3 REASONS why coffee shops FAIL within the first 12 months

The Three Critical Reasons Why Cafes Fail (and How to Succeed in Your First 12 Months)

Starting a cafe is a dream for many, but the reality is that many struggle or fail within the first year. The key to long-term success lies in mastering three critical, often-overlooked areas of your business.

We don't want to see any cafe business fail. By bringing these issues to your attention, we aim to provide the information you need to establish a robust and profitable foundation for your business.

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1. Poor Planning and Underestimation of Costs

The single biggest mistake new owners make is underestimating the financial reality of setting up a cafe.

The Planning Pitfall

Lack of a Business Plan: Even if you're not a "business planning person," you must secure help (from a family member or a hired professional) to create one. This document is essential for realistic budgeting.
The Cost Underestimation Trap: Almost every new cafe owner dramatically underestimates the total cost of their setup. The costs are higher than you expect, regardless of the size of the venue.
The Buffer Requirement: Always overestimate your spending in your budget to create a financial buffer. This buffer must also account for your personal earnings during the initial growth phase, which can take significantly longer than anticipated. You must budget for the unexpected and ensure you have money to rely on until the business is consistently profitable.

Action Item: Budget for more time and more money than your initial calculations suggest.

2. Staffing: The Hardest Variable

Staff are often the most challenging, most costly, and most volatile part of a cafe operation. Staff-related issues are a common reason for struggle and failure.

The Hidden Staff Costs

Training and Onboarding: You must factor in the time and financial cost of finding, hiring, and training new staff. This includes the cost of uniforms and the actual time it takes to get them serving the premium coffee your business is built on.
Experience vs. Cost: You have a critical balance to strike:
- Do you hire cheaper staff and accept the high expense of time and potential service impact for extensive onboarding and training?
- Or, do you pay a premium for experienced staff who can hit the ground running, potentially bring loyal customers with them, but cost more in wages?
Reputation Check: Always check references to ensure the staff you hire have a positive reputation, as a bad reputation can be detrimental to your business.

Action Item: Develop a highly efficient and documented onboarding process (like the one we've shared on our channel) to minimise the costly time and errors associated with training new baristas.

3. The Forgotten Marketing Budget

The marketing budget is frequently left until last, underspent, or entirely forgotten because owners don't understand the space. However, marketing is essential for driving the customer growth you need to succeed quickly.

Strategies to Accelerate Growth

Organic Takes Time: While social media is a free and great way to share your vision and daily life, building an organic audience takes significant time.
Budget for Paid & Promotional: To build your business quickly and increase income, you must invest in marketing spend. This can be:
- Low-Cost Promotions: Print flyers and brochures. Have your staff do a mail drop in the local area during downtime. Ensure customers can easily walk away with a menu or promotional material.
- Press and Paid Advertising: Actively seek out press or allocate funds to paid promotions and marketing campaigns to get the word out faster.

Action Item: Allocate a dedicated budget for promotional material and paid marketing to accelerate your customer base and increase income immediately.

By getting these three core elements right—planning, staff management, and marketing—you significantly reduce the likelihood of your cafe failing and set yourself up for long-term success.