If I Pay Taxes in January - It Will Signify Success

Denis Ezhov
founder Erizo
My first business started in Spain. Prior to that, I, as an engineer-designer, had never been involved in trade. When opening a tea and coffee shop in Barcelona, I had no illusions. This stage is about learning. I learn while working 12 hours a day. It's a long way before I recoup my investments, and the store has already been attempted to be robbed twice.
I didn't conduct any market research to choose a niche for my business, although I probably should have. In my hometown of St. Petersburg, I always liked flavored coffee, from a specific brand. Not finding it in any store in Barcelona, I decided to sell it myself.

In immigration with zero knowledge of the Spanish language and not the best English, the paths to finding work and socializing are limited. Therefore, the only option is to pave this path independently. Fortunately, I could obtain a loan from close relatives on favorable terms. Moreover, I officially documented all the agreements, which helps me legally minimize taxes.

I didn't think long about the name. It comes from my last name - "Ezh." Moreover, "erizar" in Spanish means "to make one's hair stand on end": we promise to emotionally uplift and boost spirits.

However, local residents were taken aback by our prices. "Too expensive," say the people who are used to drinking coffee for 1.5 euros (while ours costs 2.2). It's no wonder that among our regular customers, the majority are foreigners who appreciate specialty blends.

I enjoy working in atmospheric places with heart. So, it's heartwarming when people say that the store is beautiful. I designed the entire interior project myself using a free 3D program, drawing inspiration from the wonderful design created by Lisa. She developed the brand book with a signature style, and I creatively apply it to everything else.

To gauge the level of my perfectionism, here are a couple more facts. I bought the most expensive coffee grinder and water purification system because it contributes to 50 percent of the flavor. The coffee machine wasn't the highest-priced one, but I spent a month fine-tuning it to get the guaranteed results I like. Again, I figured it all out for the first time independently. It's all a learning process!
Store Opening Budget
Business Transfer (Traspaso) Documentation - 21,000 euros.
Design - 500 euros.
Renovation, including materials - 5,000 euros.
Legal Matters - 1,500 euros.
Equipment (coffee machine, water filtration, cash register, coffee grinders, refrigerators) - 15,000 euros.
Purchase of goods - 12,000 euros.
Advertising - 1,000 euros.
Total: 56,000 euros.
The life of the store's founder goes like this: from 10 AM to 8 PM, you're constantly on your feet. You're selling products, pouring coffee, entertaining visitors, and cleaning up.

The turnover allows you to cover the rent, utilities, and pay another salesperson who takes over for me, or else I would have collapsed.

Twice, unknown individuals attempted to rob me in broad daylight. Now, you can watch it on surveillance camera recordings like a detective series. One of the robbers threatened me with a plain plastic file instead of a weapon, with an A4 sheet of paper that read, "I have a knife, don't resist, give me the money" (see video below). Later, it turned out he was using this method to hide the message about having a knife, so the incident would be classified as theft.

I didn't hesitate, pressed the panic button, took out scissors, defended myself, and held onto my money. In the second attempt, they stole a tip jar. I chased down the thief and got the money back. Although, while chasing the robber, I injured my leg, and it took a month to recover.
When I was looking for a location to open my store, I chose busy places. Mine is located in Eixample on a large square. I arranged it through a traspaso, which means I paid for the transfer of the business from the previous lessor.

Now I understand that there was no real need for it. Firstly, it took a lot of time and money to make the deal legally clean. I was afraid that along with the premises, I would inherit debts and hidden obligations. Secondly, it turned out that my store, albeit slightly, visually obstructs a newspaper kiosk, and people simply don't see my sign. Plus, there's a bar nearby with cheaper coffee.

To attract customers initially, I offered discounts, but unfortunately, it didn't lead to repeat purchases, only losses. The most successful marketing tool became the loyalty program integrated into the Loyverci cash application. Customers enter their phone number, create an account, and accumulate points that can be redeemed on their next purchase. Most people save their points, and this genuinely leads to repeat business.
A unique aspect of my business is that I constantly have money tied up in inventory. Selling and buying new stock for profit is not always possible. About 20 percent of our goods are held in storage, unable to be converted into cash at any given time.
The most challenging aspect is trying to gauge demand accurately. For example, I had to expand my tea assortment by about double and coffee by 30 percent. It takes time to figure out what's selling and what's not, and yet purchases need to be made in advance. I work directly with factories at wholesale prices, so I can't just place small orders.

Here's my plan: I'll continue working until the end of January 2024, review the performance indicators, and assess the results. I'm currently selling at a loss, which means I don't have to pay VAT and income tax. So, paying taxes next year would signify success for me. Sometimes, I regret that I'm operating fully above board. Purchase prices for coffee and tea are increasing, rent is up by 2.3 percent, and delivery costs have risen by 10-14 percent.

A single store is unlikely to bring substantial profits; I'll need to develop an entire network. However, I'm thinking about creating an online delivery service to reach my entire audience. I believe that the quality of the products and their exclusivity will eventually attract many customers. That's when a new phase of learning will begin!

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