Sean Scott owns Subculture Coffee, with locations in West Palm Beach and Delray Beach in Florida. When Sean and I spoke for our podcast we talked about about everything from the trust and relationships formed between coffee buyers and the farmers they source their beans from, to the risks of bad weather harming coffee bean crops, to the trial and error of the craft of roasting great coffee, to issues that are relevant whether you are starting a coffee shop or any type of restaurant. Here’s a great example…
What are some of the things you learned when starting that you hadn’t thought of before you got started?
I think a lot of people, me included, underestimate just the liquid cash you should have accessible when you start. You think, “Alright, so I have the build-out paid for” and you tend to spend everything before you open. You think, “Well, we’ll make money once we’re open.” I think that’s a bad move. If I had to do it all over again, I’d have more money in the bank just because you’re going to have to do a lot of promo. You’re going to waste a lot of products. You aren’t going to make as much money as you thought you were, because things might happen slower, things break, etc. Usually opening is delayed a lot longer than you thought. There’s way more permits that you have to pay for than you had anticipated. There’s way more licenses that are a hundred-and-fifty bucks here, a few-hundred-fifty bucks there. A lot of people just focus on paying for the build-out, but they don’t really pad their account. I understand because a lot of people don’t have access to the capital to cover all that. But I think it’s really important. That can make or break it, especially in the first year.
How much capital should you have?
I would say six months is good for us. I would also advise that if your personal finances are a mess, you probably shouldn’t go into business. A really good litmus test is when I’m talking to people who are considering this, I ask “How are your personal finances?” Not the specifics, but if you have a hard time managing your personal finances, and if you can’t figure out ways how to save money then business might not be the place for you. You have to be able to do that. We price out per cup of coffee, lids, cups, coffee, milk, sugar – I know exactly where everything’s going. The same thing applies in your personal life. If you don’t know where everything’s going, then there are going to be a lot of holes in your boat – maybe losing a lot of money. I was always very conscious about accessing my own checking account when I was twelve and had to start buying my own clothes and all that stuff at a very young age. Accounting has always been something that I’ve had a focus on and been aware of. It’s almost natural. But I found that for a lot of people – like my wife – it wasn’t like that at all.
We moved in with my brother before we opened the first coffee shop and we just shared rent with him. We had one car instead of two cars. We minimized our lifestyle before we opened the shop. Don’t expect to maintain your same lifestyle. Minimize it on purpose so that you require the least amount of money when you’re starting up. Then, expand it as you can afford to as you grow. I almost put more emphasis on your personal life before you open than I do on your vision of the business, because there’s a definite correlation to how you run both and the ability that you’ll have to navigate rough waters and make it through and survive.
No matter how diligently you plan, and how conservative you think you are, it will still take longer and cost more…
Absolutely. For sure. I think that’s without a doubt. In my six years of doing this there’s never been a time where I’m like, “Oh, that was faster.”
Sean shared plenty of additional great advice during his interview, so give it a listen if you enjoyed this piece. You can subscribe to our podcast series on iTunes for free.