Coffee shops have become very popular over the years and will continue to grow in popularity, as the U.S. coffee shop market grew to a $45.5 billion industry in 2018. With a growing number of consumer sophistication and bigger multinational investments, getting into the coffee industry could be a good idea for someone looking to start a small business. If you love all things coffee, opening a coffee roasting establishment is a great place to start.
Coffee beans are green, hard and are unable to be brewed when in their raw state. It takes a coffee roasting business to roast those green coffee beans to the light, medium and dark roast levels we are all familiar with. Starting your own coffee roasting business can be overwhelming, but with these tips, you will be set up for success.
Create A Business Plan
Reading enough small business articles, this step should be a no-brainer. All successful businesses start with a well-thought-out business plan. A good business plan helps you map out the specifics of your business while helping you answer some questions that may arise about your business.
Determine what costs are involved with opening your coffee roasting business. There are more costs associated with this business other than a commercial space. You must also think about purchasing a coffee roaster, green coffee beans, packaging supplies, point-of-sale software, labels, heat sealers, a coffee grinder, a computer and internet access. Also keep in mind the ongoing expenses like buying fuel for the roaster, packaging supplies, rent and utilities, POS system monthly or annual fee, paying employees, shipping and delivery costs and equipment service calls.
Do some research on the types of coffee beans and coffee roaster machines. Not all coffee beans are the same and they all have different tastes depending on where you purchase them. They can range anywhere between $3 to $5 per pound. The same thing goes for coffee roasters. A small commercial coffee roaster machine can be purchased for about $3,000 while a higher-end model can be as high as $58,000.
Layout your target market. You can sell your roasted coffee to individuals, coffee shops or grocers. Determine if you want to sell to individuals with retail prices, if you want to sell to businesses with wholesale prices or a combination of both.
Just as important as laying out your target market and determining how much to charge is picking the best name of your business. Make sure it is a name that is easily marketable online. Your product and branding should stand out from your competition. If you do not know where your competition stands, do some research and find out what they offer to their customers.
Form A Legal Entity
Creating a legal entity for your business ensures that you will not be held personally liable if your coffee roasting business is sued. You can open a corporation, LLC or a DBA. The goals of your business will determine what kind of entity your business should be. Make sure you also apply for an EIN. This number will allow you to pay for a variety of state and federal taxes which is imperative to pay before opening your business.
Create A Business Bank Account
Separating your personal bank account from your business’ will ensure further asset protection. If these things are not separate, your personal assets like your home and car are at risk in the event your business is sued. Having a separate bank account also makes filing for taxes so much easier.
It could also be a good idea to open a business credit card. This can help you pay and keep track of your business expenses. The business credit card could also help establish and improve company’s credit history. This comes in handy when trying to raise funds and investments.
Keep Track Of Business Accounting
This is imperative. Recording your business expenses and keeping those recordings organized is imperative to understanding how your business is doing financially. This could be the difference between deciding if you should expand or downsize. Having correct and detailed accounts also helps to make your annual tax filing easier.
Get Permits And Licenses
You must have the necessary permits and licenses to run a coffee roasting business in your local area. If not, you could be fined for copious amounts of money or risk your business being shut down. Do some research in your area about what is needed. All locations and regions might require different permits and licenses. It is up to you to do that research. An example of these things may be a certificate of occupancy, a fair trade certification and frequent health inspection checks. Check with your local town, city or county clerk’s office to find out more information.
Brand Your Company
Branding is so important, especially in today’s digital age. Clearly define what your business is and what it stands for. To spread awareness about your coffee roasting company, offer cuppings. These are professional coffee tastings that give your business the opportunity to engage with potential customers.
By doing research on your competitors, you are also helping to determine what kind of coffee you want to specialize in. You could specialize in a certain roast level or coffee from a particular location. You could also buy the coffee by direct trade and share the stories of farmers who grew the coffee. The possibilities are endless when you have done some research on what your competitors offer and how you can fill in the gaps.
Create A Website
This is very, very important. Almost every business has a website because they know majority of their consumers, customers and clients are spending a lot of time online. They are also making judgement on those companies that do not have websites. If your company does not have an online presence, the potential customers could be least likely to interact with your company. Get a website and engage on social media.