8 Business Lessons From My Failed Coffee Shop

I think it was one of our college teachers who told us that it was better for us to make as many mistakes as we could before the CPA Board Exams. When we asked why he reasoned that we would definitely remember our wrong answers more than our correct ones, and I think he was right.

I was a Certified Public Accountant, an Internal Auditor and a Risk Management Officer for ten years, but I have never learned as much about business than when I failed at my own.

Here are the 9 things I’ve learned from my failed coffee shop business:

1. You should choose the right location

When you’re setting up a business, always remember that location matters. You should be as near to your market as you possibly could!

A good location will help you bring the customers you desire. A bad one can turn away even the people who want to support your business.

It’s quite understandable to have a limited budget when you first venture into business. You can’t afford prime locations yet. But you need to balance your goals. You must at least try to find a place where your customers don’t need to exert extra effort just to reach you!

That’s what happened to my coffee shop. I thought I was already able to choose the best location because the place was near a local school and even a church. But here’s where I went wrong: I chose a location that can’t be reached unless you climb up the second floor.

To some people, it may not matter. But I’ve realized that it made a lot of difference. People told me so. The old told me so. Those with aching knees told me so.

When I was still conceptualizing about the coffee shop, I thought about students as my target market. That’s why I thought they could easily walk up to the second floor. But why make people climb up the stairs in the first place?

2. You should have less recurring expenses

A business doesn’t always click as soon as you open it. You must wait for some time before people hear about it. You must expect time before they make it a hobby to go to your café.

But if you have big bills to pay month after month after month, you may not be able to wait for the time when your business picks up. You may run out of money even before people hear about your business!

In my case, I had a big chunk of money going out for rent as I do not own the space for the coffee shop. Whether I earn money or not, I had to pay my rent. Aside from that, I had to pay for electricity, water and salaries of personnel whether I had dozens of customers or whether I had none.

3. You should have enough budget

This one is very much related to number two. If you can’t minimize your recurring expenses, you must have more budget to work with.

Do you have enough money to wait for two months? For six months? How long could you wait before you run out of money to take care of your expenses?

You must be able to estimate well how long you can at least break-even with your business (break-even is when your income is enough to at least cover your expenditures).

4. You should promote your business well

Promotion goes hand in hand with customers.

If people never even knew your business existed, how could you even expect them to come?

When I had my coffee shop, I thought that the promotion I made was enough. Looking back, however, I know now that what I did wasn’t sufficient at all.

I should have given more flyers. I should have had more posters. I should have offered more discounts at the beginning of the business.

Since the business was near a local school, I could have had a talk with the school management instead of merely distributing flyers to students. In addition to the school, I could have also talked with various establishments near my coffee shop.

Without proper promotion, your business will certainly suffer.

You shouldn’t rely on word of mouth alone for people to learn about how good your product is. Bring your product to as many people as you could right from the start.

5. Start small

Successful businesses don’t always start big. Some start small and slowly expand their way to success.

When you start small, you don’t need to spend too much at the start. You have more room for mistakes and more time to grow. You can learn and improve slowly as you know more about your market and your product.

Test your market by starting small. If you’re trying to open a café like me, maybe you can start by opening a small space inside the school’s cafeteria. That way, you can test your market. You can also avoid a huge expenditure on renting a big space.

6. Have a backup plan

It doesn’t feel good to start a business with an idea that it could somehow fail. But this is the reality.

In business, there is no certainty of anything. When you open one, you take a big risk.

My advice then is to always have a backup plan. Also, don’t put all your money in your business, especially if it’s your first one and you have absolutely no experience dealing with it. I see so many people putting all their hard-earned money in a business only to lose everything after the business fails. Many of these people have used even their retirement funds.

Set aside some money that could help you try again. Or better yet, don’t resign from your day job yet.

7. Study more

Trying to open a business when you’re young sometimes bears the risk of too much excitement. That’s what happened to me. I got excited about the idea of opening my own coffee shop. I couldn’t wait! I wanted to open one right away. I did not take the proper diligence in studying and researching about it before I’ve finalized the decision of setting up the business.

You can’t be too negative when you’re starting a business, but you can’t be too positive either!

You must consider all the risks involved, and you must be patient. You must learn as much as you could about the business you’re setting up. If possible, take a mentor. Study more. Interview the right people. Study the market well. If you can have first-hand experience, you must do so.

8. You should properly supervise your business

When I was trying to make my coffee shop business work, I was not able to take sufficient time off from my day job. I thought I could make it work in a short time. I thought I could just hire people who would make and sell coffee and take care of the customers for me.

Setting up a business, however, takes time. It takes time for the entrepreneur to learn about it, and it also takes time for you to pass on your knowledge and train others for work. It doesn’t happen in an instant.

If you really want your business to succeed, you must make sure that it is properly supervised.

Don’t do it like it’s a part-time hobby you can look into after your day job. If you want to do it like that, start small, very small. That way, you still have full control over it and it doesn’t overwhelm you.

Final thoughts

It takes guts to start a business, but it takes so much more to make it succeed. You must humble yourself and learn all you could to make it work. Train yourself and get the best people who can help you. Make sure you have sufficient funds. Look into every possible risk and set up appropriate courses of action to mitigate them.

You can never have a hundred percent assurance for success, but you can avoid a big downfall from which you can never recover anymore.

Learn from other people who have learned from their mistakes, and give room also for your own.

Stay positive, but be more than positive. Be someone who can turn things around to make even your mistakes work for you!