Pros and Cons of owning your own cafe/restaurant

The self-employment subject emerged whilst chatting with a chef friend this morning. This friend has been in the industry for over 20 years and is very accomplished. Yet he debated fiercely about the negatives of being self-employed and shared with me why he had no desire to own a restaurant of his own. Later in the day I asked Mumma and Pappa Schmidt the same question, who proceeded to inundate me with the many positives of working for yourself. Their responses were passionate and compelling but then again so were Cheffy's.


THE UP-SIDES

i named this one Pokabuzz - everyone laughed at the time

• The number 1 persuasive point to working for yourself is exactly that. You are working for yourself. No Mr Boss man breathing down your neck, telling you how to dress, tapping their watch as you walk in the door 2 minutes late. "Stop bringing stray dogs into the office and dressing them up like Pokemon characters". Uuuuurgh - fist shake to the sky, do I have any freedom!! Yes, you can, bee self-employed. Then you only have to answer to yourself and of course to the needs of your customers.
• Owning your own cafe means you get to express all your creativeness and indulge those culinary desires you could previously only dream about. Mmmm lychee, raspberry brownies. This starts with the decor of your cafe, the logo, the name, the menu to decide upon. Basically everything, as I am finding out now it is so exciting creating a place from the ground up, Palomino Espresso can be everything I've ever wanted in a cafe.
• The opportunity to meet lots of lovely, interesting people in the community. This is a real plus from the cafe trade. When a customer turns into a regular and you remember their orders, know where they like to sit and in the long run get to know them. I've met quite a few friends this way over the years.
• If your coffee shop is successful, the financial incentives should be worth it. You have direct influence over your monetary success or failure.
• Despite the point above, one of Pappa Schmidts first comments was that you get to work from your heart and not just for the money. It's a happy life when you are doing something you enjoy with passion.
• An added bonus of having your own restaurant/cafe is that you never really pay for food. Yes you buy lots of stock for the business but then you end up eating breakfast and lunch there and you'll probably take some left overs home for dinner. Dollars saved.

AND THE DOWN-SIDES

• Owning a cafe isn't just another job. It's a totally different lifestyle. Prepare yourself for long hours, working on weekends and getting called in on the rare occasion you do get a day off. Bye bye social life. Ensure your partner realises the situation too!
• The financial risk. Generally, there's a lot of your money that could go down the drain. I have known people to lose their life savings in a failed cafe. Only ever borrow from the bank or invest an amount that you are prepared to lose. I decided on a number that if lost I know I can still come back from. 
• Unsteady income. In the first few weeks to months there won't be much money to put in your pocket at the end of the day. Re-investment, wages and cost of sales all have to be covered before you get your share. 
• The food industry is also very price sensitive, which means demand for your food and coffee will go up and down significantly as a result of price changes. This leaves owners with a very fine line to walk, with cost of goods and labor and making a profit. I hope to make the quality of the food, coffee and service stand out at Palomino Espresso therefore negating some of the price sensitivity.
• You never get to walk away from your own business. When things are get tough, you have to stick it out and try to turn the situation around. No clocking off at 5pm, that business is yours 24/7.
• Banks are often not too keen on the self-employed. It can be hard to secure loans in the beginning and don't even think about a new mortgage. In due course, however, these fickle creatures will soon turn around once you have an established successful business. But initially you will probably already need to own your own home or have some other assets to go guarantor on any loans.
• The last point I can think of isn't really a negative to owning a cafe but its something that makes life harder. Many would be cafe entrepreneurs don't realise the number of skills you have to have up your sleeve. At any one time you should be ready and able to perform as barista, chef or waitress. If you can't perform all of these jobs in your cafe it could make life very hard for you. What if someone calls in sick? What if you suddenly get slammed for take away coffees and have to help on the machine? Experience in all these positions is necessary as well as being a good manager.

this little guy was such a pro - Pikachomp

Look, its obvious there are going to be good and bad sides to any job in life. I must think the advantages outweigh the risks or I wouldn't be following through with my initial dreams. I believe if you really want/need to make it work and are willing to give the business everything you've got then you'll get your rewards. Most of the negatives mentioned above are issues that will surface at the beginning of the business. Give it time, establish processes and cafe life will soon become straightforward and pleasant. I can't wait to open up my little place  and I'm prepared for whatever it takes to ensure Palomino Espresso is a joy to visit and work in. 

To roast or not to roast, that is the question

Commercial roasting, in my eyes is nothing less than an art form. Not only does it takes years of experience and palette refinement to master this tricky trade but the job itself is full time. Aside from the actual roasting process which is lengthy and painstaking, being an excellent coffee roaster involves sourcing the finest quality beans you can find, often involving lots of travel to far flung areas of the globe. It's not something to take on lightly. Substantial time, money and personal investment is necessary to get it right.

Time, money and personal investment are resources I have dedicated to the set-up and management of Palomino Espresso. I cannot possibly hope to be the best coffee roaster out there. Sydney has some serious quality in the roasting market. Businesses that live and breathe the whole coffee roasting process and concentrate on nothing other than sourcing, roasting and delivering first class beans, and I want my coffee shop to use those first class beans.

I felt my business would be over-burdened, with roasting to add to the list of things to perfect. As i've said before Palomino Espresso is about the whole experience. Therefore my 'list' already includes yummy homemade food, friendly welcoming service, exceptional coffee made by skilled barista's and all in comfortable, aesthetic setting.

Palomino Espresso will be a collaborative cafe whereby I source the best people, suppliers and ingredients in any given area. I want the best bakers to provide my bread, I want the freshest fruit and veg from the markets to use in my menu and I want only the finest most passionate roasters to supply Palomino Espresso with its beans.

Don't get me wrong, I'm not knocking the guys that do roast their beans in house. The likes of Mecca and Double Roasters consistently produce amazing coffee and I rate them both highly (see top 5 Sydney cafes). But for my coffee shop as a single owner and wanting an emphasis on food and service as well as coffee, sourcing the best of the already top quality roasters out there is the optimum approach to bring you a chief cuppa.

Thanks for reading my little speech on this subject. Next up is a full account of my day at Morgans Handcrafted Coffee and why they are my chosen roasters!

established business or blank space??

if you don't take risks, you'll never move forward.

Alrighty, I know many of you have been holding out all day for this. So as promised we now have the exciting topic of.......drumroll..... the pros and cons of buying into an established business as compared to moving into a blank space.

First off is taking over an existing business. With this you get the benefit of walking into a premises with all the equipment and general processes in place and therefore also the potential of making money from day dot. This means no taxing that precious brain of yours with issues like DA applications, logos, layout, plumbing and yada yada. The major downside of this approach is that it costs. Expect to pay a decent amount for goodwill (the intangible value of a business) as well as for the fixtures and fittings. Ensure you look at all the business financials to determine if you are paying the right price. The other bumma of an established cafe is that you will find it harder to stamp your own feel and aesthetics into the place which a lot of the time is a big part of the excitement when opening a cafe/restaurant.

A slightly cheaper alternative to the one above is to find a business that isn't doing so well. Sometimes you can pick up a bit of deal doing this, especially if the owner is looking to vacate or get out of the lease. You can then offer a nominal amount for the business - say $10k and you still get to walk into $30-40k worth of equipment. Obviously try to understand why the previous business flopped. Can you make it a success or is the place doomed to failure.

Lastly, theres the option of moving into a blank space. You have the freedom to design and the fit out the shop as you please and yes you get all the headaches of dealing with the council, electricians and carpenters that go along with it. Designing your own cafe from scratch can be hugely exciting, attempt to not get caught up in the euphoria of your shiny new bank loan and the many ways to spend it. Before you can say 'david copperfield' you're over budget and only half way through the fit out process, doh! Do get plenty of quotes/timeframes from contractors and triple check your calculations. Include time spent working on the business with no income rolling in. If you decide to go this route, negotiating a rent free period with the landlord is a must - approvals from the council can take months to process.

Personally, I have lots of ideas for how I want my cafe to operate and look like. Therefore I will be creating it from scratch but in a property that was previously a cup cake shop so it already has a decent fit out in terms of kitchen equipment and storage.

The couple of links below will help you out if you're thinking about this sort of stuff. There's an incredibly boring but easy to follow explanation of calculating goodwill and a link to the NSW Trade & Investment website which actually has a surprising amount of useful information for small business including legal compliance info. Happy reading!

Valuing a Business

NSW Gov - Business Locations

The finer points of commercial leasing

I can make a pretty coffee, but can I start-up my own business? Hurdle 1 in this process is finding the perfect premises. This is quite possibly the single most important step in the whole cafe process and as a result many would be cafe/restaurant owners bring out the 'too hard basket' and never make it past this stage.

I have seen first hand how the property you choose can make or break your business. Therefore I put some serious time and effort into seeking out my little place, looking on and off for nearly 18 months before committing myself. Luckily for you I have a fair amount of experience in commercial leasing. My family have collectively started 8 various hospitality businesses from scratch. So to save you a lot of blood, sweat and tears I have compiled the following list of points to remember when looking for a business premises:

• Does the area have the right demographics for your target market?
• Is there a good amount of foot traffic for passing trade?
• Are you after an established business or a blank space?
• What is the current DA (development approval) for? Don't just take their word for it, you have to see the paperwork!
• If there is not a current DA, is there landlord approval to run the space as a cafe?
• What is the term of the lease? For example how long will you be tied into the lease for.
• Check to see if there are any development plans for the property - you don't want to set the place up just for your landlord to turn round 6 months later and re-develop the area upstairs into a 24 hour brothel, (saying that this may attract some new colourful customers).
• Does the property have a grease trap or mechanical ventilation? If not, can this be installed and at who's expense? Some landlords may pay for this or at least contribute towards the cost.
• Does the asking rent include outgoings?
• What toilet facilities are available? There are certain council regulations relating to this depending on the capacity of your property.
• What incentives are on offer? Remember there is always a deal to be had. This could mean a rent free period or the landlord helping with the fit-out, it doesn't hurt to ask anyway.
• Is there disabled access? If your site isn't at street level, council will require installation of a ramp.
• What available parking is there in the area?
• Are other businesses succeeding or failing in the area?

There may be other issues that come up along the way but the above is a pretty comprehensive list of questions to bring along to any estate agent meeting. A final tip is to ensure you get a good solicitor to look over the details of the lease to ensure there are no hidden gems that the landlord neglected to tell you. The balls in your court until you sign on the dotted line.

I realise this can all seem a bit daunting. However, if you approach it in a logical way and just get stuck in, it really isn't so bad, the lawyers will do most of the ground work for you anyway. If you are feeling overwhelmed or have any questions, thoughts on finding a property don't be shy. I am passionate about small business and will help if I can.

Some of the points made today warrant a whole post to themselves. Tomorrow we will talk about the pros and cons of buying into an established business as compared to starting one yourself from the ground up. Wohoo bet you cant wait, this is edge of your seat stuff!