Due Diligence Basics


I don’t know how starting a coffee shop normally goes, but this part [post-location find/pre build-out] has been the most complicated so far! I now understand why there aren’t a lot of online resources to prepare you for the technicalities of opening up a shop. They tell you the basics to look out for, and the importance of contacting the permit/licensing authorities involved, but how do you prepare for things you’re not even aware of? You can’t! The complications that arise is case by case, so you can only prepare for as much as you can, hope for the best, and go along for the ride. And it’s not even over, so I’ll be sharing what we’ve been experiencing and learning at this point, and finish this topic up sometime in the future.

This is also the point where however easy you thought starting a coffee shop would go gets thrown out the window. You’ve got your business plan, got your location, think you have all your ducks in a row, but it’s rocky and murky waters up ahead. So how are we preparing, and what would we have done sooner at this point?

Due Diligence Basics

Due Diligence Basics

Due diligence describes the steps you take to minimize future risk. In this case, doing your due diligence for signing a lease involves making sure you’re legally permitted to build out your shop the way you see planned. Things can come up that you might not have even thought of, like needing another exit or bathroom based on your seating capacity, or needing a commercial kitchen based on your menu. There are so many unknowns and it can be overwhelming, but doing as much research as you can will better prepare you before you’ve taken costly steps too far, like signing a lease realizing you can’t have, or afford, the shop you planned.

Here are the least of people you want to talk to with your coffee shop inquiries:

  • City Permit Center– the planning, building, and/or zoning department to see what permits you need to apply for (building, signing, alarm, zoning, etc.)  depending on what you’ll be doing with the space
  • City Health Department– for a food/beverage license and to see what health codes and regulations apply
  • Local Fire District– for regulations and permits regarding alarms, sprinklers, exits, etc.

Check out licensing and permit regulations ahead of time to get a clear idea of what’s required, by whom, and exactly what you’ll need to fill those requirements so that you encounter less surprises along the way.

  • Design team: architect/engineer- you may need one or both to draft plans for permits
  • Build out team: contractor, plumbing, electrician, etc.
  • Lawyer– to look over the lease when the time comes
  • Insurance Agents– to have necessary insurance when the time comes

The architect/engineer and other licensed team members will also be helpful in working with the administrative offices, as they have experience on pulling permits, and even decoding the application itself! Having other personnel such as a lawyer and insurance agent lined up will make it easier when the time comes, because you’ll have plenty on your mind without wanting to search for people to work with you.

Start sooner than later

This is a great place to start in preparing to open a coffee shop, and start as soon as you can, even to get a general outline. You may not get specific answers until you have a space or are closer to signing the lease and build out, but it helps to show you want to go about the right away from the beginning instead of scrambling for answers once the clock is ticking. Either way, be prepared for hiccups; we’re learning to be flexible and patient while we figure it out. There are so many moving parts and people, and they have to come together all at once in a short window of time, but even doing a little more planning in the beginning would’ve saved us some time and prepared us for what’s ahead.

How much due diligence you need to do will also vary depending on your city, their permit requirements, your space, and use of space. Start with these basics, but don’t make the mistake of not inquiring and assuming you don’t need to go through these authorities.

Current Update

So where are we now? It’s a humbling process that many times we don’t what we’re doing or what to expect. As our first time taking on a venture like this, there are so many unknowns, but we’re willing to learn and do what we need to do. There have been stressful moments and breakdowns, but just as much peace and provision to keep us going. Everything has been great with our landlord since we’ve found the space, put together a letter of intent, received a proposal, and agreed we were ready to draft the lease. At the moment we’re waiting on a few things before signing to minimize potential costly complications that could change our points of negotiation.

We’ve been spending some time going back and forth with the city on what’s required of us. Based on our space, we need to file for a building permit, health license, and get the fire district approval. In order to do that we need an architect and/or engineer to draft up plans. For a while time was passing as we were  looking for an architect and engineer, but throughout this time the “bathroom situation” (as we call it) kept popping up. Basically some architects were confident one bathroom was sufficient in our small square footage, but others were certain you still needed two with a seating capacity of 15 (which the building permit and health office confirmed we do). It all depends on how you interpret the code (which is why an architect/engineer should be part of the permit process), but more often than not, authorities pick the more stringent of interpretations. Because needing to build out another bathroom affects our budget and certain lease negotiations, we’ve been waiting on this confirmation before we do anything with the lease so we’re not stuck in a situation we can’t handle.

In the meantime, we’re still learning a lot about the technicalities of the permit process, are shopping around for equipment (which you need to present for the health permit), getting our design and build team together, and figuring things out a day at a time. Shoutout of thanks to everyone who’s helped us along the way– for your advice, input, patience and support! It means a lot to have you part of our journey, we certainly aren’t capable of doing this alone. We shall keep you updated and continue sharing what we’re learning! 

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2 Comments

  1. I am currently looking into opening a coffee shop and running into the same issue, but our space is too small to utilize well if we have to put two bathrooms in. What was your final outcome?

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    • Julia

      Our architect made a plan work that had one ADA bathroom, and one non-ADA bathroom. The second is teeny and doesn’t take up too much room, but still gives us two bathrooms. Finding an architect able to see that solution and professionally request a variance to the city made a big difference.

      Depending on your architect and your ability to problem-solve with the landlord/city, people have also made it work by having a community/shared bathroom within 50 feet of the space… I feel there are solutions if you are surrounded by professionals willing to find them. It is case by case though!

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