What I Wish I Knew Before Opening My First $1milion/year Café

My first café was my first business venture. I owned this café for about ten years before selling it. By then, it had become a success, grossing a million dollars a year despite being small-ish with only about thirty seats. It was featured in magazines and inflight recommendations despite no marketing or PR on our part. While I am proud of this accomplishment, there were decisions I made that made my life difficult. I am hoping that my advice would be helpful to those of you opening a retail business for the first time. Out of the ten things listed here, the first and last are the most important.

You need to love working and hustling

Ask yourself, are you the type of person to putter around the house, try new recipes, constantly on the move, pore over details, and hustle to make sales? If you are not, the café business is likely not for you. A lot of people have romantic notions about opening coffee shops, but it’s because they grossly underestimate the sheer amount of unglamorous work that goes into making a café a great hangout…except you don’t get to hang out when you own it.

I couldn’t enjoy going to cafes while I owned mine. Every café I went to, I analyzed their operations and dissected their products. It was work. Every time I went into mine, I only saw the work that needed to be done. My café was small, but I still had hundreds of items to inventory, 40 or 50 staff a year to manage, machines breaking down, customers running off with our milk and sugar, rodents, garbage, vandalism, theft, alarms, getting sued by an ex-staff (read on to find out why), WSIB queries, insurance, supplies not arriving on time, having to look for new suppliers, dealing with customers/neighbors/landlords/thieves robbing our neighbor/ drunkards/ police, etc. And that’s only to name a few. If you naturally enjoy a slow pace and you can’t live without savoring the good things in life, this business is not for you. There are better and cheaper ways to make money.

Keep it simple

The simpler your business is, the better. I was infected by a grandiose view of myself thinking I would be good at everything because I was good at everything I tried up to that point. Little did I know that running a café would be the hardest endeavor I would attempt…including raising children. Running one café is like having ten toddlers. If you had ten toddlers, you would simplify (e.g., reduce clutter), kid proof (e.g., gates), and ensure a harmonious environment (e.g. not letting a wild dog into your house). When you open a café, you might want to bake from scratch, prepare food from scratch, roast your coffee, and have live performances every week. Unfortunately, when you do anything from scratch or add extra elements such as live performances, it will be more work and more chances of things going wrong.

Your motto should be "under-promise and overdeliver". Research the best wholesale baked goods, research the best roasted coffee, and maybe make sandwiches from scratch and be the best at it. Or bring everything in from wholesale and focus on having the best coffee. Even better would be starting with baked goods and coffee, but not worrying about sandwiches until you have enough people asking about lunch. You should become known for one product plus your service then gradually expand your product variety. Do not start with five things then take them away when they don’t work out. Start with two and when you have perfected them, add another. It is easier to add to your service than to take away because then you don’t lose customers.

Start with shorter hours

You might think you have to open from 6 am to 7 pm because a neighboring Starbucks does or a diner across the street does. If you start with long hours right off the bat, you will burn out, have staffing issues, and the quality of your product will suffer. Start with shorter hours that may prove to be the most popular. Examples would be 6 am to 12 pm for breakfast/coffee crowd or 10 am to 4 pm for midmorning coffee and lunch crowd. This philosophy gos hand-in-hand with simplifying your operation.

By keeping your hours short, you are streamlining your operation and leaving more time to improve the quality of your product. If your product is excellent, people will come even if it’s inconvenient. They might grumble about the short hours, but they will show up and will be grateful when you extend the hours.

Here are more reasons why you should keep your business hours short-ish:

• You can be present for all opening hours, making sure you have full control and knowledge of the operation. You want to observe what works, what doesn’t, and what customers are happy with. Customers also like to see and talk to the owner. This is your chance to build rapport with them. A lot can go on without your knowledge, so you want to avoid this when first getting started. You want to be the one to open and close the shop every time until you get to know your staff better.

• You have less staff to worry about because one of the hardest things about running a coffee shop is obtaining reliable staffing. Juggling a smaller number of staff will make your life a lot easier.

• You want to prevent burnout. If your business is open for 6 hours a day, trust me when I say you’ll be doing at least 3 more hours of work outside of the opening hours, or you should. Paperwork, research, marketing, networking, sourcing products, inventory, hiring, firing, scheduling regular deep cleaning, etc. all take up your time and you are the only one who can do it. With long hours, you end up spending time at the coffee shop working the bar instead of managing the place because somebody will call in sick or quit unexpectedly.

Do not spend too much money on cosmetic renovation

It might seem like you absolutely need to have certain furniture or countertops to make your business work, but the chances are, there are cheaper options. Unless you own the building, find some other way to lower the costs. Ambience is built not only by the interior design but by the cleanliness, style, people, and service. Invest in interior design once you streamline your niche for the business and sign at least a five-year lease. Otherwise, a fresh coat of paint and handmade lanterns might do.

Do not assume all people have common sense

I do not believe in micromanaging, but I do believe in microteaching. Teach well and thoroughly when you first hire someone. It’s tempting to outsource training to a manager or a senior staff member, but you need to do the training yourself so you can assess your new employee's potential. If they have trouble getting the basics of operating an espresso machine or complains about having to mop the floor, you’re better off not employing them. If they show enthusiasm and go out of their way to perfect things, that’s good information for you to have.

The training session is where you get the best information about the person you’re hiring. Do they let their ego get in the way and seem to know it all? Are they not as knowledgeable about coffee as they claimed? If you don’t want to deal with someone mopping the floor with syrup (true story), spraying Windex over fresh foods (also true), or selling the freshest products first (happens all the time!), do all the training yourself until you are too rich and too busy to care.

Establish a good relationship with your neighboring businesses and residents

This might seem like a no brainer but it is easy to get upset and burn the bridge when you are stressed out and your neighboring business complains about the garbage bin in your shared storage. This is asking for trouble as anyone in your neighborhood can report you for some non-existent infringement which ends up creating more work and headache for you.

Even though we initially had a good relationship with the owners of a Chinese restaurant next door, they got jealous when we started doing too well. It did not matter that we did not sell any of the same products. They began to complain to the landlord about how we took out our garbage or to the city about our patio boundary. Try to establish a mutually beneficial relationship with your neighbors and show respect even if you feel like spray painting their window instead. But also recognize that some people are the way they are so you might have to adopt a monk-like attitude to cope.

Establish sign in/sign out with staff

One thing I learned was that people can change drastically and quickly when they are desperate. A star staff member might one day stop turning up for work. Six months later, you are being sued for human rights violation because you supposedly did not pay them for hours they worked. You check your staff schedule and you scribbled that they did not show. You pay them anyways because fighting the allegation would be too costly and time consuming with very little chance of winning because you have no concrete proof. Have staff sign in and out for their shift and do it diligently.

Take a few days before you sign anything

It's easy to make decisions when you are under the influence of excitement, fear, pressure, anxiety, etc. I signed a terrible lease that haunted me during the entire time I owned my first cafe. I signed it because I wanted it to happen. I was excited, felt bad about walking away from my landlady who looked like a benevolent buddha (turned out to be the opposite), and naively thought that it would work out somehow. It did, but with a huge headache that weighed me down for ten years. After two years, I was ready to attack anyone in sight because I was so stressed by this lady.

We often feel like we are going to lose the opportunity of a lifetime if we walk away, but usually the opposite happens. I should have walked away from the lease then my landlady would have caved to better terms (found out later how desperate she was to lease it out), but because I was shaking from excitement, she stood her ground. Sleep on a major decision for a few days and try to keep emotion out of it. Ask your trusted confidants around you. Ask yourself, what would I say if my friend came to me with this scenario?

Know your limits

No one can know everything and you are no exception. Be honest about your capabilities and limitations when you are putting everything on the line for your business. You are investing your money, time, relationships, quality of life, and possibly shortening your lifespan to do this. Make sure you know what you are good at and delegate what you are not good at. It is easy for you to think you can do it all and maybe you can, but the question is can you do all of it within the limited number of hours you have and not lose your sanity? Remember, the price you pay because of your inflated ego is much greater than the price you might pay for injuring your ego.

Sell when business is good

If you are not enjoying operating the cafe, sell it, especially if the business is doing well. The chances are, you are not going to be able to maintain the quality or the success of your business if you don’t thrive on it. Sell it when sales are good so you can do something more enjoyable and meaningful for yourself. We tend to hold onto our business when things are going well because it’s profitable, but this trend cannot last if you begin to dread going to work.

There are three kinds of cafe owners: ones who enjoy the thrill of opening a new business, ones who love the daily grind of operating it and hanging out in their creation, and ones who enjoy both. If you belong to the first group, you won’t be able to maintain the success. You might think a good manager would do the trick, but no one will care about your business more than you, and good managers don’t hang around forever unless you give them a stake in your business.