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<\/span><\/p>\nHave you ever wanted to launch your own coffee business but didn\u2019t know quite where or how to seek funding? While this perennial question can present major challenges to all aspiring business owners, there are myriad methods to choose from\u2014or mix and match\u2014to get the launch money you need, each bringing with it a unique set of pros and cons. In this piece, I\u2019ll outline some first steps to apply to your business before you pursue funding, then explore a handful of the countless pathways to acquiring the funds you need to bring your vision to life.<\/span><\/p>\n 1. Create a Business Plan<\/strong><\/p>\n Before pursuing any kind of funding, you\u2019ll need to make a <\/span>formal business plan<\/span><\/a>. This step is especially critical for obtaining bank loans, but also important for crystallizing focus and gauging needs and costs no matter your funding strategy. <\/span><\/p>\n Puerto Rico-based <\/span>Caf\u00e9 Comuni\u00f3n<\/span><\/a> co-founder<\/span> \u00c1bner Rold\u00e1n studied business administration before getting into coffee and opening his own cafe; even so, he still felt intimidated by the process of crafting a business plan. Rold\u00e1n used the online platform <\/span>liveplan.com<\/span><\/a> to help him with focus and format. \u201cThey have templates that you can use, and they give you examples for every part of the plan to help you to write out your idea. When I first sat down to write out my business plan I got stuck, but once I started using this website I did it in no time.\u201d <\/span><\/p>\n Coffee veteran Anne Nylander has previously launched <\/span>two consulting services<\/span><\/a> and is currently in the process of opening her own cafe. She recommends that people drafting business plans be as detailed as possible. \u201cIf you\u2019re thinking about starting a business, get as much as you can on paper,\u201d says Nylander. \u201cAnd don\u2019t be surprised when people expect you to provide more details than you\u2019d ever imagined. The process can take a very long time, so if you want to do it, start now and chip away at it.\u201d<\/span><\/p>\n 2. Build Your Following<\/strong><\/p>\n Another thing many business founders I spoke with recommended is developing clientele and\/or gauging interest before investing large sums of money in your business. \u201cBuild your audience first. Do pop-ups on loaner gear, tastings, whatever,\u201d says Kalle Freese, founder of the now-closed <\/span>Freese Coffee Co<\/span><\/a>. \u201cThis way, you can be sure you\u2019re making something people actually want. \u2018Build it and they will come\u2019 is not a good move 99% of the time.\u201d<\/span><\/p>\n Many of the founders I spoke to raised funds multiple ways, so don\u2019t be afraid to mix and match funding methods\u2014they each provide their own benefits and challenges.<\/span><\/p>\n Method One: Small Business Loans<\/em><\/p>\n One of the most popular tools for funding a new business are <\/span>SBAs<\/span><\/a>, or small business loans granted by the U.S. Small Business Administration. There are different types of SBA loans and all of them offer many benefits over conventional business loans, but they also require more paperwork.<\/span><\/p>\n Equipped with a thorough business plan, Rold\u00e1n applied for an SBA loan in May 2016. \u201cAfter a lot of paperwork, quotes, calls, and stress, my loan was approved on September 2016,\u201d he said. He thought that meant he would receive his money the next day, but instead, he had to go through what\u2019s called the closing process. \u201cIt meant that I needed to submit a lot of more paperwork. The closing process was done on December 2016, and we started to get checks to start the construction work on January 2017.\u201d Although Rold\u00e0n\u2019s experience shows one timeline, the multi-stage <\/span>process<\/span><\/a> can move faster in other cases.<\/span><\/p>\n \u201cIt took a lot of time and stress but it was worth it,\u201d Rold\u00e1n said. \u201cYou need to be very prepared with your concept, plan, numbers, and business idea and ready to answer extensive questions.\u201d<\/span><\/p>\n While SBA loans offer freedom from investors, a major pro listed by Rold\u00e1n, it can be <\/span>challenging<\/span><\/a> for certain entrepreneurs to get them. Factors like credit score and ability to put down collateral can make it difficult to get approved, especially for people from marginalized groups.<\/span><\/p>\n Method Two: Crowdfunding<\/em><\/p>\n Crowdfunding is a popular and versatile option for many first-time founders. There are <\/span>many different crowdfunding platforms<\/span><\/a> specifically geared toward launching businesses and products, each with its own pros and cons. Some, like Kickstarter, work through a single fundraiser for a one-time capital injection, and some, like Patreon, allow patrons to support monthly and provide consistent capital injections. In general, crowdfunding offers a way to obtain money without being accountable for recouping the investment of a bank or investor. <\/span><\/p>\n Crowdfunding is a great option for people who, for any number of reasons, have a hard time getting a traditional business loan or SBA loan. It\u2019s also a great way to build your audience and make sure the interest is there before you sink a lot of money into your business idea, and it offers the benefit of being able to fund specific parts of your venture, like an espresso machine, or the whole enchilada. <\/span><\/p>\n Luke Tomlinson, co-founder of <\/span>Grindsmith Coffee<\/span><\/a> in Manchester, used crowdfunding to launch his company. Having previously founded a coffee cart through a traditional bank loan, he met his current co-founder in 2013 and raised 10k in 30 days in order to get their space. On top of that, they raised another 10k through a government startup loan program in order to fund equipment. \u201c<\/span>Utilizing the Kickstarter platform allowed us to experience the ups and downs of fundraising without becoming a debt-heavy business so early on,\u201d said Tomlinson. \u201cIt helped us appreciate the value that people are willing to invest into your brand and idea. If we\u2019d failed to deliver a strong brand value, people wouldn\u2019t believe in our concept and wouldn\u2019t have backed it.\u201d <\/span><\/p>\n It\u2019s important to note that many crowdfunding platforms involve the fundraising party laying out a series of rewards for supporters, so make sure to think about what you\u2019ll be able to sustainably offer in return for support. Another constraint to keep in mind is your community\u2019s income: can your community offer the funds to make your fundraiser successful?<\/span><\/p>\n Method Three: Investors<\/em><\/p>\n Investors are another popular way to gain revenue for a business launch. There are different pathways to finding investors for your brand. <\/span><\/p>\n After their initial crowdfund and loan combo, Grindsmith went on to launch another shop, then a roastery and lab, via private equity fundraising. <\/span>\u201cIt\u2019s hardest with your first business: it\u2019s difficult to get funding for a business that isn\u2019t yet tangible,\u201d said Tomlinson. Just as with crowdfunding, he says that if investors can\u2019t get behind the idea, then maybe that\u2019s a good indicator that it isn\u2019t ready yet or isn\u2019t strong enough.<\/span><\/p>\n Freese went a very different route: using a family member as an investor. Only 17 when he launched Freese Coffee Co., he had already been working in coffee for four years. After holding a lot of pop-ups and events to establish an audience, he partnered with his father in order to be able to qualify for a bank loan, using his parents\u2019 apartment as collateral. \u201c<\/span>I was a little unsure about working with my dad as a business partner for the first time, but it worked out well,\u201d said Freese. \u201cIt was also scary taking a loan from the bank and being personally liable for it.\u201d He emphasized that personal compatibility is a must when partnering with a family member as an investor, and that, especially in the case of family, using a primary residence of you or a parent as collateral is not a sound idea (his parents used a former residence).<\/span><\/p>\n Another way to get investment money is from your social network. Alex Merrill founded <\/span>Hammerhand Coffee<\/span><\/a> with help from an <\/span>angel investor<\/span><\/a> he met through a mutual acquaintance. \u201cI had a business plan and was looking for funding and a location,\u201d says Merrill. \u201c[My investor] owned a building in a budding historic downtown area (among other investments he has downtown) and wanted to find someone to open a coffee shop. It was the perfect scenario for both of us.\u201d<\/span><\/p>\n Looking back, Merrill, who manages Hammerhand while not technically owning it, can\u2019t imagine funding the business any other way. After a series of unfortunate events wherein the building collapsed, they experienced major clerical errors around taxes, and construction eliminated parking and walkability for over eight months. They had to find another location, and it cost much more than intended. \u201cIf we had used a bank loan, we would have been belly-up in six months,\u201d said Merrill. \u201cIf my investor had been more eager to get his money back or run, we would have been out in the second six months, but he believed in me and in the brand. We\u2019ve finally leveled out and got ourselves in the black. We have become a staple of the community and that was [our] main goal: to create a space for people of his community to connect and converse over a product that is prepared with thought and care.\u201d While the plan was to move Merrill into a 20% ownership position over the first year, he is holding off in conjunction with his investor while the business earns back lost funds. <\/span><\/p>\n One major potential drawback of working with investors is that you lose sole control of your business. Investors may\u2014and likely will\u2014have their own opinions on the best use of their money. \u201cTechnically, my investor could come in and change everything I have built and I couldn\u2019t say no,\u201d said Merrill. \u201cEven if I owned 20%, he could out-vote me. This is a real and honest danger doing things this way. You must have a trusting relationship with your investor.\u201d<\/span><\/p>\n Eric Squires helped open <\/span>Three Crowns Coffee<\/span><\/a> in Warsaw, IN, although he\u2019s since parted ways with the business. Interested in starting a coffee company, he was approached by an angel investor through a mutual friend. The investor, who already owned a successful social club and wanted to build in a coffee shop, was a perfect fit for Squires. \u201cIt lined up with what I was hoping to do almost exactly. I had no capital to start a business and [my investor] Dave didn\u2019t have the coffee expertise. So Dave bankrolled the project and I ran the shop,\u201d he said.\u00a0<\/span><\/p>\n While the arrangement was a great way to bring a dream to life, Squires ended up leaving the business. <\/span>\u201cAt the end of the day, I didn\u2019t have complete control over how things were done and how money was spent,\u201d he said. \u201cWhile I had autonomy day to day, there were a number of things that eventually led to myself and Dave parting ways. His vision changed over time and some of the ideas I had were rebuffed. It\u2019s easy to forget that investors are simply trying to turn a profit and their priorities may not always line up with yours.\u201d However, he doesn\u2019t want his story to act as a cautionary tale. \u201cFor me, having an investor was good for a season, but if I could give anyone advice on it I\u2019d say know your non-negotiables and get everything in writing.\u201d<\/span><\/p>\n Savings<\/b><\/p>\n The last major funding option I encountered certainly isn\u2019t for everyone: opening your business out of savings, potentially while working another job. This option depends entirely on your personal situation: cost of living, debt, income needs, and more. However, it\u2019s worth mentioning because many are able to do it and find success. <\/span><\/p>\n Davis Sears is currently in the process of launching Welcome Coffee in Portland, OR, with co-founders <\/span>Sarah Ricks and Justin Boek<\/span>. The trio is launching solely on savings earned while working as baristas and servers, jobs in which they are still employed while gearing up for launch. Davis acknowledged that this funding method is far from universally accessible. \u201cWe\u2019re lucky. We live in a city that has two separate shared roasting spaces where you can rent time on a roaster, two of our owners are in double-income households, and there are three of us, which makes a huge difference. All of these factors are what enabled us to create a plan for growth, and make a timeline for when we\u2019re going to invest how much. But I do think it\u2019s important to note that it can be done.\u201d Sears emphasized that Welcome\u2019s approach revolves not around an expensive brand identity and buildout, but on creating relationships with guests and wholesale partners who view their mission as authentic and valuable to the community. <\/span><\/p>\n . . . . .<\/p>\n As you can see, there are many different ways to approach funding a first-time venture. The constants from method to method are that you as a founder need to know what you want to do, why you want to do it, and what parts of your vision you\u2019re willing to compromise. Once you know that, there\u2019s no shortage of ways to get your launch money and bring your vision to life.\u00a0<\/span><\/p>\n RJ\u00a0Joseph (@RJ_Sproseph<\/a>) is a Sprudge staff writer, publisher of\u00a0Queer Cup<\/a>, and coffee professional based in the Bay Area. Read more\u00a0RJ Joseph on Sprudge Media Network.<\/a><\/em><\/p>\n The post Funding Your Cafe Dreams<\/a> appeared first on Sprudge<\/a>.<\/p>\n
Have you ever wanted to launch your own coffee business but didn\u2019t know quite where or how to seek funding? While this perennial question can present major challenges to all…<\/p>\n","protected":false},"author":1,"featured_media":2396,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[158,160,162,164,166,168,170,172,174,176,178,180,154,182,184,186,188,156,190,192],"tags":[63,27,65,61,59,67,31],"_links":{"self":[{"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/posts\/2395"}],"collection":[{"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/comments?post=2395"}],"version-history":[{"count":0,"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/posts\/2395\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/media\/2396"}],"wp:attachment":[{"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/media?parent=2395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/categories?post=2395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thecurbkaimuki.com\/rest\/wp\/v2\/tags?post=2395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}First Steps For Everyone<\/b><\/h3>\n
Getting The Money (And there\u2019s no one right way)<\/strong><\/h3>\n
\nSource: Coffee News<\/body><\/html><\/p>\n","protected":false},"excerpt":{"rendered":"