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Starting a cafe with no capital, no experience?

Colisasota

New Contributor
Jan 12, 2019
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Hi, I'm new here and still reading The Millionaire Fastlane, but I see a need and am wondering if it is something worth pursuing.

I live in a fairly new area, there are a set of shops near completion which have been "in progress" since 2015. I am a member of a few different community discussion groups and for the past 2 years, there has been a lot of heated discussion about the lack of such services as a supermarket, cafe etc and an empty building.

So far there is only 1 planned tenant that I am aware of - an Indian grocery and convenience store. I know that the community are screaming out for something like a cafe and feel that they would support one.

Obviously I need to do a lot of research on this but the biggest barriers to entry that I currently see are that I don't have the start up capital and no experience in running or even working in a cafe. Of course I can learn the practical side of things and hire experienced staff, but it is the financial side I am concerned about - who is going to back me financially if I don't have the experience? It's also a venture that would require a lot of start up capital and running capital in the beginning, especially if I would need to hire staff (I'll at the very minimum need a qualified/experienced barista) and likely need quit my current job.

One thought I have had is to start a coffee van - much lower startup cost, I could get a personal loan to set up the van and could speak to the council (who is very much aware of the need for such a business in this area) about where I could set one up.

The other barrier to entry is that I will be moving in approximately 1 year's time to a different state. I would have to either be able to sell the business or hire a manager for it by that time.

I guess that question I am asking is - is this a stupid idea? I know people say to think big, but is this too big for my current situation? Would I be wasting my time researching this venture if I'm not likely to get the startup capital.

I think the coffee van idea is possible, maybe I should start with investigating that first. That is also something that could possibly either move with me or be sold easily in a year's time. If I do the coffee van thing - there is the risk that a coffee shop could open in the shops at some stage creating competition where now there is none and I really would love to see a cafe opened up at the shops - I'd love to go with that option.

I'm off to do some research, but in the meantime, and ideas and/or feedback would be greatly appreciated.

Thanks :)
Joyce
 

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boydsmith

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Oct 7, 2018
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I have no info about your locality. But, I will attempt to add some value to this thread

Probably, there are no cafes there because there is no NEED for a cafe there

Here are some of the ideas with which you can start a cafe safely

1. Find an underutilized building in that area where there are no tenants. Contact the landlord and explain that you are setting up a cafe and tell that you can't give him any money and you will share profits with him. It is of value for him because it is not making any money sitting there without tenants. It helps if the landlord is enterprising.

2. Why don't you make a deal with a shopping centers in that vicinity where you put up a satellite shop inside or nearby their place of businesses and give them a share of profits? Hey, you get their traffic for free. Once you can prove that you can be profitable with this, why don't you do the same thing 100 times in different locations(SCALE)
 
OP
OP
C

Colisasota

New Contributor
Jan 12, 2019
3
3
13
I have no info about your locality. But, I will attempt to add some value to this thread

Probably, there are no cafes there because there is no NEED for a cafe there

Here are some of the ideas with which you can start a cafe safely

1. Find an underutilized building in that area where there are no tenants. Contact the landlord and explain that you are setting up a cafe and tell that you can't give him any money and you will share profits with him. It is of value for him because it is not making any money sitting there without tenants. It helps if the landlord is enterprising.

2. Why don't you make a deal with a shopping centers in that vicinity where you put up a satellite shop inside or nearby their place of businesses and give them a share of profits? Hey, you get their traffic for free. Once you can prove that you can be profitable with this, why don't you do the same thing 100 times in different locations(SCALE)
Thanks for your reply. I already had a location in mind, like I said in my previous post, there is a brand new shopping centre expected to be completed very soon (it has taken 4 years since the original development application for it to get to this stage!). As far as I am aware, the shopping centre only has one tenant so far (indian grocery and convenience store), there was also supposed to be a gym, but that has fallen through. This is a relatively new area with no supermarket or anything like a cafe etc. The community has been crying out for something like this for a long time and I'd really love to give it to them. Whether it's a cafe or some other business is irrelevant to me, I'm just trying to meet a need. A supermarket is also a big need for this community, but that would require even more capital.

My biggest concern at this stage (apart from capital) is time, I am moving away in about a year. Is that enough time to get a business like this established and running without me?

Ideas that I have thought of so far for fundraising capital are:
  • Crowdfunding - maybe I could offer paid memberships, where I offer a coffee a week for a year or a coffee a day for a year to people willing to invest in the business.
  • Joint venture - finding someone who is passionate and experienced about running a cafe that might help satisfy the requirements for a business loan and we can go into it together with me looking after the business side of things, marketing, accounts etc and them looking after the day to day operation of the cafe.
  • The idea of contacting the developer is a good one, but from what I have heard, he is a bit of an arsehole so not sure how successful that would be. Still worth looking into though
 

ProblemOd

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ever thought about a franchise? All the processes are already set for you. It maybe easier to get a loan for franchise than your own cafe. You can also get some partners who would be willing to work for equity.
 

MJ DeMarco

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emphasize.v1

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Nov 17, 2018
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Hello Joyce,

Considering the facts that you've provided us with, I'm pretty sure that you have much better alternatives. To get a loan in order to enter the unreliable business such as cafe doesn't strike me as a good idea. Have you put numbers into your analysis? I'm pretty sure that once you calculate costs in detail you'll have a better picture. Once you do that, you'll have an idea of revenue needed to make it sustainable.

Although I've never ran a cafe I'm pretty sure from mathematical point of view that you can't make it self-sufficient+making up for you lost paychecks(since you'll have to quit your job) in such a short period of time, especially since leasing the premises in a new area must be really expensive. Finding a loyal manager to run it for you without playing you is another big challenge.

What I'm trying to say is that it's a risky move and it's up to you to calculate that risk since you know all the details. I guarantee, once you put the numbers on paper, you'll know the answer.
 

Timmy C

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Domain experience is essential for opening a restaurant etc unless you have the right people in charge that you can trust.

I don't see you succeeding with no experience the odds would be so stacked against you it isnt funny, the restaurant game is very very hard VERY.

No Capital either it is a recipe for disaster.
 

minivanman

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I doubt any bank would loan you the money with no experience anyway but if they did, right now you have no capital and no experience, if someone did loan you the money here is what you would end up with in a year when you move, lots of debt and a bad experience.

Heck, a few years ago when everything was booming more than it is now, an experienced chef tried to get a loan for a restaurant and everywhere he turned they said no. No....no...no...no...no..... over and over and over. Great credit score, everything should have been good, except it was for a FOOD business. So, he found a gas station and asked for a loan on the gas station. 1st place he asked said.... HELL YEAH! So he remodeled the gas station and inside the gas station he put in a..... yes, you guessed it, a restaurant. It has become kind of famous in this area. Right before Christmas I saw where a car had ran off the road and in to one of the gas pumps. Now that he has been in business a few years he has proved himself and they have some big machines there taking out all the gas pumps now. lol I guess he will officially be JUST a restaurant once they remove the pumps. Moral of the story is, even if you have a proven track record at being a chef and great credit, banks still don't like loaning money to a restaurant.
 

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Yzn

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I don't recommend it.

These types of businesses require a lot of money and a lot of time. And if you don't have experience or manpower(which requires money), well...you're going to be super overwhelmed. It's not like a job you can quit, you'll need to suffer the consequences.

Why don't you start with something that doesn't need those as much?
 

Roli

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Hi, I'm new here and still reading The Millionaire Fastlane, but I see a need and am wondering if it is something worth pursuing.

I live in a fairly new area, there are a set of shops near completion which have been "in progress" since 2015. I am a member of a few different community discussion groups and for the past 2 years, there has been a lot of heated discussion about the lack of such services as a supermarket, cafe etc and an empty building.

So far there is only 1 planned tenant that I am aware of - an Indian grocery and convenience store. I know that the community are screaming out for something like a cafe and feel that they would support one.

Obviously I need to do a lot of research on this but the biggest barriers to entry that I currently see are that I don't have the start up capital and no experience in running or even working in a cafe. Of course I can learn the practical side of things and hire experienced staff, but it is the financial side I am concerned about - who is going to back me financially if I don't have the experience? It's also a venture that would require a lot of start up capital and running capital in the beginning, especially if I would need to hire staff (I'll at the very minimum need a qualified/experienced barista) and likely need quit my current job.

One thought I have had is to start a coffee van - much lower startup cost, I could get a personal loan to set up the van and could speak to the council (who is very much aware of the need for such a business in this area) about where I could set one up.

The other barrier to entry is that I will be moving in approximately 1 year's time to a different state. I would have to either be able to sell the business or hire a manager for it by that time.

I guess that question I am asking is - is this a stupid idea? I know people say to think big, but is this too big for my current situation? Would I be wasting my time researching this venture if I'm not likely to get the startup capital.

I think the coffee van idea is possible, maybe I should start with investigating that first. That is also something that could possibly either move with me or be sold easily in a year's time. If I do the coffee van thing - there is the risk that a coffee shop could open in the shops at some stage creating competition where now there is none and I really would love to see a cafe opened up at the shops - I'd love to go with that option.

I'm off to do some research, but in the meantime, and ideas and/or feedback would be greatly appreciated.

Thanks :)
Joyce
My biggest concern (and clearly the concern of the gym that fell through) is that it has taken four years, and is still not actually complete.

Also the fact that you're moving...

I like the coffee van idea, those things are getting really popular over here (London, England) and can be taken anywhere, parks, busy office complexes, and of course your new home.

Perhaps just see this as you refining your 'value-seeking' skills. It is natural to want to jump straight into something after reading TMF, take your time, keep saving, and keep looking for value.
 

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