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taught_me_patience

(5,477 posts)

70. Honestly, it hasn't been the best financial decision of my life

Mon Oct 28, 2013, 01:03 AM

Oct 2013

Sales have ramped up slower than I thought and costs have been higher than I thought. There are some major issues that make the coffee shop business a tough one. One is high product cost and wastage. My overall gross margins have hovered around 55 to 60% and coffee margins have been around 65% (coffee 75% of sales). I figured coffee margins would be closer to 70%. Another problem is that labor cost is extremely high. Figure that two workers become stressed at gross sales of $100-$120/hr... those two workers cost $30/hr after tax and workers comp... then labor will be a minimum of 30% of gross and can run much higher than that. Figure in rent and other costs, and it doesn't leave much net profit margin. Very high volume is required to make any money. on top of that, I'm constantly running around and putting out fires. My head barista couldn't come in today, so I had to work behind the bar for 12 hours. Before work, I had to run to Ralphs to pick up half and half because our distributor didn't deliver last week. Little things like that are pretty annoying.

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I'm trying to start a business. I have no equity I can call my own except for a financed car. [View all] Buddha_of_Wisdom Oct 2013 OP

You have, uh, studied the need for this in your area? leftstreet Oct 2013 #1

Yep. I have. Buddha_of_Wisdom Oct 2013 #5

Good luck with your plan SoCalDem Oct 2013 #2

You need a convincing business plan. nt bemildred Oct 2013 #3

I have a solid business plan Buddha_of_Wisdom Oct 2013 #7

It doesn't sound as though the people you want to raise money from think so. bemildred Oct 2013 #30

If a car is your only equity source, it's very unlikely MineralMan Oct 2013 #4

Neither have the people who have started the frozen yogurt places.. Buddha_of_Wisdom Oct 2013 #12

OK. Create a strong business plan and see what happens. MineralMan Oct 2013 #15

I think it was Mitt Romney who said, "Go to your parents for money." nt valerief Oct 2013 #6

That is part of the reason I'm trying to do this. Buddha_of_Wisdom Oct 2013 #8

Might be easier to expand the ISP business Paulie Oct 2013 #17

Your father sounds successful. Trust his judgment. If he won't co-sign, rethink your model. Hosnon Oct 2013 #24

My dad has run several successful business.... Buddha_of_Wisdom Oct 2013 #32

It sounds like you and your father have many good relationships through your business. Left2Tackle Oct 2013 #54

When you make your pitch, bring plenty of your yogurt... Eleanors38 Oct 2013 #9

The product is from Oregon.... Buddha_of_Wisdom Oct 2013 #13

Join SBA Katashi_itto Oct 2013 #10

+1 n/t Gormy Cuss Oct 2013 #25

Great idea Shankapotomus Oct 2013 #11

You need to work and raise the capital Paulie Oct 2013 #14

Yup. Here in the Twin Cities in MN, frozen yogurt places MineralMan Oct 2013 #16

I've noticed that several here in DC... Chan790 Oct 2013 #28

Here in Colorado, we have a pretty mild climate Buddha_of_Wisdom Oct 2013 #33

What you need is a job. LuvLoogie Oct 2013 #18

Hmmm greytdemocrat Oct 2013 #19

Brainstorming... Buddha_of_Wisdom Oct 2013 #34

You need a reality dump. nt greytdemocrat Oct 2013 #53

Some people just love to tear down other people's ideas. Quantess Oct 2013 #66

You're going to have to start smaller. Look for one of these. JVS Oct 2013 #20

Bicyle Ice Cream sales seem to be surprisingly big Fumesucker Oct 2013 #47

MIT and Boston College School of Business have websites Raven Oct 2013 #21

For the most part, ignore any advice from DUers (and the internet). Hosnon Oct 2013 #22

+1 graywarrior Oct 2013 #23

I have contacted the person I need to talk to at Small Business Development Council Buddha_of_Wisdom Oct 2013 #35

If somebody is going to put up all the capital they'll want a hell of a lot more than that Yo_Mama Oct 2013 #42

for 600k i would want more than 49%, i would be taking all the risk loli phabay Oct 2013 #45

... and SCORE. lumberjack_jeff Oct 2013 #48

Get a part-time job in a yogurt store first dem in texas Oct 2013 #26

Why do you have to start so BIG? Th1onein Oct 2013 #27

Food carts are the rage. Many businesses begin from them. grasswire Oct 2013 #29

Having raised that kind of capital to start a business I can tell you that grantcart Oct 2013 #31

Exactly. nt Demo_Chris Oct 2013 #37

Entirely true Yo_Mama Oct 2013 #46

+100 mahina Oct 2013 #51

You need a detailed business plan. DETAILED.... Demo_Chris Oct 2013 #36

Follow the business plan of sriracha sauce success story vinny9698 Oct 2013 #38

I comes down to this... Demo_Chris Oct 2013 #39

Message auto-removed Name removed Oct 2013 #40

Don't listen to them my friend. skippy66 Oct 2013 #41

ROFLOL! mrsadm Oct 2013 #44

My advice - start smaller. tammywammy Oct 2013 #43

Hey, I need $500,000 too.... panader0 Oct 2013 #49

Go with something you already know, even more importantly something you already have contacts in Fumesucker Oct 2013 #50

Contact your local chapter of SCORE sarisataka Oct 2013 #52

First do you have any experience in the retail business whistler162 Oct 2013 #55

That's not equity, that's a depreciating asset that's probably not worth what you owe on it. Spider Jerusalem Oct 2013 #56

i would suggest working at a few of the places which are similar to what you want to open JI7 Oct 2013 #57

If this is a serious post, I can give you advice taught_me_patience Oct 2013 #58

I am interested. Buddha_of_Wisdom Oct 2013 #59

If you'd like me to read it, PM me and I'll give you my email taught_me_patience Oct 2013 #60

Out of curiosity, how's the coffee shop going? Pretzel_Warrior Oct 2013 #63

Honestly, it hasn't been the best financial decision of my life taught_me_patience Oct 2013 #70

Sounds like a hard sell. A saturated market for sure Pretzel_Warrior Oct 2013 #61

I just might have to head that direction Buddha_of_Wisdom Oct 2013 #62

Better check with your father first. Nine Oct 2013 #64

Exactly. I can't decide if it's youthful exuberance and ignorance, Egalitarian Thug Oct 2013 #68

People interested in investing that much in a franchise business, invest in a franchise. Egalitarian Thug Oct 2013 #65

that amount seems kind of high for a yogurt place JI7 Oct 2013 #67

Here's how to start a business with little money. Monk06 Oct 2013 #69