employee working at a cafe

Starting A Business In 100 Days
The Tips, Tricks and Mistakes You Need To Avoid

Thinking of starting a business? Perhaps a cafe? With the rate that cafes that pop up in the city – how do YOU stand out?

We invited serial Entrepreneur and business consultant, Danial Nai, to the Storehub HQ to chat a little more about what it takes to open a successful cafe – he shared his insights on what he thinks is necessary to start a business in Malaysia.

Danial studied in Melbourne and loved the community aspect and tangible, monetary fulfilment when he was a barista there. He returned to Malaysia and started League of Captains, Podgy and the Banker and Coffee in Common. He also consulted on the opening of Kopenhagen Cafe.

With his biggest tip being “Trial and Error”, Danial lists out the key pointers you need to think about before you start any business. Here are the SEVEN key areas that you need to nail;

    • Product offering, concept & design

    • Store location

    • Budget & funding

    • Understand Tax & GST

    • Renovation & Machines

    • Staffing

    • Be Personal

Ask yourself ‘Who am I starting a cafe for?’ What is your end-goal? Can this passion translate into revenue? How do you plan to translate revenue?

1. Product Offering, Concept & Design 

Whatever your reason is, always remember that you product needs to stand out in order to stand clear. Competition is inevitable, especially in Malaysia. The amount of cafes in Malaysia open up in the hundreds. How do you set yourself apart?

 Every cup served needs to be of consistent and exceptional quality, but coffee alone won’t retain patrons. Add complementing products like cakes, pastries and cookies. What’s food without beverage, anyways?

Consistency is how you differentiate your cafe from the rest.

 You want to have tight quality control. Spend a bit more on coffee beans and on ingredients. The barista needs to serve the perfect cup of coffee 200 times a day

2. Store location

Do your research and find the best locations to open a cafe – especially for the concept that you plan to go with. Market research is extremely important when picking a location – where is the best place to open a business? It really depends on who you are trying to target. Who is your target market? What kind of people do you plan to attract? What level of convenience are you looking for?

 Some cafes who are in the right location catering to their clientele include Kopenhagen, Podgy and the Banker, Artisan and Table & Apron. Your cafe’s location will determine your required revenue, which has to be taken into account when you formulate your products and pricing.  Rental doesn’t come cheap, though.

EXAMPLE: A 2,000 sq ft lot in Mont Kiara, Malaysia can be around RM15,000 (US$3,500) per month, so ensure you’ve a revenue of at least RM100,000 (US$25,000) a month to stay afloat.

The worst thing to do is settle for a place solely because the rent is ‘cheap’.

3. Budget & Funding

calculator and financial graph

 Invest in the RIGHT things – the necessary things that your business NEEDS in order to run smoothly. It may be expensive at first but always think of the long-term benefits before splurging on the wrong things.

Be it an espresso machine or an oven – your investment must be a benefit to your purpose.

 Always lay out your costing in the beginning – from additional spends (such as cakes, cookies, snacks) to monthly necessities such as dishwashing soap, tissues, and other disposable but used items.

Have at least 6 months of working capital. That’s a minimum of RM200k-250k (US$45,000-US$60,000) for just a small setup. If you’re hesitant about investing in machinery, seek industry advice and experience.

Your ROI depends on how much you spend. You should aim to break even your cash flow within 12 months. 6 months is the ideal target but should be no more than 12 months.

A few examples of cafes who have struck the right balance and know their focus would be Jaslyn Cakes, Common Man, Pulp and Sprezzatura Coffee.

4. Understand Tax & GST

Now that Malaysia has implemented GST – it is important to understand GST properly. How does GST work? What is the percentage? What do you fork out? What do you get back? It is important to understand what you’re getting yourself into legally.

If you have the capacity and cash flow for it, outsource accounting and tax-related stuff.

5. Renovation & machines

dreamy cafe layout

 

Here comes the big part (after establishing your TYPE of cafe) – the renovation. How your café is laid out will play a HUGE part in your success. You need to think about all the angles before you start on your renovation. Be smart about how you source contractors, products, machines and even furniture. Your setup cost will determine your ROI, of which you can derive a more realistic breakeven and recoupment.

PRO TIP: Think about your layout on in terms of flow. Are you looking to be a table service or counter service type of business? Each choice requires a different flow, and you’ll need to organize your layout to suit it. When a customer walks in – what’s the first thing you want them to see?

Also, be ready for hidden costs –  You can expect to go over budget by about 20%. There will ALWAYS be something extra, even if you’ve planned everything to the detail. 

MONEY SAVING TIP: Look for cafes who are closing down or clearing products for a budget steal.  

 

6. Staffing

employee working at a cafe

The best place to start looking: Social Media (Instagram, Facebook, Twitter etc) and Word Of Mouth.

Be clear of your expectations like experience and salary. The word will spread.

You could also consider hiring during your renovation process – this will give your employee the sense of belonging and ownership.

Local millennials expect more than monetary returns since they’re wanting skill sets and opportunities to grow. Foreign workers want and deserve the same skill sets and opportunities too, but sadly, the perception of them making your business look less established is still prevalent in our society.

Hire staff with personality rather than technical abilities since the latter can be taught as time passes. A glum face taking your order or serving you miserably won’t reflect well, no matter how good your coffee tastes.

7. Be Personal

Once you’ve started your business – one thing you should always remember is to BE PERSONAL. Give your customers an original experience. Get to know your customers; learn their favorite drinks and talk to them about it. However, be prepared to feel underappreciated as a serviceman. You want customers to take home a completely original experience, so think of what will drive them to your store.

When you start a business, Don’t make it different for the sake of being different. Staring a business in 100 days is entirely doable, provided your resources and your strategies are in place.  It’s also a great idea to talk to friends and family who are in the same industry – get their opinions, do your homework and enjoy the process.