Project management strategies for starting a coffee shop

Project Management - Starting a coffee shop

Coffee Shop

The following pages will focus on presenting the steps for starting a coffee shop an ensuring its successful functioning. The paper will successively present the steps required for starting the coffee shop, starting with an analysis of the target segment of customers and the coffee shop's specific features, continuing with the project's objectives and other specific issues, like project rationale, methods for ensuring the project's success, the project's scheduling and management, as well as several recommendations aiming at presenting some ideas that will lead to the coffee shop's success on medium term and long-term also.

Project specification

The first thing to do when starting a project is establishing the project's main goals, its specific objectives, and the whole vision of how the project and its outcomes should look like. The project's objectives should be formulated as SMART: specific, with measurable achievement, achievable, realistic, and time terminated (Wikipedia, 2007). The following lines will briefly present what the project is supposed to accomplish, and the project's specific objectives.

For this project, the vision as a whole consists in creating a coffee shop, basically, but not just any coffee shop, like thousand others, but a very different, and quite unique, one, that clearly stands out compared to other such shops currently on the market of coffee services. The coffee shop that is intended to be designed in the following pages is a different one, and the difference resides in the basic and additional services it will provide for it customers, the location of the coffee shop and its interior design, and the special approach to coffee services that the new coffee shop is intended to promote.

The basic services of the new coffee shop will include offering all kinds of coffee, satisfying any customer, from simple customers to very sophisticated ones. Additional services refer to chocolate, which is considered by some to be going hand in hand with coffee. Therefore, the new coffee shop will also sell chocolate, combining these two items that are quite vital for some.

The location of the coffee shop should be the following: the first location should be in a very crowded area, for example: next to certain colleges, office spaces, train stations or related station that are very busy. If the first location of the coffee shop will prove to be successful, it is recommended that the coffee shop is expanded to other locations, similar to this one, on the one hand, or in less crowded locations in order to cover as much space of the city as possible, on the other hand.

Another objective of this project consists in the coffee shop's interior design, which is recommended to b a very original one. For example, for the customers do not take their coffee or chocolate to go, but choose to serve it in the coffee shop with friends, the interior design will be consisted of elements that related to coffee, like: coffee cup shaped sofas or stools, wooden tables of very dark brown color, just like the color of coffee and chocolate, and other interior design items related to coffee or chocolate. For these objects, one can hire a specialized furniture manufacturer to create these interior design items custom-made, which will add a lot of uniqueness, originality, and quality to the coffee shop's aspect and long-term image, on the one hand, or one can buy already made such interior design items, one the other hand, which will consistently reduce initial costs, but will not present the same quality as the variant discussed above.

Business case

Rationale for the project

When starting a new business, no matter the domain of activity, it is very important to have real information to rely on. Therefore, it is imperative to conduct market studies, industry analysis, and any other studies that are able to provide useful information in order to better accomplish the business plan. The following lines will discuss the background for opening a coffee shop, some facts about the current state of this industry, trends, forecasted evolution.

Although there are thousands of coffee shops, larger or smaller, more simple or more sophisticated, covering all tastes, there is still room for such a new business in the coffee services field to be developed, as the coffee shop segment still presents a lot of interest.

In 1997 there were over 2400 coffee shops listed in the United States. Their number has significantly increased over the past ten years, reaching 24,000 currently. In addition to this, "Starbucks, the number one contributor within the industry operates over 10,500 coffee shops in a variety of locations in some 37 countries worldwide and has continued to see double digit growth in sales and earnings over the last five years. The company reported full year 2006 revenue of $7.8 billion" (Quickplan, 2007). The company is expected to significantly increase its sales in 2007 also. Coffee shops' success is due to an important demographic growth correlated with demand growth. Also, the relaxed atmosphere in coffee shops is very much responsible for the fact that more than half of Americans have become espresso drinkers over the past 17 years.

In the past two years, the coffee industry has been characterized by an increase in the number of drive-thru coffee shops. For example, in 2005 there were 1,050 Starbucks drive-thru locations, while currently their number reaches 1,600 locations.

Other relevant information related to the coffee industry has been revealed by a 2001 survey conducted by the National Coffee Association that indicated that "over 100 million people drink coffee on a daily basis and that nearly 60 million more occasionally consume coffee. Based on average drinking habits, the daily coffee drinker will consume multiple cups per day - totaling hundreds of millions cups of coffee being consumed every 24 hours" (Home Business Center, 2005).

This immense consumer demand can be correlated with the growing trend of gourmet coffee that is presented as a great opportunity. The future of coffee shops presents several opportunities also, as "The Specialty Coffee Association of America's Market Report forecasts that the number of coffee houses in the U.S. will grow to 15,000 by the year 2006" (Home Business Center, 2005).

As mentioned above, with over 300 million cups of coffee consumed daily in the U.S., the coffee market is still attractive for entrepreneurs that want t open a coffee shop, no matter its size. The population is growing, the demand is growing, and also customers' tastes are growing also. Customers' tastes regarding coffee have developed more and more over the past few years, they have more complex tastes now, more complex needs, desires, and expectations regarding their cup of coffee. Therefore, the moment is very good for opening a coffee shop, but not a traditional one. It is the time for opening an original coffee shop, a different one, that stands out, and that is able to satisfy the most sophisticated of the customers' tastes.

Stakeholders

Coffee shops are usually small to medium sized businesses. Such businesses do not require the participation of many parties. I a business like coffee shops, it is better to have at least interested parties as possible, given the reduced size of the business. With a lot of stakeholders involved, the coffee shop will be harder to run, and a lot of disagreements will emerge between the stakeholders. Stakeholders have a significant influence on programs, products, and services. Therefore, the less stakeholders involved, the less divergent opinions that would eventually lead to the project's failure.

Keys to success

There are several issues that will contribute to the coffee's success. These issues are:

The business plan, in the first place. The business plan is the first aspect directly responsible for the coffee shop's success or failure. The entire business is relying entirely on the business plan. If the information and analysis comprised in the business plan is not accurate or actual, the whole project will be a total fiasco, a total waste of time, energy, and money. But if the business plan is a suitable and professional one, the business's success is guaranteed

The coffee shops activity. In order to be successful on such a developed market, with thousands of coffee shops, and with great players that practically establish the market, one's key to success is to come up with something new and original. Therefore the core idea for this coffee shop is to combine coffee with chocolate. The coffee shop will also serve chocolate-based products that go hand in hand with coffee, for some. Therefore, the new coffee shop will reach beyond the coffee drinkers barrier, attracting customers that are not very keen on drinking coffee, but enjoy chocolate instead, or both. This will be this coffee shop's competitive advantage

In addition to this, the coffee shop will have a very wide range of products, serving almost all types of coffee, being therefore suitable for satisfying the tastes of any customer

Another key for the new coffee shop's success is a very good marketing strategy, especially regarding Public Relations. PR basically means doing a good thing and speaking about it. In other words, no matter how great the new coffee shop will be, unless it is very well advertised, it will not be worth a dime. The new coffee shop will be advertised on: business cards, T-shirts, travel mugs, coasters, glassware, sport bottles, ceramic cups, and others. Also, the coffee shop could be advertised on radio for greater success.

Macro (Top Down) cost estimate

Starting a coffee shop is a business that requires significant amounts of money. In accordance with the coffee shop's size, the following macro costs are estimated:

For a coffee cart the start-up cost is $20,000-$25,000

For a coffee kiosk, the macro costs are usually between $50,000-$60,000

For a coffee drive-thru, the costs for opening such a location may be very different in accordance with the unit's size, reaching $30,000-$180,000

For a sit down coffee shop, the estimated macro costs reach $150,000-$300,000 (PowerHomeBiz, 2006)

Work Breakdown Structure (WBS)

The work breakdown structure principles for opening a coffee shop should e the same as for any project: the 100% rule; planned outcomes, not planned actions; mutually exclusive elements; level of detail and progressive elaboration; WBS coding scheme (Wikipedia, 2007).

The 100% rule is the most important element of WBS. In our case, the 100% rule that is consisted of the project's scope, is designing a coffee shop, with unique and original features.

This step is followed by the planning of outcomes, instead of the planning of actions. The outcomes for this project are:

Designing a unique and original coffee shop finding the new coffee shop's competitive advantage designing the interior of the coffee shop in accordance with the specific features that the new coffee shop is intended to present finding marketing methods for attracting customers once the coffee shop is opened

The WBS construction levels for this project are the following:

WBS Level 1: Coffee shop (100).

WBS Level 2: Interior design (40), machines acquisition (20), furniture acquisition (10), coffee menu (10), chocolate menu (10).

WBS Level 3: Interior design: purchasing the location (10), doing the actual interior design drawings in collaboration with specialized workers (10), creating the actual interior design (20).

5. Schedule and key milestones

The schedule and micro cost estimates for starting a coffee shop is the following:

Searching a location for the new coffee shop - 3 weeks.

Buying or leasing the location - 1 week, $100,000.

Working on the coffee shop's menu - 3 weeks.

Acquiring machines in accordance with the items in the menu - 3 weeks, $80,000.

Setting the interior design of the coffee shop, from the architectural design to the actual construction of the interior, including furniture acquisition - 3 months, $30,000.

Recruiting and selected qualified personnel for the coffee shop - 1 month, $10,000.

Setting and implementing the new coffee shop's marketing strategy - 3 months, $30,000.

Opening the coffee shop - 1 day, $10,000.

The milestones of starting the coffee shop are: purchasing the most suitable location, acquiring the machines, recruiting and selecting personnel, which will be the coffee shop's most important resource.