Maximizing Your Cafe or Coffee Shop’s Potential Through Strategic Planning
Strategic planning is the process of defining a business’s direction and making decisions for allocating its resources to pursue that direction. It involves setting goals, analysing the competitive environment, and studying the internal and external factors that can impact the business. By taking the time to carefully plan and prepare, a cafe or coffee shop can increase its chances of success and growth.
Things to Do When Strategic Planning for Your Cafe Business
What’s needed for strategic planning –
- Knowing what you want to achieve
- Knowing what others are doing
- Knowing what you are good at
- Knowing the order of priority for your action items
- Knowing what success looks like
What Exactly Do You Want to Achieve with Your Cafe Business?
Success looks and feels different for everyone. For example, not everyone in the industry wants to build a franchise coffee empire. Some people are happy to have a lifestyle business where they work less than 12 hours a week and get a salary that pays for everything they need.
The first step in strategic planning is to decide what success is for you and set clear and specific goals for your cafe or coffee shop. These goals should be measurable, achievable, relevant, and time-bound (SMART goals).
Setting clear SMART goals will help you focus your efforts and stay on track each day (or in times of difficulty). That way when someone offers to get you on the first page of Google with SEO, or asks you to sponsor their event, you can quickly decide if that’s the right thing to do with your time and money.
How is Your Cafe Business Better Than the Competition?
Every business has competitors. In the cafe industry they might be in a building next door to your coffee shop or at home in the kitchen.
Your next step in strategic planning for your cafe is to analyse your market and competitors.
The important thing is to know what your competition is doing and how that is stopping customers spending with you. By using market research techniques, you can find out the size and characteristics of your target market, as well as the competitive landscape.
When you know what others are doing, you discover what you can do that’s appealingly different and promote that.
Do You Have all Your Business Weaknesses Covered?
Every business owner, CEO and corporate leader has things they are excellent at and things that they’ve got no skills or aptitude for. Which means that the business they lead can have some weakness, unless they take steps to employ people who are great at what they are not good at.
It is important to identify your cafe or coffee shop’s strengths and weaknesses. Knowing what they are doesn’t make you bad at business – it makes you smart!
By understanding your strengths and weaknesses, you can have a plan and strategies to take advantage of your strengths and get others to handle what you’re not so good at. This makes a strong cafe business.
What are Your Cafe Business Priorities?
For any cafe business, the one important guiding principle you want to always keep in mind is ‘follow the money’.
When coming up with a shortlist of things you need to prioritise doing in your coffee shop – knowing whether a task adds money to your business or is just an expensive, is vital.
In strategic planning for your cafe, the priorities you shortlist are those that you are aiming to accomplish in a set period of time.
For example, imagine you need to make a change in your business over the next two weeks. You have a choice between spending money on buying some pot plants to freshen up your cafe interior or spending money on doing a ‘mail drop’ to promote your cafe.
If you apply the ‘follow the money’ principle, then doing the ‘mail drop’ has a greater chance of bringing you more customers, where as the pot plants many make customers stay in your cafe a little longer so they spend more. Both of these outcomes could be good for your cafe.
The task you choose to prioritise would depend on what is most important for business success at the time; and what you want to achieve.
Current situation + Expected future outcome + Value proposition(ROI) = Strategic Business Priority
Let’s say you have an established cafe business (Current situation), and what’s most important is to make more money (Expect future outcome), so you might opt for buying the pot plants to get customers to spend more (Value proposition).
On the other hand if your coffee shop is brand new (Current situation), getting more customers (Expected future outcome) might be the priority, so you might choose to do a ‘mail drop’ to get new customers (Value proposition).
Common Cafe Business Priorities to Consider
- Sourcing high quality supplies at competitive pricing
- Employing great staff
- Improving the terms of contracts and your lease
- Develop a marketing and sales strategy
- Increasing sales and business profits
- Reducing waste and unnecessary spending
- Promotions and attracting new customers
- Keeping existing customers loyal
- Holding on to your status and reputation
As your coffee shop goes through changes there will be times when important urgent things need attention. Use your strategic plan and priorities to help you decide which solution and steps get you out of ‘danger’ and help the long-term success of your cafe business.
What Are You Measuring and Tracking to Know You’re Succeeding?
Any strategic plan is incomplete without metrics – things you measure, track and record to know how much you are improving or losing.
In Australia, the tax office kindly gives cafe owners some basic benchmarks against which you can measure and compare your success to industry standards.
You can check out the full list of industries the ATO provides benchmarks for here – https://www.ato.gov.au/Business/Small-business-benchmarks/In-detail/Benchmarks-by-industry/
In reality, there are many things in a cafe business that can be worth measuring and tracking. From the number of people who walk past your cafe each day to the number who walk in. The cost per cookie made from a batch of dough to the sales amount per customer for a particular day. What you choose to measure is entirely up to you.
To make the information you collect useful, you need to do some sort of evaluation. One of the easiest to do is called the ‘radar retrospective’. This is where you assess the information based on these three questions –
- What went well?
- What didn’t go well?
- What opportunities are there for improvement?
Once you’ve done your evaluation it’s time to make some decisions and to take action based on the outcomes. Using the ‘traffic light’ approach deciding what to do next becomes easier.
What a buyer, banker or investor wants to see will be quite different. So make sure you get familiar with the financial metrics these people will be interested and keep track of these too.
Once you have developed your cafe’s strategic plan, it is important to implement it and regularly review your progress. This may involve making adjustments to your plan as you learn more about your market and your business.
By regularly reviewing and updating your plan, you can ensure that you are making the right kind of progress, and making informed decisions that will lead you to the business success you want from your cafe business.