Simple Business Plan

So, let’s keep the cost down and our business plan simple. To do this, we will assume, in this scenario, that your coffee shop simple business plan will feature a “coffee cart” from which you will sell gourmet coffee to people on the street.

The kind of coffee cart we are talking about here is the self-contained gourmet coffee & espresso mobile Kiosk (cart) we all see in airport concourses and on street locations in many cities. They are either on wheels so they can be moved to storage at night, or they are in the form of a Kiosk that can be covered at night. For the purpose here, I am referring to them as "coffee carts."

In developing our simple business plan for our coffee cart business we will start by breaking the planning process down into two distinct phases—pre-venture planning, and startup planning, as follows:

Personally, I like to use a 3-ring binder with sheet dividers set up for the following major categories:

Business Concept

Do you “own” this startup idea? And if your passion is not greater now than it was when you started thinking about it, you might want to reconsider what you’re about to do. This exercise applies to whatever business you want to start up.

If you’re ready to go, the next step in your simple business plan is to visit your city Planning, or Business Permit, department to see what the restrictions are regarding coffee carts and where you can put one. You don’t want to spend time on planning your business only to be told that you aren’t allowed to do that within your city. For the purpose of this report, we’ll assume you can have a coffee cart anywhere in the city—with the proper license and permit, of course.

All the passion in the world won’t help you if there are no customers to buy your coffee. So obviously, location is the most important aspect of this particular simple business plan. I would suggest that you pick out a few likely locations for your cart, and physically spend time at these locations looking for the following:

• Is there heavy pedestrian traffic of people on their way to work (count them)?


• How many of them are carrying cups of coffee?


• What are the names on the coffee cups (where did the coffee come from)?


• How close would your competition be?


• If there are large office buildings in the area, would one of their lobbies be a good place for a coffee cart?


• Would the building’s management allow a coffee cart in the lobby? Ask them!

After you have done your observations and investigation, and written down all your findings, you need to determine whether you do indeed have a strong potential market. Then, you need to write down your first and second choices for location. Now you are on your way to building your simple business plan.

Advertising/PR

So, you think it would be a good idea to run specials on certain days (especially the slow days) and during holidays. You might print up small flyers pushing these specials, with coupons on the flyers for discounts on certain coffee drinks, or the like.

Let your mind create all kinds of ideas for promoting your new coffee business…just be sure to write them down as part of your simple business plan.

Equipment

Start by making a list of all the items you think you will need, and then put estimated costs beside them. Keep adding to this list, and update the costs as you get more information. Keep updating your simple business plan, even if it is just adding more cocktail napkins.

A word of caution here—do not include any items that are just “nice-to-have” things. For a small startup like this you want to think in terms of “essential” items only. Maybe you can add some of the others after you become profitable. For our purpose here, we will assume you will buy used equipment and have it refurbished.

Keep this list as part of your simple business plan, and update it often as you find better prices on better equipment.

Operations

You may have to pay rent, depending on where you locate. Now would be a good time to start writing down all the potential costs you can think of, and also write down what you think those costs might be.

One thing you might consider, is finding someone in another part of town that has a coffee cart business, and simply ask them questions about what it takes to operate their business. If you make a business colleague out of them, you can likely even ask about costs of running their business. It’s worth a try. And be sure to write down in your ever-evolving simple business plan, everything you learn as you go along.

Administration

• Projected wages for self. I would suggest that, to begin with, or at least shortly after starting, you plan to pay yourself the minimum amount of money you need to live on. Any short fall in revenue for this amount would be made up from your “startup” cash.


• Insurance costs. You will want to consult with an insurance agent to determine the minimum coverage you will need (especially liability insurance), along with the projected cost.


• Licenses and permits. When you investigated the requirements for your business license and permits, you undoubtedly found out the costs—write these down on your list.


• Interest. If you have to personally borrow money to get your business started, you will have to pay interest. This is where you would estimate that cost item.

Now that you have a pretty complete set of notes in your simple business plan, it is time to pull all of your information together and see how much money you need to plan on having available for your startup.

For an example, I have prepared a simulated list (in pdf format) of Projected Startup Costs... download here, based on what we have talked about so far for our coffee cart business. You can use this format to make your own projected startup costs for whatever business you want to start.

When you prepare your own list of projected startup costs, you simply plug in your own line item descriptions and estimated cost for each, in basically the same way as this example. You will then know how much money you will need before you start up your business.

Too many new entrepreneurs try to start their business without going through this process—and then wonder why they ran out of money before they actually got a good start.

Now that you have determined the viability of your business idea, and also what your approximate startup costs will be, we will assume that you will finance your business from a combination of savings and other sources of money you have personally e.g., credit cards. So, now you need to start planning how and when you will actually start your business.

Register Your Business

Use the Internet to check the U.S. Patent and Trademark Office to see if your preferred business name is already taken. Check with your County Clerk's Office, and your Secretary of State for current businesses that may already be using your desired business name. It would be a good idea to visit your local library and ask the Librarian for any other sources of information regarding business names. Of course, you can check out available domain names any time on the Internet.

This sounds like a lot of trouble for a not very important step, but I recommend you record all this research in your simple business plan file or binder. If you are ever made to change your business name after you have been operating for a while, you will quickly wish you had done your homework at the beginning.

Then when you are satisfied with your chosen business name, and assuming you will start as a Sole Proprietorship, you need to register that name as a fictitious, or DBA (doing business as) name. Depending on where you live this can be done at the county or state level, but it is not expensive, nor difficult.

Since you are going to operate as a sole proprietorship, you will likely use your Social Security number as your Tax ID number, but I strongly encourage you to get a federal Employers Identification Number (EIN). It is simple to get and more places are requiring it.

In most states you will also need to collect, and pay, sales tax on some or all of what you sell. Some states require you to have a "Sellers Permit" to collect sales tax. Be sure to check this carefully for your area, because you do not want to anger the "tax man."

As soon as you have your business name registered, it would be appropriate to open your business bank account. You will soon need to start writing checks, and banks will usually want proof of your business before they open an account for that business.

It is obvious that you are now beginning to spend a little money, so you will want to set up your simple bookkeeping system as soon as you spend your first dollar.

This may seem like a lot of things to keep track of, but if everything is included in your simple business plan ("planning" file or notebook), they are easy to schedule and track.

Bookkeeping

For expenses, simply record the date of your expense, the check number, who the check was written to, and record the amount in the expense column. You need to do the same for credit card expenses. You should have so few suppliers, that you shouldn’t even need a separate column for what the expense was for—but you may if you wish.

Money received is simply added up for the day and the total recorded in the Revenue column for that day. If you choose to separate coffee sales from other sales items, you may record that separately.

To determine if your business is following your simple business plan, simply add up the two columns for the week, or month, or year, and the difference between the two columns will show you how much profit you made. You can then compare these numbers with the ones you wrote down during your planning. At this point, you may want to modify your "plans" (or not) to reflect your experience to date. Remember, plans become outdated, but "planning" never stops.

Then, at tax time, when you, or your tax person, start to fill out your Schedule C on your 1040 Tax Return, all you have to do is go down the list of expenses and pick off the line items you need for each category of cost. Of course, you will also have to calculate depreciation of your coffee cart and any other equipment you buy—but only when filing your annual tax return.

I would also suggest you file all your receipts in a shoebox, or similar container, by date…this will match your records on the simple sheet of columns in the event you, or your tax person, have a question about a specific expense.

For more complex accounting issues, go to the Small Business Accounting section to read the reports presented in that section.

Startup Schedule and Checklist

Preparing a schedule and checklist is the best way to see all the things you need to do before startup or launch day. And when you write them down, you will be surprised that there are fewer than you “felt” there were when they were just rattling around in your head.

Your checklist can look however you want for your particular business, but the important thing is to write down ALL of your action items needed, and check them off as they are completed.

You can use a format similar to the sample I just set up in pdf format for our coffee cart business…just write in your action items and put a date in front of them, or use that line to check off the items as they are completed. You can access a copy of this sample Coffee Cart Startup Schedule....download here. This sample startup planning template can be used for any business, just modify the action item descriptions to suit your own business.

If you have a partner involved in your business, you should read the report Strategic Planning For Business next. It would also be good to read this report because you will likely have "partners" of some form in the future.

If you will not have a partner initially, but you will require financial help from family and friends (but not professional investors), I recommend you proceed to the report titled Business Plans For Small Business.

Actually, it would be good if you would read all the reports on planning, and pick out what level of business plan would best suit your new business.

Good luck on developing your simple business plan for your first business startup!