13231979784_90ca865d8a_zRunning a great business on a shoestring is no easy task.  Well-known chefs usually have an investor or partner(s) to establish their restaurant brands.  It does really take money to make money.

If you are leaning toward a store rather than a cafe, you will need displays, shelving, focus lights, a good amount of inventory stock and, since many concepts are a combination of both, you will need to decide where your emphasis will be.  I can’t tell you how many times we were in the process of making a $50 loose tea sale when someone just wanted a tea to go for $2.50 and was in a big hurry to get it and get going.  Staff decisions are important, not only as to how many per shift, but also the personality type and amount of training in tea and customer service you plan to provide.  What about pay?  Will it be by the hour with tips, and/or with a bonus or profit-sharing program?   Will you manage the store or hire an experienced manager?  Are you physically up to 60-80 hour work weeks?  This is not necessarily age-dependent. I know of two women in the eighty-year range who work their restaurants hands-on. I’ve worked with twenty-somethings that couldn’t keep up with me or them.

Do you know what your average ring goal is?  Does it surprise you that coffee houses and cafes average around $6 per transaction as an industry, whereas Teavana, as a ‘mall store’ concept, averages over $30 per transaction?  How many rings a day on average will a particular location support?  Once you’ve found the location, whether you are working solo or with an experienced commercial real estate agent, sit and watch foot traffic and time patterns and talk to other retailers nearby about their experiences.  A landlord told us that Starbucks closed a store in our area that didn’t hit $800,000 a year in sales. If that’s true, divide the average transaction into that number and figure out the daily customer traffic needed to hit it.  How many days and hours will you be open?   Commercial leases include times you must have the store open and commercial landlords have no qualms about enforcing lease terms.

So, back to the dream: who will your vendors be and how will you find them?  The easy answer is trade shows but I can tell you that my best vendors were not found through trade shows but through word of mouth, lots of research, and calling and emailing and sampling and searching and digging.  How much do you know about tea itself? How much do you know about major growing regions, how tea is processed, differences between regions, terroir, flushes, Fair Trade, organic?   Some of your customers will know a whole lot about tea, but most will know almost nothing and will expect you to educate them.

Inventory control is a huge factor in running a business.  Even with ‘forever’ shelf life, general merchandise is expensive (to you) if it just sits on the shelves looking pretty.   If you offer food, how it complements the tea selections is important.  In cafe concepts, it often happens that the person who went into business to sell tea ends up running a sandwich shop when the concept is not clear or focused.

There are too many details to cram into a short post, but bookkeeping, constant cleaning, and dealing with city, county, state and even federal government agencies are just a few of the things that come into play.  In short: the reality is that you will become much more than a person who wants to sell and share their love of tea!  “Great it is to dream the dream…”

All that and the tremendous time and cost aside, here we go again.  This will be my third launch into the deep, and this time I have much more helpful information to move forward with.  Like a veteran with war scars and a bit of trepidation, I sit here looking at the new dream on paper, and the entrepreneurial adrenalin still starts pumping.  It’s like you can’t help yourself.  You get pregnant again, even with the memories of the pain of childbirth, exhaustion of early morning feedings, and innumerable challenges as the child matures.

Possibly, hopefully, in 9 months (or longer?), our newest baby will be ready to meet the world!  If you’re ‘pregnant’ as well, I hope this was helpful and wish you all the best!  And, whatever you do, avoid a premature birth…haste makes waste and expensive mistakes.  We will not go out into the arena again without adequate financial resources (not loans!), a finely tuned concept, and an “A” location.  I urge you to do the same.

Are you already a retail tea business owner?  I’d love to hear your input and experiences!

This is the second in a two-part series. To read part one, click here.