Amy Croger is founder and CEO of Farm City Coffee in Nashville, TN. She learned how to start a coffee shop business in 2012 when she opened her own mobile coffee shop, known fondly to Nashvillians as The Trailer Perk.
We spoke with Croger about how she turned her dream of owning a business and her knowledge of coffee into a successful coffee shop brand.
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Knowing how to fund your small business is key to managing risk. According to Croger, a coffee shop can cost as much as $500,000 to open.
“I think a lot of coffee shops that open now have somebody who has half a million dollars and hires a consulting team and someone to do everything for them. And I wasn’t that person. I couldn’t do that.”
Croger began with a small food truck and bootstrapped the whole operation. She saved money from her day job and used it to fix up her coffee truck.
She also used credit cards for financing. “I had a couple of credit cards with zero interest that had 14 months interest-free.” (Credit cards can have a considerable interest rate, so be careful with this strategy.)
She knew it was time to invest and expand when she outgrew the refrigeration space on the truck. “During peak season we get 60 gallons of whole milk a week. That’s a lot of refrigeration. And that’s only the milk, not including the other refrigerated supplies and ingredients.”
A larger brick-and-mortar space — a food stall at the Nashville Farmers Market — allowed her to accommodate more volume and demand. She intentionally chose a permanent space with a lot of foot traffic to help grow her business.
Another benefit of moving indoors? She no longer had to source water and electricity.
Croger also paid close attention to pricing her products for profit. She kept her menu simple to keep costs low, and priced out every aspect of the product: coffee beans, milk, paper products and labor, as well as overhead costs like rent.
Croger advises all potential coffee shop owners to gain real work experience before going out on your own. She worked in Los Angeles coffee shops to help her create her West Coast-style shop in Nashville.
In addition, she asked for discounts at coffee workshops and festivals across the country as she learned the craft. “I was young and broke, and I couldn’t afford to take the classes offered at these coffee festivals. And they actually said, well, pick what you want, just make it out to Atlanta, and we’re going to comp this.”
She also suggests learning more about your customers and the neighborhood you serve. Does the community want a community gathering space or a quiet workspace? Does it need to be child-friendly?
Write a small business plan for your coffee shop to articulate goals, establish operations and develop other essential components of your business.
“I had five days to get my business license permit before I opened.”
The first day Croger opened her mobile coffee shop, she only made $25. But she still needed all the correct licenses, permits and insurance.
To register a compliant small business, you typically need:
Your lease and business license will likely require you to have small business insurance, and you may need more than one policy.
Some types of business insurance for your coffee shop could include:
But because you’re also selling food and beverages, there may be additional licenses and permits depending on your local jurisdiction, including:
Additionally, your lease and/or landlord may have further requirements. For example, you may need a permit to host live music — or not be allowed to have music at all.
Croger believes that hiring your first employee, even part-time, is essential because of long hours. However, she recognizes that her hiring strategy has changed. Initially she hired people with barista skills.
“I wanted the very best, most experienced, skilled people. And those actually almost always tend to be your worst.” She found that it was better to find coachable employees. Instead of hiring for skills, she started looking at personality qualities like attitude, punctuality and people skills. She then trains her staff on the latest coffee trends.
Note that most states require workers’ compensation insurance to help with on-the-job illness or injury for employees.
Start small with marketing to grow your business. A simple website connected to a local Google Business Profile can do a lot. Social media is an additional affordable marketing tool that lets you connect with your customers.
Because coffee shops are parts of communities, you can use neighborhood marketing groups to network and promote your business. For example, Farm City Coffee is part of the Nashville Food Truck Association and the Nashville Farmers Market to link with their social media and websites.
NEXT helps you get coffee shop insurance to meet all lease, license and permit requirements.
Our customized insurance packages let you mix and match policies to get the coverage you need. Choose from general liability insurance, workers’ compensation insurance or commercial property insurance.
Answer a few questions and review your coverage options online. Get a quote and purchase your policy in less than 10 minutes. You’ll have immediate access to your certificate of insurance anytime you need it.
If you need help, our licensed, U.S.-based insurance professionals are available to answer your questions.
Jessica spent over a decade working in education before moving into content marketing. She has worked on content marketing campaigns in the edtech, real estate, and personal finance sectors. She has a passion for working with companies that take the time to educate their customers. When she’s not working, she’s probably outside with her two kids.
