No.04: Learning How to Budget & Finance a Coffee Shop
Finances is the most daunting thing, for us, in starting a coffee shop. I think it's something that stops a lot of people from opening a business but just like everything else, we buckled up and jumped right in to figuring it out.
From a Bank:
- Small Business Loan
- Credit Cards
- Equipment Loan
- Acquisition Loan
- Commercial Real Estate Loan
- Construction Loan
- Secured Line of Credit
- Crowdsourcing (we use GiveButter)
- Personal Savings
There are a lot of options when it comes to financing a coffee shop but the tricky things is securing them.
From my research, it seems a Small Business loan is the best when it comes to repayments, however it's hard to get approved. You need to have experience in running a coffee shop so if this is your first location then you're out of luck here.
The other loans are usually larger but you need to have great personal finances or a large down payment to get approved. This means your credit score has to be over 650 and your credit card utilization has to be under 30%. Lastly, your debt-to-income ratio has to be good.
Unfortunately for us, I lost my job when I got pregnant last year and having a baby and a new mortgage that we can't pay on one salary forced us to use credit cards. With some freelance marketing consulting gigs, I'm starting to make money again but we have a long way to go to catchup. So for us, our best bet is applying for grants and crowdfunding in order to get a large enough downpayment to start.
I also think getting a good investor who sees our vision would be beneficial for everyone. If we had an investor, we can go for the big plan which would definitely pay off for them in the long run. We plan on having a mini shopping center with the coffee shop in the middle and leasing out 6 other small shops. The lease alone on those 6 shops should cover costs and get a return quickly. Here's our inspo:
If you want to support our dream, you can donate on our main coffee shop page.
Organizing & Budgeting
While there are many ways to organize finances, I found the easiest is using Notion. Notion is where we organize our whole business! It's such a powerful tool. The best way I can describe it is it's a combination of a project management tool (like Asana or Trello) and Google Drive (storing and organizing files).
Here's a snapshot of our dashboard for our business:
And here's a snapshot of our Coffee Shop Dashboard:
Each of those rows has the ability to take notes within them so it's almost like a folder within each task.
I show you how to create your own budget database using in the video. It's pretty simple once you get the hang of it.
If you ever have questions you can email me at hello@rejoiceanddogood but there are a LOT of free youtube videos that walk you through using it in many ways.
Lastly, here's the link to the course I started taking this week: Coffee Business. This course outlines some example numbers that can be super useful to start with.