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$6M/Year Coffee Business

Started On The Side?!

Introduction

Explore the incredible journey of Jake Paulson from Anchorhead Coffee, who transformed his humble garage setup into a thriving coffee shop. Prior to delving into the coffee business, Jake immersed himself in the music industry, where he realized that his favorite part of the day was enjoying a magical cup of joe.

Fueled by passion, Jake and his partner made the bold decision to transition careers and began crafting cold brew in their garage. This marked the birth of Anchorhead Coffee. In just two years, Jake successfully expanded Anchorhead Coffee to 300 retail stores. 

Starting The Business

When Jake opened his first location, he set a goal of making $2,700 a day, which would amount to a million-dollars a year. On the first day, they made around $2,100, but then the numbers dropped to $1,500 in the following week. However, with the hype and advertising, they quickly surpassed their initial numbers and ended up making $810,000 in the first year and $1.2 million in the second year.

Jake mentioned that when they opened their new location, they hit the streets with free drink cards that had the address on them. This is a great way to get people interested and create buzz. Additionally, leveraging social media platforms to showcase the coffee and engage with potential customers. Posting high-quality photos, running promotions, and interacting with your audience can help build a loyal following.

When Jake Paulson started his coffee business, the startup costs for his first location were around $500,000. This amount was broken down into different categories. About $350,000 to $300,000 was allocated for the buildout cost. Another $100,000 was used for purchasing equipment, and an additional $50,000 was set aside for operating expenses upfront.

They were able to secure private investors in their second year of business who helped cover half of the startup costs. For the remaining half, they had to take out a secured loan. Since they were a small business with no established business history, they couldn't get an SBA government loan. However, their investors stepped in and covered the entire amount, with $250,000 being secured and paid directly to the bank.

Growing The Business

Jake Paulson grew his coffee business by focusing on old-school marketing strategies and creating a visually appealing brand. Instead of relying on expensive PR firms, he and his team took cool pictures and made cool videos to generate buzz through word of mouth. They realized that at their stage, hiring a PR firm wouldn't be worth it, and they could better allocate their resources by focusing on their products, customers, and overall experience.

Jake emphasizes the importance of making your brand look as cool as possible. Perception plays a significant role in attracting customers, so investing in creating a visually appealing brand is key. People are drawn to cool spaces and aesthetically pleasing products, which they love sharing on platforms like Instagram. However, it's not just about appearances; having a high-quality product to back up the brand's image is crucial for long-term success. By focusing on these aspects and creating a strong brand identity, Jake was able to move his coffee business forward, survive, and thrive.

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