Have you opened a business and failed? Succeeded

[kcoole]

Hi! I am in the process of getting an SBA loan to start a small coffee shop. With help from an SBA advisory program, I have created a very detailed business plan. I feel great about the plan and our location and about 50% of the people I talk to say "Oh, that is wonderful, you'll do great!". On the other hand, the other 50% say, you know most new businesses fail?!? Everyone wants to throw around that 90% of restaurants fail within their first year. So, I am looking for stories of success and failure. Have you opened a business and failed? What would you do differently? Have you succeeded? Do you have advice for a young entrepreneur?

Thank you to everyone!!!

[TheNiche]

Go talk to the owners of Bohemeo's in the East End. They've had to bend over backward to satisfy various bureaucrats and can tell you a few horror stories.

[livincinco]

Hi! I am in the process of getting an SBA loan to start a small coffee shop. With help from an SBA advisory program, I have created a very detailed business plan. I feel great about the plan and our location and about 50% of the people I talk to say "Oh, that is wonderful, you'll do great!". On the other hand, the other 50% say, you know most new businesses fail?!? Everyone wants to throw around that 90% of restaurants fail within their first year. So, I am looking for stories of success and failure. Have you opened a business and failed? What would you do differently? Have you succeeded? Do you have advice for a young entrepreneur?

Thank you to everyone!!!

Specialty coffee is a tough market to get into right now. It's a luxury purchase that a lot of people are cutting back on in a tough economic climate.

No stories for you, but here's a couple of rhetorical questions for you to consider.

Starbucks owns the market - what is going to compel someone to purchase from you instead of them (atmosphere, convenience, quality?)

Small businesses usually succeed by generating positive word of mouth. What steps are you taking to ensure that will happen?

Does your location contribute to your specific differentiating factors? Also, people will generally only buy coffee from locations that are on the right side of the street on their commute. Does your location withstand that?

Wholesale coffee prices are likely to be unstable for several months and you are likely to get impacted by rising prices. Are you going to be able to withstand price increases on your key commodities when your competitors are less likely to be impacted because of their size?

Hopefully, you're opening in Katy. We need alternatives to Starbucks (not a big fan of Dunn Bros.)

Best of luck.

[KimberlySayWhat]

No advice, but I'm always interested in hearing about small business success stories, so I hope you do well!

[editor]

Hi! I am in the process of getting an SBA loan to start a small coffee shop. With help from an SBA advisory program, I have created a very detailed business plan. I feel great about the plan and our location and about 50% of the people I talk to say "Oh, that is wonderful, you'll do great!". On the other hand, the other 50% say, you know most new businesses fail?!? Everyone wants to throw around that 90% of restaurants fail within their first year. So, I am looking for stories of success and failure. Have you opened a business and failed? What would you do differently? Have you succeeded? Do you have advice for a young entrepreneur?

Thank you to everyone!!!

Good luck to you. I have a few nuggets of advice as someone who started his own business:

• Ignore all those people who predict failure. Especially those who have never started their own business. People like to throw around that "50% of businesses fold in the first year" thing like it's fate. It's not. It's a statistic that does not reflect the reality of the retail marketplace.
  
• Make sure your licensing is in order. If you have to hire a lawyer to do it, do. But make sure you understand everything that has been done. It's the only way to get that worry off your back.
  
• Advertise. The first place that slipping businesses cut back is in advertising, and it's their biggest mistake. McDonald's, Coca Cola, and Disney didn't get where they are today by not advertising. I'm not saying you have to advertise on HAIF, but advertise somewhere when you can. I don't always have the money to advertise, but when I do I see returns.
  
• Don't look for short-term returns. You have to think about the long haul. This goes to my advertising point above. If you put a coupon in the paper don't do it to bring people in tomorrow. Do it to raise brand awareness. You may get a flood of people one day, and that's great. But what you're looking for is the long-term trickle that will keep your business afloat in good times and bad.
  
• Try to budget your money so that you can pay for recurring basic costs like utilities ahead of time. You don't have to make the payment, but try to set aside enough money so that you don't have to worry about things for a month or two. I actually write checks for the estimated amount of my bills two months ahead. That way I know I have at least that much of a cushion.
  
• Look for ways to get free promotion. For your business, it's a lot easier than some because coffee is cheap and giving a bunch of it away won't hurt too much. When I worked at KHOU, every morning at 6am the Kolache Factory would deliver three boxes of free kolaches to the newsroom. In exchange, at the end of the show we would put up a graphic stating "Breakfast provided by the Kolache Factory." How much did those kolaches cost the company? Maybe $20 retail. $2 wholesale. How much is that slate worth? Probably $600. If you can't find a TV station morning show to take your free coffee, try a radio station. They're the best/worst product whores out there.
  
• Always remember that you are going to have psycho customers. There's nothing you can do about it. Some people are just unhinged and will take it out on your waitstaff, your product, or whatever. Ignore them and move on.
  
• Don't worry about running your business in an unconventional manner. I do. I never did a business plan. I never got a business loan. But the Artefaqs Corporation has been around for five years now, and I'm able to do my web sites and photography full time.
  
• If you have a spouse, try to convince him/her to keep his/her job. You'll need it for the benefits. When I quit my old job COBRA was $900/month. No thanks, I'd rather pay rent, so I'm living on wife support.
  
• Take credit cards. This is a must. And don't do that stupid "$5 minimum purchase" thing. It will drive people away. If someone pays for a $2 cup of coffee with a debit card they'll be back to do it again. You may only make 50 cents on the transaction because they used plastic, but if they come back a couple of times a week for a year you've made $100 that would have otherwise avoided your business because you don't take cards. Setting a minimum transaction limit is against the terms of your credit card agreement anyway, and you can lose your terminal or get your rates raised if the credit card company gets enough complaints.
  

That's it off the top of my head. If I'm in line with what you're looking for, let me know and I'll post more advice. As my good luck gift to you, PM me your information (opening date, etc...) and I'll give you $100 worth of free ads here on HAIF. I'm happy to help a fellow entrepreneur.

Oh, one more thing -- get a web site. It doesn't have to be fancy, but it has to work and be reliable. One page with your location and basic information, plus a contact page, plus a menu PDF is all you need. I think HAIF user GWilson does web design work. I don't know what his rates are, but he might cut you a break for being a HAIFer.

[dalparadise]

Early to bed, early to rise, work like hell, and advertise.

Laurence J. Peter

[KimberlySayWhat]

dalparadise:

Early to bed, early to rise, work like hell, and advertise.

Laurence J. Peter

Early to rise, early to bed. And in between I cooked and cleaned and went outta my head.

Alice

[TexasVines]

I see a lot of businesses open that never had a chance and it would have been a surprise if they did not fail

for what you are going to do it better be all about location.....and if not then you better find the magic forumla that only a few find that makes your place that is not "location" still a location to be at

have you looked at what operated in your location in the past and why it was a success or a failure.....have you looked at why others in your business have been a success or failure

the other thing I would say with the business you are looking to get into is you better try and pry a lot of information from your customers in a freindly way to find out what it is they will buy from you besides coffee

one thing I will give to some "ethnic" stores that may look pretty crazy with a strange mix of products is that they are willing to sell what they can sell for a profit......they don't care if burritos and an oil change sounds strange......they don't care if a donut store with chinese takeout is a strange mix.....they care that the most amount of dollars per fixed overhead expenses passed through their business

you will need to find something besides coffee to capture the dollars.....you might be surprised what it could be.....but I am sure there will be something or somethings.....and I am sure you will need to find out what they are and get them in the store to really make it

[gwilson]

A few things from me as someone who has failed and is in the process of succeeding (hopefully - I gauge success on the long term, not this years revenue).

1. Don't do something you don't love.

2. Don't put things off. The more time you waste, the more damage you do to yourself.

3. Don't get discouraged. Things won't always go your way. These aren't failures, these are steps to success.

4. Don't get greedy.

5. Don't be afraid to ask for help.

6. Hope for the best and prepare for the worst.

7. To do lists are a must. Organization is key or your chances are hurt.

8. Due diligence on contractors you hire to realize your business is very important.

9. Manage your cash flow wisely.

If this project doesn't work out, but you're dedicated, try again. Life is pointless without risks.

If you're married or have kids, be diligent in maintaining a consistent relationship with them. Forsaking your family is easy to do and rationalize when starting a business. Coming home late, ignoring them, etc is an easy trap to fall in to and no amount of success or money can repair the damage this can do. Involve them if you must, but maintain that relationship. In the end, it is the most important thing.

[kcoole]

You are all wonderful, thank you for your replies. I have negotiated a lease just outside of Katy. My husband will be keeping his job, which pays enough to payback the loans we will need to take out. I am on the right side of the street and the space is brand new, so no previous failures. The traffic is great and the area is high income. I've talked with some local business owners who also sell "luxury" foods in this area. No reports of sales slow-downs, yet.

Texas Vines -- You are absolutely right. The other half of the business will be a variety of tart-tasting, healthy frozen yogurt flavors with a topping bar. (Think Swirll and Berripop.)

My husband is a marketing and graphic design guy, so we are VERY big into advertising and branding.

Gwilson, everything you said rings true to me, especially the part about family.

Has anyone had success finding an SBA loan? I am having a hard time finding a bank that doesn't have a blanket "we don't do start-up's" policy. Maybe somewhere here knows a good bank (or is a banker ).

[TJones]

Has anyone had success finding an SBA loan? I am having a hard time finding a bank that doesn't have a blanket "we don't do start-up's" policy. Maybe somewhere here knows a good bank (or is a banker ).

Have either you or your husband served in the military ? You may want to try a VA loan there if you have.

As an afterthought, I would become a member of Brazos Valley Teacher's Credit Union, in Katy. You only have to open an account for $25. I would do that and talk to a loan officer about your business plan. They are one of THE best C.U.s out there.

Edited June 27, 2008 by TJones

[houstonmacbro]

Specialty coffee is a tough market to get into right now. It's a luxury purchase that a lot of people are cutting back on in a tough economic climate.

No stories for you, but here's a couple of rhetorical questions for you to consider.

Starbucks owns the market - what is going to compel someone to purchase from you instead of them (atmosphere, convenience, quality?)

Small businesses usually succeed by generating positive word of mouth. What steps are you taking to ensure that will happen?

Does your location contribute to your specific differentiating factors? Also, people will generally only buy coffee from locations that are on the right side of the street on their commute. Does your location withstand that?

Wholesale coffee prices are likely to be unstable for several months and you are likely to get impacted by rising prices. Are you going to be able to withstand price increases on your key commodities when your competitors are less likely to be impacted because of their size?

Hopefully, you're opening in Katy. We need alternatives to Starbucks (not a big fan of Dunn Bros.)

Best of luck.

When I lived out in Westchase I would do my best to frequent local coffee shops. There was/is one on Westheimer (inside the BW) (Italian something) and another at Highway 6 at the Katy Freeway. The one on the freeway was closed because of the Hwy 6 expansion, and not sure about the Italian coffee place. It might still be there.

One thing I liked about both was the free Internet access and the relaxed atmosphere. It didn't feel like they were grinding us in and out and I was loyal to them and would purchase many items to make up for the hours I'd spend on their Internet and enjoying their establishments.