How to go from out of cash to searching for a second location – Bear Coast Coffee

In the southern most city of Orange County lies an iconic sleepy surf town, San Clemente. With blend of laid back surf culture and proximity to major hubs like San Diego and Los Angeles, San Clemente has become the ideal location for professional surfers from throughout the world to come and hone their skills in the off-season, as well as a great place for local families and military personnel from the near by Marine base to unplug on the sand. Located only yards from this iconic beach is Bear Coast Coffee, a third wave coffee shop that, like its home town, blends the quality expected from a metropolitan cafe with the laid back personal service of a beach town coffee shop.

Today, you can drive by Bear Coast coffee and admire the line curving out the door and onto the sidewalk, with wait time that rivals even that of the big boys from Seattle. Bear Coast is profitable, servicing the community they love, and is anticipating a second location in the next year. However, just eight months ago when they approached me, Bear Coast was losing cash and just a couple months away from not having enough to cover payroll.

Pop Up.

The owner, Jeff Clinard, launched the brand Bear Coast Coffee in a pop up coffee bar in San Clemente after managing other coffee shops for over half a decade. When the pop up shop launched, there were few employees, limited overhead, and a community thirsty for great coffee. This was a beautiful mix that led to Jeff and his growing team to move from their pop up, into their first independent location. Unfortunately, it was during this move where the challenges began.

Construction.

When construction started in the new location, a contractor was hired and entrusted with the task of completing the build out. After a few months and over $20k spent, it was discovered that the contractor was stealing and not performing the work. This was a devastating blow to the new entrepreneur, and the contractor was fired. However, with the help of a new trustworthy contractor, Jeff completed the build out and opened the location in May of 2016.

Sales Sales Everywhere but Not a drop of Cash

Despite construction setbacks, Bear Coast opened to a great crowd and amazing community support. As a pop up, they had established themselves as a consistent quality coffee shop and when Bear Coast Opened, they did not disappoint. Jeff was able to train great employees, source amazing coffee, and deliver the product the customer wanted. Unfortunately, within two months, even with growing sales, the credit limits were maxed, and cash was running low. This is what people forget to tell small business owners. Growing is not the same as succeeding and Bear Coast needed help and was able to reach out.

What we did to help:

 

Account for everything.

Most people love to say that they are not “Numbers People.” Accountants have boring reputations and entrepreneurs with big ideas are on the cover of well designed magazines. However, the truth is that any good business owner has to know their numbers. They do not need to be a CPA, or know how to calculate the NPV of a competitor’s cash flow, but they do need to know where their money is going.

The first step we took was to download and categorize every dollar earned and spent during the previous three months. This sounds like overkill and a bit scary, but really it only took an afternoon (4hrs tops) and Jeff just provided access to his Point of Sale System and business bank account.

From there I was able to quickly answer the key question : “Where did the money go?”

What’s Trending.

We then looked at what the underlying trends in all of information.

When looking at sales and expenses it is easy to see the easy answers, are we making more then we are spending?

However, we focused more on specific questions. These were things like:

  1. When more money is spent on coffee do we have an equal or better increase in coffee sales?
  2. When buying inventory how long does it last on the shelf?
  3. If advertisement is purchased do we see an increase in orders?

From this questioning, we were able to see two major areas where significant cash was being spent with little to no positive impact to their bottom line. In addition, we identified a few areas that if more money was spent, we would see a significant increase in bottom line sales.

Because here is a little secret… money is your other employee.

When dollars are spent in the right way they not only cover costs, they can accelerate growth.

Plan a Plan.

Business is complicated with everything connected, when major issues are fixed, it does not mean all issues will go away. So when we identified the initial causes of cash flow problems we immediately set up a schedule for periodic reviews and key reports for us to go over.

In the same way you might have a personal fitness trainer, we became their business trainer.

Lather Rinse Repeat.

Within three months of our work with Bear Coast, Jeff and his team were seeing consistent positive cash flow. This allowed us to adjust focus and start building up a cash reserve and pay off the debt. Now eight months into the project, they are only a two months away from being debt free with a cash reserve, and are scouting locations for their second shop.

What does this all mean?

Opening a business is hard, and takes amazing determination and support, and what people don’t always mention is how lonely it can be. It was a great experience to work with Jeff and his team, and when we first started I know he felt frustrated, stressed, and a bit lost. However, a lot of times it just takes someone to come along side who has not only an outside perspective but professional training and experience. I was able to help keep Jeff from thinking about everything all at once, and instead helped him focus on what’s important, allowing him to enjoy his business more.

 

If you have a business, and you’d like to chat about how I might be able to help. Send me an email and tell me about your business.

And hey if you’re in San Clemente I’ll meet you at Bear Coast.

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