Starting a coffee roasting business has many challenges, especially for new business owners or entrepreneurs.
In this guide, we understand the difficulties faced and show you how to start a profitable coffee roasting business despite the challenges. You only need to read on for tips on starting your coffee-roasting journey.
Starting Coffee Roasting Business
Whether you’re new to coffee roasting or an industry veteran, starting your own business can be rewarding on many levels. You’ll need all the assistance you can get to achieve such lofty objectives.
Below are the different actions to take in setting up your coffee roasting operations.
Identify your Target Market
One of the things you’ll need to have figured out is your target market. Due to the constant demand for coffee products, finding a call isn’t that difficult.
While true, you must decide who you need to sell to. Potential buyers include tourists, corporate clients, and local businesses.
Other possible buyers of your roasted coffee products include specialty food stores, health-conscious consumers, and online shoppers. You may also target home brewers, event planners, and more.
By identifying your target market, you understand their preferences and needs, thus fulfilling such.
Research the Business
When it comes to market research for a coffee roasting business, there are several benefits derived from the process.
These include minimizing investment risks, identifying potential threats & opportunities, being used for strategic planning, and identifying emerging trends.
Business research also helps with revenue projections, keeping ahead of the competition, and identifying and focusing on customer needs.
In planning your marketing research, you’ll need to define the problem, choose your method of inquiry, and adopt a research method and design.
Also, choosing a sample, data gathering, analysis & interpretation, and obtaining your marketing research results are necessary. If this sounds complicated, you might want to hire an expert to handle all your business research needs.
Have a Plan
Your coffee roasting business idea will need a clear and concise plan for its implementation and everyday running.
In other words, this plan does good for your business. These advantages include the validation of your business idea and the benefit of setting and tracking your goals.
Your coffee-roasting business plan also allows you to take action, manage resources, make better decisions, and manage risks.
This document also promotes effective internal and external communications. With that said, how should your plan be structured? For best results, the following sections must be included:
They include the executive summary, business or company description, industry analysis, and target market analysis.
Also, add sections like the competitive analysis, marketing strategy, operations plan, management team, financial plan, and appendix.
Identify your Funding Sources
While seeking to establish a coffee roasting business, one thing you cannot do without is identify funding sources available to you.
There are different types to consider. The most common include using credit cards as financing solutions or using traditional small business loans.
Other funding options for coffee roasting businesses include SBA loans, equity financing, peer-to-peer lending, and small business lending fund.
Small business financing, business plan competitions, venture capital, and angel investors are more funding sources to consider.
Get Coffee Roasting Equipment & Supplies
All coffee roasting businesses will require all essential equipment and supplies for effective functioning.
Of course, this will attract expenses you must be prepared for, as discussed above. So, what types of equipment and supplies are needed for a coffee roasting business?
Examples include roast log software, bean probe, moisture meter, gas burner, and airflow control system.
Others include stirrers, color analyzers, bags, scoops, hoppers, coffee roasters, grinders, de-stoner, scales, cooling trays, cleaning brushes, packaging materials, etc.
There are Ongoing Expenses to Consider
When setting up your coffee roasting operations, it’s essential to factor in ongoing expenses.
Also called recurring expenses, these are incurred daily, weekly, monthly, or yearly. Examples of these include equipment service calls and employee wages.
Other ongoing expenses include supplies (green coffee) purchase, POS system fee, roasting fuel, packaging supplies, and shipping & delivery costs.
More coffee roasting supplies include utility & rent expenses, amongst others. Having knowledge of these and preparing will help with smooth business operations.
Several factors, such as location, business size, type of equipment, and product demand, will determine these costs. To know how much it will cost, you’ll do well to work out your business needs and make inquiries, etc.
Obtain Coffee Roasting Business Permits & Licenses
Licenses & permits for a coffee roasting business aren’t uniform across all states.
In other words, requirements applicable to your state of residence may not be the same for another. With such a reality, general permit & license categories may be common irrespective of business location.
Such may include a building permit, business license, sales tax permit(s), food service permit, and health permit. You’ll need to know specific information about these permits and license types.
To be fully operational, you must meet all such access and licenses.
Form a Legal Entity
Your coffee roasting business must have a legal entity within which to operate.
Of course, such a business structure must be suitable or meet your business requirements. Irrespective of type, these structures offer a variety of benefits or advantages, including the ability to raise capital.
Your preferred legal entity might also offer liability protection, the flexibility to switch when you need to evolve (sole proprietorships and partnerships offer such advantages), and clarifying business ownership.
You may prefer the following structures for your coffee roasting business: sole proprietorship, partnership, and limited liability company (LLC).
The corporation is another type you may find interesting. You’ll do well to consult a business or legal consultant for advice on what structure to adopt.
Register the Business
It’s essential to have your coffee roasting business registered before opening. One of the necessary registrations for such a business is the employer identification number (EIN).
Your type of structure will determine if you’re eligible for the EIN. It also determines your business classification. The Internal Revenue Service (IRS) issues the EIN for taxation purposes.
Having shown you the basics of starting a coffee roasting business, it’s up to you to decide how soon you want to start and how to achieve your goal.
Do further research and seek professional help where you have difficulties.