Learn from a business owner’s experience of closing down a failing coffee shop. Discover the challenges faced and the lessons learned from this tough but necessary decision.
Not every business turns out to be a “successful success”. In 2018, Mila Mizina made her dream come true – she opened her own small coffee shop in Penza. However, the project lasted only 9 months, after which it had to be closed. The girl told whether it is easy to start your own business without experience, what problems await a budding entrepreneur and why a failed business is not the end of the world.
A click in the head
Before starting my own business, I was a journalist for two years: I worked at a news agency in Penza. But then I realized that news was not my thing, quit, and worked remotely for about six months at a monitoring agency, writing analytical reports for large companies. I was happy with almost everything, but it was somehow boring, I wanted movement and development.
I go to fly yoga, and after each class we meditate: you lie in hammocks, your body sways, relaxing music plays. One day I was just lying there, and it clicked in my head: I want a coffee shop, it will be called “MORE coffee”. After all, I really like coffee, why not?
I immediately imagined that it would be a small stall. My boyfriend and I often walked along the embankment in our area and saw many empty kiosks. I really liked them: small, neat, designed in the same style. I wanted something of my own in this place.
The idea of starting my own business haunted me for two months. In the end, I discussed it with my boyfriend and my parents. They always support me, and here they also said: yes, that’s cool! I, in turn, explained why the business could be successful: after all, I wanted to open a coffee shop in a good place, where there are always a lot of people. We realized that it was time to act.
IP in a few days and 200 thousand in debt
I had no experience in entrepreneurship. So I sat down to study everything first – both from the point of view of legislation and from the point of view of the coffee business. Everything was new to me, but in the end I was able to figure it out. So, the requirements of Rospotrebnadzor turned out to be logical and expected: it was necessary to simply file a notification about the start of the coffee shop.
The tax system turned out to be the most voluminous and complicated. Here the Internet came to the rescue: forums for entrepreneurs, business blogs on YouTube. Thanks to them, I learned about the single tax on imputed income, which I eventually used and thanks to which I saved significantly on taxes. Now this form has already been cancelled . The tax service website helped me figure out other issues : it is surprisingly convenient and understandable, and if something is still unclear, you can call the hotline, and they will explain it to you. I registered as an individual entrepreneur in a few days: I submitted an application online and picked up the certificate.
Based on reviews from other businessmen, I found suppliers of coffee beans and consumables that were ideal in terms of price and quality. Then I found an organization where I would rent a coffee machine. My boyfriend worked in shifts, and we decided that we would work in the coffee shop ourselves, without hiring staff. To hire people, we needed at least 40 thousand a month for salaries. This is provided that you put them 2 through 2 and pay 20 thousand rubles a month to each – the average salary of a barista in our city. Where would I get this amount?
My boyfriend and I took barista courses, got health certificates, and decided to work without paying ourselves a salary.
My parents lent me 200 thousand rubles. This money was enough to rent a space, a medium-quality coffee machine and a coffee grinder, and to buy the initial products. The designer created a nice logo for us. I managed to save money on this, since the girl was my friend and did the work cheaper. But it was important to me to pay her anyway: your friends are not obliged to work for free. Let it be a discount, but not free labor.
The premises had to be paid for the first and last month at once. For our small point, the rent seemed high. In the summer we paid 40 thousand rubles, the rest of the time less: in May the rent was 20 thousand, in the winter – 8 thousand rubles. But it was not possible to save in the cold months: because we had to heat the stall at night, we paid about 6 thousand rubles more for electricity.
It took a month of preparations and the coffee shop opened.
“My hands have never shaken so much in my life!”
Shortly before the opening, the printing house delayed our menu (it appeared about a week later), and we decided to start without it. We simply opened a stall with an A4 sheet of paper on the glass, where our positions were written. And inside the kiosk there was me – sitting and waiting for someone to come. People looked around, but no one came.
I was a bit scared alone, so a young man joined me. We sat like that for two hours. It was time for lunch, and the guy went for a shawarma. At that moment, our first customer came up. I thought he would buy one cappuccino, but he took a huge set: there were three or four coffees. My hands have never shaken so much in my life! But I think I did everything well, although that guy didn’t seem to come back to us.
After launching the business, I continued working remotely, and my boyfriend didn’t quit his main job either. We took turns working at the coffee shop, the schedule was flexible: whoever was free worked. Usually, in the morning, I sent reports to the monitoring agency, and at about 12 I came to the kiosk. Then I started working later, because there was almost no one on the embankment in the first half of the day. We finished at 21:00.
I worked like that for about six months. And then I was hired by the radio station where I had dreamed of working all my life, and I had to quit my remote work. But I didn’t quit the coffee shop. In the summer, we opened at 10–11 o’clock and worked until 10–11 p.m. Every weekday, I left for the broadcast at 4 p.m., and the young man was just waking up after a night shift and going to the kiosk.
I had about one day off a week, sometimes two. All meetings with friends moved to a coffee shop. But by and large, for these nine months we fell out of social life.
Everything didn’t go according to plan
My expectations and reality did not match at all. Before the opening, we studied everything: we saw that there were always a lot of people on the embankment and that they bought coffee at other stalls. We thought that they would come to us too. But everything did not go according to plan: there were few customers. Of course, we acquired regular customers. These were people who simply idolized our coffee and said that the others poured some kind of crap, and if the quality was good, then the price was too high. We did not raise the price because we were afraid that otherwise we would not be able to compete with the chains: for example, a 250 ml cappuccino cost us 99 rubles.
We tried to do everything well. At first, I bought very expensive grain and double-layer glasses, which burned my hands less. But after two months there was still no profit, and we started saving: we switched to cheaper grain and single-layer glasses. The latter were produced in our region, so we didn’t have to spend money on delivery.
But cheaper does not always mean worse. We tried not to cut quality in any way and to work conscientiously.
Then I came up with a coffee shop gimmick: edible coffee cups. At that time, there were no such things in the city. But we had no money for advertising, and this played a cruel joke. When the same cups appeared in another, more popular coffee shop, they started to be actively bought. Our customers refused the new product altogether. Coffee in such a cup costs more, and we had to explain what they had to pay extra for. An edible cup of coffee cost 200 rubles. The cup itself was 100 rubles. The purchase price was 60, and I don’t count transportation costs. Another problem was that the cups were on their way from St. Petersburg, some were broken on the way, and some cracked when the coffee was poured. Part of the batch was simply thrown away.
It’s just a bad day or Mercury is retrograde
To win customers, we constantly tried to do some promotions. We arranged discounts on Black Friday and on the day when we celebrated six months since our opening (we already understood that we would hardly make it to a year), launched special offers, loyalty cards, social media contests, and chocolate bar giveaways to customers. But in the end, none of these promotion methods were successful. The flow of people rushing to us for coffee did not increase.
It was very hard. At first, we worked on pure enthusiasm, but when we realized that everything was not going where we planned, the interest faded and the favorite thing began to irritate. I went to work through force, fed myself with thoughts that it was just a bad day or Mercury was retrograde. I always found excuses, but then I just came to complete despair.
In addition, it turned out to be very difficult to work as a barista and do the accounting at the same time. Ideally, a coffee shop owner should not be involved in making drinks. When you sit at the kiosk, it is very difficult to think: as soon as you start doing something, someone comes up for coffee, and you get distracted.
By summer, we were able to earn about 20 thousand a month. These figures did not please me and seemed too small, because I could not even hire a barista. Plus, prices for everything were rising around us, and we did not raise them. The expenses only increased: for example, we had to buy an ice generator to make cold drinks, and this is not a cheap pleasure.
We survived only because both my boyfriend and I had extra jobs that helped us have money and invest in the business.
I didn’t even cry
In the end, we worked for 9 months. The main reason for closing was the lack of profit. I didn’t have any sudden click, I just watched things and saw that they weren’t improving. I saw how every day people walked past us to other stalls saying: “Let’s not take a risk and buy coffee in an unknown place.” And then a full-fledged coffee shop opened nearby with the same quality coffee as ours. It became pointless to compete.
We discussed the possibility of closing for two months, and then I made the final decision and at that moment I felt relieved.
A month before closing, I called the owner of the premises, those from whom I rented the coffee machine, all the suppliers and informed them. Then we stopped working and I filed an application with the tax office to close the individual entrepreneur.
I still have our glasses at home, sometimes I use them. We drank the rest of the coffee ourselves, I almost sold the syrups: some of them are still in the kitchen, but I’m already sick of them. The table from the stall, the chair and the heater were also mine. I gave the washstand to my friend’s dad for helping me take things out of the stall in a GAZelle. I also managed to sell the wardrobe, the refrigerator, the ice maker and the cash register.
It was easy for me during the closing. I was surprised because I thought I would suffer, but I didn’t even cry. I just closed the stall, gave them the keys and said goodbye. The hardest thing was parting with regular customers, we did it almost with tears in our eyes.
The investment never paid off. I left the business with a debt of 200 thousand rubles to my parents and an almost empty credit card, the money from which I spent on mandatory contributions to the Pension Fund and on medical insurance.
We need to promote the brand
I think I failed for several reasons. First, we had no advertising. They say that 10 to 30% of profits should be given for these purposes, but we had no profit – and nothing to give.
The second reason, which I could not influence in any way, is people who have a strong belief that they need to go to big brands. There is only a small share of buyers who are ready to try something new. At that time, there were seven coffee shops on our embankment, some chains had two stalls at once and coffee shops all over the city. People knew them. They went there, even if the taste of the drink left much to be desired.
We were also often confused with ice cream. The coffee shop was called “MORE coffee” and the logo depicted a coffee cup flying on a surfboard over the waves. For some reason, people thought it was a cone of ice cream. I heard passersby say: “there’s ice cream here, let’s move on.” So, perhaps, we let the positioning down.
We need to promote the brand, it’s the only one that works now. We need advertising, bloggers’ attention. I’ve only just now thought of some things.
If you doubt whether you need a business, then you don’t.
For me, my own business was no better than “working for someone else.” I don’t regret leaving the business world. I’ll say more: I’ll never go back to business because I like having free time and weekends more. When you work for yourself, you may not have your own life at all. You work around the clock and always. Holidays become the most stressful moments. And you need to keep everything in mind: at a regular job, you only perform your function, but here you are a one-man band. Now I feel freer.
If you doubt whether you need a business, then you don’t. Even if there is just a drop of doubt. Do only what you are absolutely, 100% sure of.
I am to blame for my own mistakes. The widely publicized success stories of entrepreneurs may well be real.
It seems to me that if a person wants something, he will achieve it. Perhaps I lacked motivation, I did not fight for my business to the last, or I simply burned out early.
I live by the principle that everything that happens is for the best. For some reason, I needed this experience. Business gave me new useful skills: I understood the legislation and the tax system, broadened my horizons , read a bunch of interesting books. And now I can make delicious coffee. My business showed that I can achieve my goal: I did not stop at my stall, I got through to the radio, and for two years now I have been working as a radio host. Now I am happy with everything.
My plans include delving deeper into the world of voice acting, perhaps becoming self-employed, but I’m definitely not going to open a business again.