Okay we have a great location picked: only drive thru one a major commuter road w/ space for a small retail shop inside. I have a great supplier who works with other small coffee shops in the state. I have the plans laid out and everyone thinks its great idea.

But for renovations/supplies/ect its coming out 300k. Is that a horrible idea?

I have reached out to local agencies and haven’t found grants and I don’t feel comfortable asking family.

I’m torn between you only live once/this is my dream and omg I want to throw up.

  • Asleep_Onion@alien.topBEnglish
    1·
    1 year ago

    $300k is a crazy huge amount of money for setting up a coffee shop.

    I would suggest finding a way to keep it under $100k, and then if the business is successful then you can dump more into it at that point.

    The problem is that coffee shops don’t usually make a ton of money, and you’re still going to have normal overhead to deal with (lease, payroll, insurance, etc) while you’re paying off this massive loan. With that kind of debt it could take over a decade before you’re finally paid off and can take some profit for yourself, and by then it might already be time to renovate again.

    Try to break down exactly how much profit you’ll make from each cup of coffee, and how many you hope to sell each day, then use that to determine how long it would take to repay the debt. As an overly-simplified example example:

    • $5 per cup of coffee, -$1 cost of ingredients + materials (cups, etc), -$1 business overhead
    • $3 profit per cup of coffee
    • 100 cups of coffee per day = $300 profit per day
    • Assume you need to pay yourself $200/day to survive, leaving $100/day remaining.
    • Loan is $300k, assume total cost of loan is $450k after interest.
    • $450k / $100 = 4,500 days (12.3 years) until loan is paid off

    I’m not trying to scare you away from starting this cafe, I just want you to be realistic about how much money you borrow in the beginning and how long it’s going to take to pay it back.

    I would highly recommend you sit down and list out what all these costs actually are, that are amounting to $300k, and start trimming out things you don’t absolutely need, or finding cheaper options. As an example, do you really need $5,000 tables, or could you get by with some $250 tables for a few years? Do you need original oil paintings hanging on the walls right away, or could you just use some cheaper prints for a while? And so on.