(I will not promote) I’m planning on starting a coffeeshop business with family. What advice do you have for me?

[u/Casanovajazz]

Hi everyone! I'm 25F, graduated a year ago, and l've always wanted to start a business with my sisters and build something of our own. We believe that now is the right time to do it.
We don't currently have the funds, and for personal reasons, we don't want to take out a loan.
What advice do you have for us? How should we get started? What things should we look out for or be cautious about? What about licenses and permits? How does renting a space work and what should we know before signing a lease? Any negotiation tips would also be greatly appreciated.
We're also thinking about finding an investor. If you have experience with this, I'd really appreciate any advice on how to approach investors, what to expect, and what we should be careful about when accepting outside funding.
Any advice or resources would be greatly appreciated.
Thank you 😊

[u/Successful-Title5403]

Have you worked at a coffee shop before? Have you ever held a manager position at a coffee shop?

[u/Casanovajazz → u/Successful-Title5403]

I’ve held a managerial position for 4 years but not at a coffeeshop. We’re gonna be 4 total. One will focus on finances, 2 marketing, 1 deals with suppliers.

My plan is to start working at a coffeeshop starting October to gain some insight before we get started.

[u/Successful-Title5403 → u/Casanovajazz]

That's pretty great, some skill might apply. I remember watching this video, def check it out if you haven't seen. There's more online, pretty interesting to live through their experience and perspective on it.

It's definitely not a business you can bootstrap with little funds. Coffee shops aren't going to turn profit for the first few months to a year unless you get insanely lucky or done something extraordinary. If you believe in it, take out a loan (it's risky yeah). Or continue working while saving up / continue working the first few months of opening it to keep the funds going. There's 4 people, so that's an advantage. Some can work part time and some full time. Do you really believe in this though or was this the first idea?

[u/Casanovajazz → u/Successful-Title5403]

Not first idea. I’ve been thinking about it for so long and always been scared to do it and also there was school and a full time job so time was not on my side but now I know I’m ready. I just need to plan it right.

[u/FormalFuel6245 → u/Casanovajazz]

My advice as a successful business owner. Going into business with friends is tough. Some people will work hard, some won’t. If there are agreements to split things evenly then you will need to have more roles for some of you. For example, relationships with suppliers is something that will take a fraction of the time as running the place, serving customers, manual labor to keep it running. You have to make sure everyone is on the same page.

[u/Casanovajazz → u/FormalFuel6245]

Yes, all 4 of us are family. We’re sisters. We’ve been talking about it for years. We’re on good terms. We live in the same house. We have a joint account.

We’ve divided up the roles and know who’s doing what. Our only and main issue us the funds.

[u/sum-9]

If you don’t have funds now, you definitely won’t in a year or two. Source, run a cafe.

[u/Assigned_Cryptid]

It doesn't matter how good your relationships are with your family, don't just rely on goodwill and verbal agreements. Having clear,written contracts explaining exactly what everyone involved is responsible for and entitled to will save you so much hassle later on. This isn't to be negative, this is to protect everyone involved.

Make sure you're getting proper signed contracts from suppliers etc too, and keep solid papertrails and records of important discussions and agreements. So many decent people get screwed over when other people don't act decently, and it's sad.

[u/noodlesallaround → u/Assigned_Cryptid]

This

[u/Casanovajazz → u/Assigned_Cryptid]

Yes, we’re planning to include a lawyer for a contract. I agree. It isn’t negative.

[u/Brufacee]

Before taking a lease or an investor, I'd try running weekend pop-ups for a few months. You'll learn whether people actually return, what the rush hours look like, and whether the three of you enjoy working together when it's busy.

Also write down roles, pay, decision rights, and what happens if one sister wants out. Doing that while everyone is excited is much easier than after money gets involved.

[u/Successful_Pizza_115]

This isn’t a serious post. 4 of us running the business means no one takes responsibility.

Also, no one is willing to put in capital? Start another business that you can bootstrap or you’ll waste years “planning”

[u/Ferfoxfox]

Of you want to start a biz without a loan you have few options: first work a 9-5 and save up for something small, like real small, or mobile like a food truck, or second if you want to have 3 more in your crew then pull resources from all 4 so they also have a stake in the biz. No one cheaps out.

[u/Senior-Community-767]

Not taking loans but considering investors is just kicking the debt can down the road. Investors will want equity and returns, which is arguably worse than a fixed loan payment. Look at BrewDog—they raised millions but diluted ownership drastically. If you’re serious about no debt, bootstrap it or rethink your approach.

[u/dsw-001]

You are basically running a restaurant - one of the businesses that by year 3, over half or more go out of business and by year 5 90% are out of business. My wife is running her cafe now and it's a labor of love - people on reddit scream you need to pay a living wage and when minimum wage here is $17+ per hour, you'll blow through more money for staff or you can work for basically for free as the owners don't get a living wage. They don't mention that with a lot of family owned restaurants that the owners and family may be working for free.

I can tell you from experience that my wife has shelled out about $85k out of pocket initially to buy and setup the business that included buying a distressed existing shop. Monthly operations, staff, and equipment has her breaking even or slightly ahead with $0 for her own salary so she's basically losing money every month. Depending on where are you at (if you are in CA, good luck - we are in the most inhospitable place to do business) as there are fees for everything, city permits, food licenses, and such.

A coffee business requires some fairly expensive equipment as well - fridges and espresso machine and commercial bean grinders, etc. Go online and research how much is it for a 2/3 group commercial espresso machine - it's like $6000-$10k depending on the brand - I'm guessing you weren't expecting to use a home machine. A commercial bean grinder is about $1500 to $2000, water filters and there is the maintenance of the machine. The machine will break down and expect a repair bill in the neighborhood of $300-$1000 for a service call.

My advise is to not get into this business - think about how many lattes you'll need to sell to turn a profit. My wife also roasts her own beans and sells coffee related equipment (pourover sets, syphon coffee makers, etc). She loves doing the drink aspect of the business but the paperwork, handling all of the administrative stuff, staffing, etc is just a lot of headaches.

[u/startups-ModTeam → u/[deleted]]

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[u/Bob-Roman]

“We don't currently have the funds, and for personal reasons, we don't want to take out a loan.”

 Well then, first problem is how to raise $125k to start up a coffee shop.  How much capital is family bringing to the table?

 Assume its $65K or 52 percent.  Next, you find private investor willing to ante up $60K.  However, in exchange, investor wants 48 percent ownership and 48 percent share of profits.

 If family’s contribution is limited to concept and workers/management, your time would be better spent looking for employment.

 You need to have more skin in the game than sweat equity.

[u/Successful-Title5403 → u/[deleted]]

very human