Starting your own coffee shop – a comprehensive guide

How to start a coffee shop step-by-step

To get you started, we've created a quick step-by-step guide to setting up your own coffee shop. Read on for more details on each step.

• 1. Find your niche. It’s easy to think that you can’t compete with the big players in coffee – but, as specialist independent coffee shops have shown, by finding a great niche and filling it expertly, you can find success.
• 2. Find a location. Location is key. You’ll want to think about footfall, competition, and other businesses in the area.
• 3. Find suppliers. A great coffee shop relies on great quality produce. Building a solid supply chain is a key priority.
• 4. Build the right team. It's hard to run a coffee shop by yourself. You’ll need to know where to find good staff, and how to stay on the right side of the law.
• 5. Get the legal side sorted. You should get registered with HMRC and get insured before you start trading – if you fail to do so, you could be in for a shock.
• 6. Market your coffee shop. You can have the best coffee in the business, but you need people to know about it. Learn how to market your coffee shop.
• 7. Encourage repeat business. Finally, once you have customers, you want them to keep coming back. Think about ways to encourage repeat custom.

1. Find your niche

Finding your niche is important for a market as crowded as coffee.

Depending on where you are in the country, it could simply be that your niche is that you are the only specialist coffee shop in the area. However, in busier areas, you’ll need to differentiate yourself: for example, do you specialise in V60 and Aeropress? Or, like Black Sheep, do you use a specific kind of bean?

It'll take some research, but finding a unique take on coffe ahtat you - and your potential customers - are excited about is the first step to building a thriving business.

2. Find a location

Location, location, location – it’s a crucial consideration for consumer businesses with premises.

You’ll want to look for somewhere with a good amount of passing traffic, close to other businesses and amenities. If your search area is broad, you should also think about the locations in which you’re most likely to be able to secure the best staff.

Finally, you need to think about budget – and don’t forget business rates.

3. Find suppliers

A great coffee shop needs great produce. You’ll need to pick your suppliers carefully, and you’ll need to look after those relationships carefully.

Remember that your choice of supplier might also be connected to your specialism – for example, if you choose a specific type of bean, you’ll need to find the best supplier in that category. You’ll also need to think about things like credit and payment terms, which will be especially important in the early months as you are building up custom

4. Build the right team

Staffing is crucial. You’ll need specialist baristas and potentially front of house staff.

Coffee is now such a big business that there are several specialist barista recruitment agencies, but you should make sure that you understand the costs of using recruitment agencies.

For more, read our interactive guide to hiring your first employee and, if relevant, how to hire temporary employees, which can be particularly useful during busy seasonal periods.

5. Get the legal side sorted

There are some key steps you need to take immediately in order to be on the right side of the law. You’ll need to choose a legal structure, and register with HMRC. After that, you’ll need to pay corporation tax, and you may need to register for VAT.

You’ll also need to think about insurance. Simply Business offers specialist coffee shop insurance, which includes covers such as public liability and employers’ liability insurance.

6. Market your coffee shop

Once you’re set up, you need customers! Marketing your coffee shop is one of your most important priorities in order to make sure people start coming through your door.

Your marketing efforts will likely be split across multiple channels, both online and offline. This could be as simple as a great A-board outside, or as advanced as a complete Google My Business strategy.

It’s also useful to learn what not to do, so check out our 7 common small business marketing mistakes.

7. Encourage repeat business

Now that you have customers, you need to encourage them to keep coming back. Repeat custom is the most valuable kind, and you should take all the steps you can to make sure you build it.

Many coffee shops operate loyalty schemes, or you might also investigate ‘local currency’, depending on where you’re based.