotiations. We knew we needed ramp up time to build up foot traffic and what we knew what our costs and margins were going to be BEFORE we started to negotiate the lease. A building owner has no idea how you business works – the price he sets may or may not work for you – If it doesn’t – don’t sign the lease and find a better spot. What good is a great spot if you can’t meet your overhead?

If you don’t understand your target customer, know how to differentiate your business from anything else around you,  and know how much you need to generate every day to cover your costs and make a profit so you can stay in business –  it will be very difficult to survive.

The last area that is most often overlooked is customer service. I think that this is a skill that either you have or you don’t – and it can cause a new business that has really good coffee to fail just as easily as one that serves bad coffee.