Starting a coffee shop business checklist

Before starting a coffee shop business, there are some essential steps you need to take if you want the best chance for success. To help you out with those steps, we’ve prepared a handy checklist of things to help you get started, such as:

• Write a business plan
• Find your niche
• Budget for start-up costs
• Register with HMRC
• Register with your local authority
• Buy business insurance
• Get certified
• Open a business current account

A business plan will give you the best chance for success by outlining your general strategy and the resources you’ll need to make it work. Most business plans are made up of sections like these. 

• Executive summary
• Company description
• Competitor and market analysis
• Details of organisation and management
• Breakdown of products and services
• Marketing and sales
• Funding requests and financial projections

For a more detailed explanation of what makes up each of these parts, try our other article, “What should a business plan include?”

As part of your market research, you need to be aware of your competition in the marketplace and how you’ll exist alongside them. 

Broadly speaking, you can separate coffee shop businesses into two camps; big chains and independent shops. 

Big chain stores like Starbucks, Costa, and Caffe Nero dominate the coffee shop market, so they will always be your main competition. They have an established brand and a huge amount of resources, but there’s nothing stopping you from opening a franchise on behalf of one of these big chains. 

Starting your own coffee shop from scratch may be challenging but potentially more rewarding. If you take this route, you’ll need a strong idea to set yourself apart from the competition.  

Here are some common examples:

• Artisan coffee shops 
• Cat cafes
• Boardgame cafes

It’s really up to you what direction you choose to go with your shop. The important thing is to offer something your competitors are not. 

Most of your budget will go to a few essential things that all coffee shops need, such as:

• Building rental: For a shop that’s 50 square metres, anywhere between £5,000 and £7,000 per month. 
• Coffee machine: For a commercial machine that’ll last, prices start at around £1,000.
• Furniture: £1000 to £5,000.
• Dishwasher: £600 to £2,000.
• Display fridge: £599 to £1,500.
• Barista wages: £7 to £10 per hour.

These are estimates from both ends of the price scale, so your total budget could have a wide range depending on how much you’re willing to spend.

For more information about budgeting for your new business, we have dedicated guides about why budgeting is important to small businesses and how to budget for starting a business.

If you’re a sole trader, register as self-employed with HMRC to pay income tax on your taxable income:

• Personal Allowance: Up to £12,570 (0%)
• Basic rate: £12,571 to £50,270 (20%)
• Higher rate: £50,271 to £150,000 (40%)
• Additional rate: over £150,000 (45%)

If you set up as a limited company, you should register with HMRC as an employer. Rather than income tax, limited companies pay corporation tax (19%) on all of their taxable income.

If you want to take a salary, you also need to sign up to PAYE as an employee of your business. 

As well as registering with HMRC, businesses that plan to work with food need to register with their local authority.

If you don’t register at least 28 days before you start any food operations, you can be fined and/or imprisoned for up to two years. 

You can register your food business on the government food business registration page.

If you have employees, you’re legally required to take out employers’ liability insurance. It covers the legal fees and compensation if an employee is injured or made ill because of their work. 

On top of that, it’s also a good idea to look into:

• Public liability insurance.
• Product liability insurance.
• Professional indemnity insurance.
• Business interruption insurance.
• Business property coverage.

If you search online, you should be able to find tailored insurance policies specifically for coffee shops. 

Health and safety is obviously a big concern for your coffee shop business. As the business owner, you’ll need to make sure your business complies with all the necessary regulations to keep you and your employees safe. 

There are some general health and safety rules that business owners should follow on an ongoing business. You can read more about them in our health and safety checklist for a small business. 

More specifically, you’ll also need to look into:

• Gas and electrical safety certificates. 
• A food hygiene certificate.
• A rating from the Food Hygiene Rating Scheme (FHRS). 

On top of the gas and electrical safety certificate, you also need to have your electrical equipment tested every 6 or 12 months by a registered electrician. The equipment will be approved with a portable appliance testing (PAT) sticker if everything’s in working order.

When you’re starting your own business, it’s important to keep your personal and business finances separate from day one – to save yourself from time-consuming admin further down the line. 

When you sign up for a Countingup business current account, you’ll receive free accounting software with a range of time-saving tools. 

Simply log into the app to create and send invoices, get financial insights, and confidently manage your new business finances. 

Find out more here and start your 3-month free trial today.