Renowned Chicago architect and city planner Daniel Burnham once said, "Make no little plans." Burnham spent much of his time designing big buildings in city settings. Coffeehouses may not have been part of his portfolio, but the comfy couches and aromatic smells are part of the social fabric in many of today's urban (and not so urban) settings. Therefore, making no small plans for coffeehouses might not be such a bad idea.

This year-long series will examine in depth the evolution of a coffeehouse, taking a look at the entire process from selecting the site and negotiating the lease to devising a marketing strategy and selecting vendors. What's the best way to start? It's not with picking out the perfect bean or espresso machine. Believe it or not, the best way to begin opening a coffeehouse is either with a pencil and paper or a keyboard and computer screen. So sharpen your pencils and dust off your keyboard, because you're about to start writing a business plan.

Depending on your available time and financial resources, you can write a business plan on your own or in conjunction with a consultant. Most likely, the more resources you have, the less time you'll need to personally devote to creating the plan. If the coffers are low however, expect to spend at least several months on research.

CREATE THE VISION

A business plan can be a way for bankers, investors and lessors to gauge the viability of the business concept and then offer capital or a site based on their determination of potential success. But more importantly, a business plan is a way for the entrepreneur to really figure out what he or she wants to do. "Business plans serve a variety of purposes. The fundamental one should be helping the entrepreneur reach their vision of some sort," says Joe Monaghan, author of Espresso! Starting and Running Your Own Specialty Coffee Business and vice president of Espresso Specialists, Inc., a Seattle-based equipment distributor.

A well-rounded plan outlines everything the entrepreneur has taken into consideration in order to open a coffeehouse. The plan should begin with an introductory overview that provides a mission statement: Who you are, and what you are trying to do. A business plan may contain a lot of redundant information that is laid out in the overview and then explained in more detail later on in the plan. The overview may briefly explain the unique angle of the concept, target market, marketing strategy, competition, market trends, menu, location and the company's principals.

MAKE IT DISTINCT

Just 10 years ago, opening up a coffeehouse was a unique concept in itself. Today, with thousands of coffeehouses scattered around the country and, it seems, one on every corner in major cities, a coffeehouse concept has to be distinct. This is what author and coffee coach Tom Matzen refers to as a "unique selling proposition."

"In other words, do you have an answer to the question: Why should people do business with you vs. every other option out there?" explains Matzen, who wrote Start and Run a Profitable Coffee Bar and runs a consulting business, Entrepreneur Coach, Inc., in Port Coquitlam, British Columbia. "The world does not need another coffee bar. There are lots of them. So, if you're just going to open up another coffee bar, you're wasting your money."

Because there are probably more fun ways to waste money than opening a coffee bar, the unique selling proposition is extremely important. Matzen says it is one of the hot buttons of the business plan--what most readers will probably spend a significant amount of time reading. Matzen refers to this concept as stickiness, or the ability to draw the customer past the competition and into your store.

This part of the plan explains not only who the competition is, but also how you're going to stand out from them. Matzen says that coming up with a unique concept is a must in today's marketplace. The unique concept creates a competitive advantage because there is already a loyal customer base that will seek out your store. For example, he says that an all-organic store is a huge competitive advantage as is the retailer who roasts coffee on site and can create custom blends.

"In other words," Matzen adds, "just creating an answer why you vs. every other option out there."

TARGET THE MARKET

Going along with the unique selling proposition is explaining just who will buy this proposition. Are you targeting the college crowd, the young professional, upscale families? How are you going to reach that crowd to market your concept cost-effectively? Will you use coupons, run advertisements, set up a Web site?

"If I see a person who's going to be running ads in the local newspaper, I know they don't have a clue what they're doing," Matzen says, adding that this form of marketing generally doesn't have a good return on investment. Matzen says he likes to use a 10 x ROI formula, meaning that, for example, every $100 a business owner spends on marketing will generate $1,000 in revenue.

"Cost-effective is one of the big ones, because if it's really expensive to generate customers, you're not going to be able to sustain that long-term," Matzen warns.

GATHER THE NUMBERS

Another crucial part of the business plan is the numbers. In fact, some consultants say that there should be two business plans--the presentation, which includes the vision of the concept but not the financial aspects, and the financial plan, which focuses on projected costs and revenues. While some readers such as bankers and investors may quickly review the presentation plan, it's the numbers that they're really going to focus on, says Bruce Milletto, president of Bellissimo Coffee Info Group, a widely-known industry consultant based in Eugene, Ore.

"They want to say, `O.K., this is a beautiful picture that you've painted here. We see that you have the background and the moxie and the savvy to pull this thing off, it seems like. But, let's look at some numbers. Let's see what you have projected,'" says Milletto, who co-authored Bean Business Basics, a top-selling, how-to manual on starting up a specialty coffee business.

Coming up with the numbers is, not surprisingly, what baffles most coffeehouse owner wannabes, says Kris Larson, Bellisimo's vice president. Larson says the start-up projections Bellissimo prepares for its clients include such major figures as the cost of equipment, build-out and consumable goods. The costs can vary greatly, depending on the location and size of the concept, but in general Larson and others say they range from $50,000 for a small coffeehouse without much of a food menu to upwards of $250,000 for a full-scale, sit-down store.

Monaghan of Espresso Specialists says the figures are lower for smaller concepts. For example, he says start-up costs for a kiosk may range from $20,000 to $30,000 while a drive-through will take about $30,000 to $50,000.

Narrowing down the start-up costs to one figure is where a lot of research comes into play, and the financial plan may be just as long as the presentation business plan. It's also important to include working capital in the start-up costs to get through the first few months. Many new entrepreneurs forget that it will take a while to generate a profit so you need operating capital to cover the costs of labor, products, etc., before the balance sheet reads black. "I would say that the average coffee bar that we see generally does not start turning a profit until about month seven," says Milletto.

Larson adds that Bellissimo projects two years of income statements for its clients based on the company's internal data and the data gathered from interviews with the client about such aspects as the coffeehouse location and traffic count, which then determines the price per cup that should be charged.

ANALYZE THE INDUSTRY

A business plan should also include a section on market trends in the coffee industry. This section may begin with a historical overview of coffee and then go on to explain how coffee and the coffeehouse fit in with today's lifestyle, sort of where the coffee industry has been and where it's going. Larson also says it's good to explain how the specialty coffee business has grown and will continue to grow despite economic downturns.

"We use a lot of statistics that show that it's not a stagnant business, it's rather counter-cyclical to what's happening in the economy. A lot of businesses aren't doing well but coffee just continues to do well even when the economy isn't," she explains. "People may not be able to afford the new car or the new sofa, but they can have their latte every day."

EXPRESS YOURSELF

Coffee entrepreneurs come from all different types of backgrounds and enter the business for all different kinds of reasons--from a desire to earn a good profit to a long-time wish of creating a comfortable atmosphere where people want to meet for good conversation. Readers will want to know something about the principals of the company so you should include background information on yourself and others involved in the business. Having foodservice experience is a big plus, but describing any experience that relates to the food or coffee business might provide some additional insight on your concept's prospects for success.

FLESH IT OUT

A business plan by definition should be detailed because this forces the entrepreneur to consider all the different aspects of running a business. One of these aspects is the menu. What kind of specialty coffee drinks will be on the menu? Will food be offered? Will it be just baked goods and snacks or lunch fare? The decision may relate to the location and the target market. A concept with a location that's in the direction of the morning commute may want to focus on breakfast fare for people on their way to work, while a coffeehouse concept that's going to be in more of a shopping environment may include more substantial menu items.

A description of the desired location is also important. Knowing where a coffeehouse will be gives a good indication of the traffic count and type of customer that may be expected.

Matzen says a hot button that he always looks for in business plans is whether the concept has been designed as a system-dependent model or a people-dependent model. A system-dependent model will include training programs for employees, management handbooks, job manuals, or simply written plans on how the staff will be trained to deliver consistent, predictable results with or without the principal owner, Matzen explains. A people-dependent model, on the other hand, relies upon the skills of the entrepreneur to keep the business running smoothly.

"When you create a system-dependent model, you automatically can grow and expand," says Matzen, who has developed more than 40 coffee bars for himself and clients. "When you create a people-dependent model, you're vulnerable."

Finally, Larson adds that including sample architectural plans for the coffeehouse and perhaps even a sample menu lets readers see that the entrepreneurs are really committed to the business.

"It's not written in stone, it's just a sample, but it does give a really good idea that people are actually really thinking about it," Larson says.

DO A THOROUGH JOB

If all that sounds like a lot of work, well, it is. A business plan is no small undertaking. Of course the more work passed off to a consultant, the less work for you, but the more money it will cost. If money isn't an object, a consultant can be hired to complete a business plan in a week or so. Otherwise, expect to spend anywhere from three to six months researching the plan on your own. Matzen, who charges $750 an hour, says getting coaching doesn't have to be expensive but may cost anywhere from $2,000 to $20,000. Sample business plans and newsletters offer less-costly ways for getting some good start-up tips. Libraries, the Internet and bookstores are all sources for this type of information.

Whoever puts it together, though, the plan should look as though it has been professionally done. Incomplete information, poor grammar, and typing errors on a business plan will almost surely amount to failure.

"I think that's really important for people to remember that just typing it out in your Microsoft Word and printing it out and handing it to someone isn't going to make the impression that you want," says Larson. "Lending institutions, landlords like to see things that don't look like they were done on a home computer."

Larson adds that including attractive graphics and visuals, such as photos of coffeehouses and people drinking coffee, helps the reader capture the essence of the concept.

Milletto also points out that no matter how much research is poured into a business plan, it still remains just that--a plan. Be aware that running a business will produce a whole new set of unpredictable complications. "You can take the business plan and throw it in the garbage can the day you open the doors," he says, "'cause now this is real life."