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How to Start a Tea, Coffee & Spice Shop

by Brian Hill

Opening a tea, coffee and spice shop is a challenge. Not only do you have to be a savvy retailer, you also have to be an expert on three separate commodities with hundreds of products in each line. Customers will look to you for suggestions on which coffees they should try, what tea has soothing properties and how to combine spices for an Indian masala mix.

Write down all the expenses and costs of opening the shop. Operating expenses include lease payments, insurance, wages and benefits, and marketing. Costs for opening include the initial inventory of coffee, tea and spices, equipment, furniture and fixtures, licensing and possibly the first and last month's payment on the lease plus a security deposit. Add up all the expenses and costs.

Obtain the required funding through your own assets, credit lines or a bank loan. You may have to adjust the financing to what you can afford by decreasing the size of the shop, its location or hours of operation. Keep in mind that shopping malls require that you remain open during all their hours of operation. A freestanding tea, coffee and spice shop has more flexibility.

Scout out a location for the shop. How much you pay in rent affects your bottom line. Overpaying on the rent means less profit for you. However, foot traffic is important to a retail location. For example, passersby may be enticed to enter your shop when they smell the aroma of freshly brewed coffee. A cheaper location may not have the visibility to bring in customers

Call the state business office, as well as the city where the shop is located. Since you're selling tea, coffee and spice retail, you are required to obtain a sales tax license, sometimes called a sales privilege license. Some cities require their own sales tax license in addition to the state's. A general business license is necessary. If you serve the tea and coffee to customers, the premise may have to be inspected by the health department. If you only sell packaged or bulk teas, coffees and spices, and are not preparing any food or drink for customers, you may not need the health inspection or a food handlers permit.

Analyze your competition to see what types of coffees, teas and spices they offer. Don't limit yourself to only retail shops. Gourmet grocers, organic grocers, health food stores and even restaurants may offer similar products. Select your product offerings based on what the competition is lacking. For example, you may determine that no one is offering organic coffee and teas, so that's what you would select.

Contact coffee, tea and spice vendors. Select the vendor based on pricing, delivery, minimum order quantities and reputation. It doesn't make sense to select a vendor that requires a 10-pound minimum purchase of each flavor of coffee, if you won't sell that amount before it goes stale. Tea doesn't have that problem, since it doesn't contain the oils that coffee does. Spices do deteriorate over time once exposed to air, especially if sold in bulk -- the customer takes what they want and puts it in a plastic bag and has it weighed before paying.

Display the products attractively around the shop. Label each type of coffee, tea or spice. Clearly designate prices either on the bins of coffee, a shelf label or on the jars of spices.

Train the staff to be knowledgeable about where coffee grows, how it's processed, why your coffee and teas are superior to the competition, how to store the spices and how to operate the point-of-sale terminals.

Tip

  • Before you open your shop, create a marketing plan to let customers know what you have to offer, include social media sites where you describe different coffees, announce tea specials or explain the history of certain spices.

Warning

  • Shrinkage decreases your profits. Carefully measure coffee, teas and spices, so customers get exactly what they pay for and not more. Monitor employees so they do the same.

About the Author

Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

Photo Credits

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