You are currently viewing Do Cafe Businesses Make Money? [Part 2]

Do Cafe Businesses Make Money? [Part 2]

So if most cafe business fail within the first 5 years, what happens to the survivors? And what mindset does the cafe businesses that DO make a profit have that most others don’t?

Most new cafe owners worry about their profit margins or how much they can or can’t make. Instead, they should be focusing on how to build up their customer numbers. There’s no point trying to make 80% profit off each customer if they only see 40 customers a day. The only reason why customers buy from you is that you want to fufill a need or solve a problem that they can’t find elsewhere. Customers does not care if you want to be rich or that you risked your entire savings get to where you are now.​

“When you open a business, it is to solve the customer’s problem and not your own.”

The Millionaire’s Fastlane by M. J. DeMarco

1. Put yourself in the customer’s shoes

What can they experience or buy from you that they can’t get in their local community? Maybe you can make the most consistently good coffee in town, or serve up exotic cuisine that they can’t buy anywhere else. If you don’t have an answer to that then you shouldn’t open a cafe in that area.

Once you have enough customers walking through the door then you can sell many other things besides coffee and focus more towards increasing profit margins. Now that you have some sort of reputation and trust with your customers, it is very easy to introduce new things to increase consumer spending. This results in a profitable business.

2. Have multiple profitable locations

The next phase is to create a system such that earning profit does not have to interfere with your personal time or at least to a minimal extent. Ideally, there should be enough time dedicated towards expanding the business and possibly opening up new stores. One profitable store alone cannot make you financially independent. To be truly financially independent in brick-and-mortar businesses, one needs to have multiple profitable locations.

3. Multiply what you can achieve

Accumulating wealth is one problem, but what about the rate at which your wealth grows? Fast wealth is finding a way to multiply what you can achieve. No matter how good of a barista you are, with 2 hands you can only make a certain number of cups of coffee a day. But if you have multiples of yourself (by hiring and training the right people – which I will talk about in a future post), you can double, even triple the number of cups a day. Even though you are the best doctor in your field, you can only see so many patients a day. But if you run a successful medical centre, the number of patients you can see in a day multiplies and therein lies the wealth.

Unless you are a Hindu God who can split yourself into many forms or live up to 1000 years, you will inevitably need the power of people. You need the right people to form your organisation so that you can magnify what can be achieved. Everyone only has 24 hours in a day but 2 people can effectively double the total hours given. Therefore, learning to dealing with people is very important if you want to open the door to financial freedom.

Summary

  • Put yourself in the customer’s shoes. You have to solve the customer’s problem, not your own.
  • Open multiple profitable locations to earn passive income and minimise your own personal time being wasted.
  • Multiply what you can achieve by utilising the power of people.
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