Gabe Nelson – Page 7 – Coffee Shop Answers

Setting SMART Goals for The Long Term Success of Your Coffee Business So you’ve taken the leap and set up a coffee shop business. Now it is time to try to figure out how you can achieve your goals. After all, what would a business be without goals? Without goals, there wouldn’t be a reason to start a business in the first place. When you started your business, was it so that you could earn an unlimited income? Was it so that you can achieve complete autonomy over your time and schedule? Was it so that you can get away from the job that you used to have that you didn’t really like so that you can pursue something that you feel is more worthy? Just as you had your personal goals for starting a company — your company itself should have goals. Not just any goals mind you, but smart goals. Of course, we are not talking about smart in the traditional sense, but The acronym S.M.A.R.T. What does this mean? Let’s take a look with greater detail. Set Specific Goals for Your Coffee Shop The S in Smart stands for specific. Because the world of business is very competitive and very cutthroat, you need to know exactly what you need to achieve and how you’re going to get there. You cannot afford to be vague with any aspect of your business so you have to define all of your use cases very well. Of course, the easiest way to set specific goals is by simply asking yourself who, what, when, where, why. Who When you are setting your goals for your coffee shop, who are the people that are involved in it? If your goal, for example, is to increase your revenue by 20% in the next year — who are the people that you can involve so that you will have a more realistic chance of achieving this goal? As a coffee shop owner you will need to hire the right baristas, for example. Make sure you define the type of people you are looking for precisely. What Ask yourself what it is you want to accomplish. You may think by default that you already know, but writing what your goals for your coffee shop are for the short term and long term out on paper can give you a clearer picture of what it is you were trying to accomplish in the first place so that you do not lose focus, and you do not get off track. Is your goal to be the first coffee shop to build your products off of local coffee beans? Make sure you write this goal down explicitly. When Now that you know what you want to accomplish, ask yourself when you want to accomplish this. If your goal is to have 10 branches of your coffee shop within your city, when do you want to accomplish this? Do you feel that this is something that you can make into a reality within the next five years? Is 10 years more realistic to accomplish this goal? Where Where do you believe these goals are to be achieved? If you are going to create the best possible coffee shop, is this something that you want to keep local? Do you plan on expanding your operations towards different cities in the same country? Do you feel that you can actually go global and create an internationally beloved coffee shop brand? Why Of course, the most important question of all is why. Why do you want to accomplish this goal for your coffee shop? Do you want to accomplish this goal just for the sake of having the safety net of having a profitable coffee shop business, or do you actually want to be the next Starbucks or Coffeebean? Why do you want to increase your revenue over the next year? Is it so that you can have a bigger owner's draw, pay back your loans, buy most exotic coffee beans, hire more staff, or expand a new location? To get a great example of setting specific goals, let us take a look at one of the largest and most dominant companies in the world — none other than Amazon. The goals of Amazon when it was still growing had to be very specific because they were very unorthodox as well. Jeff Bezos, the founder and CEO of the company, realized that the advantage of the retail business whether it is through e-commerce or through bring and mortar stores is that they are incredibly profitable when they reach a certain inflection point of size. When they are just starting out, however, retail companies are notoriously hard to scale and are not very profitable at all. Because of this Jeff Bezos had to set a very specific goal — to make Amazon grow as fast as possible to ensure that it reaches the inflection point a retail business needs in order to be stable. The ‘how’ of his specific goal was even more interesting, he was going to achieve this by subsidizing this notoriously unprofitable business with a very successful business, cloud computing. That is how Amazon Web Services came to be. In short, it did not matter that the e-commerce business of Amazon was not making money for the first few years because their operations were being subsidized by the profitability of Amazon Web Services. The location of his smart goal was of course in the United States of America. Jeff realized that the perennial advantage of doing business in the United States is that you do not have to go international right away to get big, you can get big right on American soil. His marketing efforts for the first few years of this implementation were very local-centric. Learning from the excellent example set by Jeff Bezos and Amazon makes you realize just how important setting very specific goals are. Even though your goal is unorthodox, knowing exactly what you are doing is all that matters. Try to apply this same way of thinking when trying to set your goals for your coffee shop. Do you know what kind of menu you want to have? Do you know the branding identity that your company will have? What is the price range that you want to go for? Which countries do you eventually want to venture into? How do you plan to be different from other coffee shops? It would be healthy if you write the specifics of your goals down so that you can continuously refine the process you want to take in order to achieve these specifics. Consider the following scenario. Your goal is for your coffee shop to be a pet-themed coffee shop. Not only will your coffee shop have coffee and treats for you, but they will also have areas for different kinds of animals that you will be able to interact with. Your goal is to set this coffee shop up in your city and eventually expand nationally. You want to be able to achieve this within the next five years. Set Measurable Objectives for Your Coffee Business Of course, an important thing to consider about your coffee shop goals is that you will never really know if you have accomplished it or not unless you justify it with numbers. You have to find a way to quantify your goals for your coffee shop so that you can realize more explicitly if you have achieved them or not. This is obviously far more simple if your goal has something to do with revenue or profit because those are easily quantifiable. But when it comes to things like increasing your brand value — then you are going to have to be more creative when it comes to finding ways to measure your progress towards achieving your plans for your coffee shop. How To Tell If You’ve Accomplished Your Coffee Shop Goals When it comes to goals that are more difficult to measure with raw numbers– you are going to have to rely on non-traditional ways of finding out whether or not you’ve made it. It is easy to tell if you’ve accomplished your goal if your goal was to create five branches of your coffee shop because, obviously, you can count the number of coffee shops that you currently have. When it comes to more abstract goals like increasing your brand value, however, you can just ask yourself questions like how well do the people in that particular community know your business? If you tell them the name of the coffee shop — will they even know where the coffee shop is? If you ask them about the quality of the coffee that you serve, will their sentiments be more positive or negative? Doing a simple survey using a pretty healthy sample size could be a good way to tell if you’ve accomplished your goal. How Do You Define Progress? Of course, you should also be able to track how far you have come as far as accomplishing your coffee shop goals is concerned. It is not enough to just measure your coffee shop goals as a matter of personal intuition, you also need to be able to tell if your coffee shop is making progress tangibly. If you want to become an internationally known coffee shop brand, how many branches do you have this year compared to last year? How much of the capital expenditures that you will need to go global have you already saved up? These are just a few key indicators of whether or not you are making progress towards achieving your goals. To get a great example of a company that uses measurable goals brilliantly to its advantage, let's look no further than one of the most remarkable companies of the last few years, Tesla. The CEO of Tesla, Elon Musk, had to rely on very measurable goals in order to achieve his goal of being one of the most mainstream electric vehicle companies in the world. Before Tesla, people simply did not believe that electric vehicles could become mainstream because they have always been seen as niche vehicles that only people with very specific tastes like to drive. Elon wanted to shatter these limitations. For 2020, in order to maintain their phenomenal growth rate, Elon wanted Tesla to sell 500,000 vehicles by the end of the year. This would shatter their previous sales record and would really bring them close to their goal of truly becoming mainstream. Tesla had already been rising up the list of most valuable automakers in the world, reaching this huge milestone of 500,000 vehicles in a year would only solidify their position. This is a great example of using sales projections as a measurable and tangible goal. In order for Tesla to reach their goal of 500,000 vehicles for the year 2020, it needed to sell 181,650 vehicles in the final quarter alone. They never did deviate from this measurable goal, so they were eventually able to achieve this huge milestone. You can also use sales projections for your own measurable goal. What is the type of growth that you want for your revenue for coffee sales alone year by year? How much should you aim for in sales in the other products of your coffee shop? The second example that would be very beneficial for you to learn about for setting measurable goals is Apple's venture to transition from a primarily electronics-concerned company to a company that has an excellent service-oriented business model as well. This of course took a lot of vision from the sitting CEO, Tim Cook, who led the company to become the first publicly-listed trillion-dollar company in the world in 2018 and then the first 2 trillion-dollar company in the world in 2020. Of course, the measurement for this goal for Apple was the increase in subscribers for their various subscription services. They kept a close eye on not just the active users of some of their most popular apps, but daily active users as well — which is a more effective metric when it comes to tracking the success of subscription-based business models. Think about how you can potentially apply this to your coffee shop. If your coffee succeeds, do you want to add new products in order to create new streams of income and to make sure that you have the safety net offered by diversification? If you want to sell customized coffee mugs with your logo on them, how much do you expect to see the sales for these mugs increase within the next few quarters? Achievable and Realistic Goals Will Make Your Coffee Shop Successful Even though you obviously want to get big as far as setting goals for your coffee shop is concerned, you want your goals to be grounded in reality. This is not to say that you cannot become a huge multinational corporation, but you happen to have a realistic grip of what is possible with the resources that you have available to you at the moment in order for you to set realistic goals and meet realistic timelines. Are My Expectations Realistic? Let’s just say that you answered the previous what and when questions by saying that you want to become the largest coffee shop brand in the United States of America and you want to be able to accomplish this within the next five years. You have to keep in mind that the largest coffee shops in the United States such as Starbucks took decades before they were able to reach the level of prominence that they enjoy today. You cannot be overconfident no matter how good you think your product is and no matter how competent you think your team members are. By being more realistic with your Expectations you can make your goals far more achievable. Has This Been Done Before? Those who do not learn from the past are destined to repeat it. Having that in mind, are you sure that the steps that you were taking will not lead you into unexpected pitfalls? Maybe you were offered funding by a venture capital firm and you chose to take on a round of funding that is far more robust than what your profits can justify. Will you be able to meet the new valuations that are associated with your coffee shop? If not – this could cause you to absolutely crash and burn. You have to take a look at what has been done before and what has not been done before because they are that way for a reason. For you to better understand why having achievable and realistic business goals are so important, take the example of so many Shopify store owners who drop ship their products from somebody else's inventory. One of the mistakes that these people often commit is that they are entranced by how professional-looking their catalog of products looks, they start thinking of themselves as a big company because they have the inventory of a big company now — even though this inventory is not exactly tangible because it belongs to somebody else. Because of these false ideas of grandeur, they start to apply for several lines of credit for their business that they could never realistically pay off. They use this credit to pay for fancy new packaging and influencer marketing, they start to receive several new orders for their products and things seemingly look well. Then they run into the problem of the dropship supplier not having enough of the product in their warehouse to fulfill the new orders. Obviously, something like that would be an absolute mess. It really goes to show that a company never wants to overconfident. Being innovative and challenging the status quo does not mean that a company has to completely ignore the facts and apply a business model based on things that are borderline impossible. In accounting, it is often said that you want to underestimate the total value of your assets instead of overvaluing them, for instance. Having achievable and realistic business goals will allow you to scale successfully without running into unexpected roadblocks. Timely Objectives Are the Key to a Well-Run Coffee Shop Because of the previous point, it should be fairly obvious that all your goals for your coffee shop business, in order to be truly smart, need to have realistic timeframes. Try to find out what your short-term goals are and work towards those in the short term well in the meantime, identify your long-term goals also and try your best to plan for those. The importance of having realistic time frames in the coffee shop business could not be overstated. This is because you do not want people to expect something from you too soon only for you to fail to meet these expectations when it is time to deliver. To look at an example of an excellent timely goal, let us look at another coffee shop chain — the most successful coffee shop chain in the world as a matter of fact. There is a new buzz around becoming more carbon-neutral now and one of the companies that are leading the way in this front is none other than Starbucks. Starbucks has been adamant about its goal of achieving 50% fewer carbon emissions on its Neutral Green Coffee by the year 2030. The most important thing to notice about these figures is that it is very clear that they are not at all overblown. There are some companies that are committing to achieving complete carbon neutrality in just a few years, which is not very realistic. The goal set by Starbucks is not only reasonable, it is something that they can probably exceed and achieve a lot faster than they originally planned. This is something that you want to make sure of when you set business goals for your coffee shop as well. It is better to be more early with a goal than to be late with it because you do not want your customers and potential investors to think that you are an underachiever and that you cannot deliver on your promises. Starting Your Coffee Shop Right with Great Business Goals Hopefully, by now you will have a better idea of what it takes to plan your next business venture in the form of a coffee shop. Remember that these are concepts that you can apply to any type of business, you are limited only by your imagination. today you were just building a humble coffee shop, tomorrow you could be building a multi-billion dollar empire. As Steve Jobs once said — stay hungry, stay foolish.