From bar mitzvah boy to coffee kings: How $10,000 turned into $10 million empire

Native New Yorker Jeremy Lyman was processing loans for a mortgage company while daydreaming about what it would be like to get paid to hang out in a coffee shop all day. Paul Schlader moved to New York City from Minnesota to pursue an acting career while acting as a bartender and manager at Heartland Brewery.

When Lyman met Schlader, a partnership was born. After about a year of hard work, they opened their first Birch Coffee shop in fall 2009. Since then, the duo has opened six locations in Manhattan, a 4,000-square-foot roast house and shop in Long Island City, and will soon open in the South Bronx. The business is now worth $10 million to $15 million.

Paul Schlader (left) and Jeremy Lyman, cofounders of Birch Coffee
Source: Birch Coffee
Paul Schlader (left) and Jeremy Lyman, cofounders of Birch Coffee

Here's their best advice for brewing up a successful retail business.

Getting started

Not everyone has a deep-pocketed backer to help them realize their dream. I (Jeremy) cashed in a premature bond from my bar mitzvah and opened an account with that. It was less than $10,000, but it was a good start. I also went about $30,000 into credit-card debt and we hit up all our family and friends and took whatever was being offered really.

I think any business can get started for a small amount of money; the key is to simply start somewhere. Start small and before you know it, you have something. While money is crucial to the survival of any business, loving what you do every day is what truly makes you successful.

Control your budget

The key is to do as much as you can on your own in the very beginning. Ask for as much help as you can from whomever you can and try not having to pay them! Try and be realistic as far as your projections and stick to them. If something changes, adapt to it. What's critical is that you try to have a significant reserve so you can focus on growing the business and not simply how you're going to make the rent.

Location, location, loyalty

We've worked with the same real-estate broker to identify new locations for all of our shops. Working with him from the beginning has given us the opportunity to develop our relationship. He has a great understanding of our needs and desires as a business and always keeps an eye out for us.

On occasion, a gem will fall into your lap. Have an open mind and when you're ready to grow, the opportunities generally tend to present themselves.

Strike a balance as you grow

It's sometimes easy to get lost in the excitement of your new venture. What is critical is that you keep a balance in your life. If you enjoy working out, keep at it. If you find that you haven't had dinner with your best friend in a while, finish reading this and then pick up your phone and call her.

And here's a secret: if you feel like there aren't enough hours in the day, wake up a couple hours earlier and boom, now there are more.

Always work smart

Just because you are working 100+ hours a week on your new business, it doesn't mean you are working smart. Sure, there will be times where you have to cover for a sick employee but make sure that you focus on the quality of the work and not simply the quantity of hours.

It isn't a contest. Focus on what you're good at. If you aren't great at math, setting menu prices might not be your strong suit. It may take a while to find your groove but you will.

Stay on your path

When you're still in planning mode, you'll encounter a lot of people who will try to talk you out of starting your own business. While some may have valid points, most people come from a place of fear. If you believe you are destined to do what you're doing, do it. Don't let others' fear of starting their own business impact you starting yours.

Hire wisely

Barista at Birch Coffee Shop in Lower Manhattan
Source: Birch Coffee
Barista at Birch Coffee Shop in Lower Manhattan

Finding the right crew is one of the hardest parts of running a small business. Don't settle on a mediocre hire. When you are interviewing people, pay attention to eye contact, body language and overall personality. You want to be working alongside people you enjoy spending time with. Experience is helpful too but personality is key.

Keep communicating

Communication, or lack thereof, will make or break your business. If you're working with a partner, it is critical that you're on the same page. You don't have to agree on everything. What's important is that you can find a common ground. Never let resentments pile up or they'll come out in non-constructive ways.

Be creative

Create ways to keep people talking about you long after they have left your space. For example, we've recently eliminated Wi-Fi in all seven (soon to be eight) of our Birch Coffee shops as a way to encourage customers to enjoy interaction with one another and take a break from their laptop screens and phones. And we have our trademark "Ignition Initiative," a series of cards available in all of our shops that people can use as conversation starters.

Commentary by Jeremy Lyman and Paul Schlader, co-owners of Birch Coffee. Follow them on Twitter @BirchCoffee.

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