Start small at the beginning to get a feel for the interest and minimize the risk of losing money. Make sure that size of the venue supports the performer. Most of the New England coffeehouses are in churches. If a church hosts the coffeehouse, a business license is not required. The coffeehouses are all non-profit, volunteer organizations.
Churches seem to be better venues for the coffeehouses then for-profit businesses.
But, regardless of the location, make sure that the maximum capacity of the building is not exceeded during the shows. If the fire department sees it, they can shut the coffeehouse down. The performers usually charge a guaranteed fee verses a percentage of the gate. But, the coffeehouse can't lose this way. If the fee has a guaranteed minimum or if the fee is a flat fee and not enough people show up, the coffeehouse could lose money.