The U.S. coffee market was valued at $45.4 billion in 2018. How many beans does that really add up to? If you’re interested in the business of coffee, you might want to start your own coffee roasting company.
Upon being roasted, green, or raw coffee beans are then sold for final processing and sale, typically as ground and brewed coffee. Coffee roasters may also find themselves giving customers advice on how to discriminate between different coffees’ roast levels and strengths.
If you want to start a coffee roastery business, check out this article! It will cover the basics including how to craft a business plan, startup costs, and common licenses for the coffee industry.
Find out how to start a coffee roasting business, and if it’s the right fit for you.
Here are 10 ways to start a coffee roasting business:
- Plan your Coffee Roasting Business
- Since you’re doing business as a Coffee Roaster, one of the first steps is to form it into a legal entity.
- Register your coffee roasting business for federal and state taxes.
- Open a business bank account and credit card.
- Set up Accounting for Your Coffee Roasting Business
- Find out what permits and licenses you to need to start a coffee roasting business and get them.
- Get Coffee Roasting Business Insurance so your assets are protected.
- Define your Coffee Roasting Business Brand.
- Create your Coffee Roasting Business Website
- Choose a Great Phone System for Your Business
Starting your own coffee roasting company can be difficult, and there are many steps you need to take before actually beginning. We’ve put together a simple guide for how to start a coffee roasting business and ensure it’s well planned out, registered legally, and complies with government regulations.
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STEP 1: Build your business
It’s important to have a plan for success as an entrepreneur. A plan can help you to map out the specifics of your business and discover any unknowns. A few important topics to cover are:
- What are the startup and ongoing costs?
- What is your target market?
- How much will customers be charged?
What shall you name your business?
We’ve done a lot of research to find the best there is. Before you purchase anything, spend some time reading our blog – we’d be happy to recommend the best options for your business.
How much does it cost to open a coffee roasting business?
Starting a coffee roasting business can be expensive. Beyond the need for commercial space, you also need to purchase:
- A commercial coffee roaster. which can cost up to $25,000 or more.
- Even after the price of green coffee rises, it is still inexpensive. A typical bag will cost only $3 to $4 per pound but comes in large bags. For example, a 50-kilogram sack would be about $150.
Packaging supplies cost only a few cents per bag or box, but they’re essential for preventing damage during shipping.
- The Point of Sale system
- Labels (a few cents each)
- A heat sealer will cost $30 to $300, or more
Coffee grinders are available in a wide range of prices, starting at around $500 and going as much as $1,000.
To operate the business, there will be a need for items such as computers and internet access, as well as a vehicle for deliveries.
If you don’t have enough money to start up a business, there are two ways that you can cut costs significantly.
First, some of the best roasters don’t actually roast the coffee themselves. They pay a rental fee to use a more established roaster’s facilities. This is known as “Contract Roasting.” Contract roasting not only greatly reduces startup costs, but there’s also no need to purchase a roaster, heat sealer, or coffee grinder. It lets inexperienced business owners lean on the expertise of more experienced roasters and it gives them much-needed hands-on experience with the process.
On the other hand, roasters can begin with less-expensive equipment. Driftaway Coffee is a commercial roaster that roasted its first commercial batches with a Behmor 1600 — a roaster typically marketed to hobbyists and which typically sells for far less than $1,000. Businesses can also purchase inexpensive grinders and heat sealers.
What are the recurring costs for a coffee roasting business?
Being in the coffee roasting business means you’ll constantly be on the lookout for new trends and changes. There are, of course, ongoing expenses that need to be managed properly like:
- Purchasing green coffee
Purchasing fuel for the roaster. Fuel sources vary based on the roaster type, but may include propane, natural gas, or electricity.
- Purchasing Packaging supplies
- Rent and utility costs.
- POS System monthly/annual fee
- Employees’ wages
- Shipping and delivery costs
- Equipment service calls
And so on
Who is the target market for this new product or service?
For a coffee roasting business, the ideal customer is a business that specializes in selling plenty of premium coffee. Coffee shops, certain grocery stores, and a few boutiques will be purchasing large quantities of coffee. These wholesale customers don’t pay as much as those who buy retail, but they provide a more stable income stream for the roaster.
How does a coffee roasting business make money?
A coffee roasting business makes money by selling roasted coffee to individuals (retail) and businesses (wholesale).
How much can you charge customers?
The retail price for a 12-ounce bag of coffee is often between $12 and $20, but wholesale prices are often around $6 to $12 per pound. The quality of the beans is the main factor that determines where within these ranges a roaster’s prices fall. (A few roasters have prices outside of these ranges.)
Lots of roasters offer retail bags in sizes other than 12 ounces, but they use 12-ounce bags as their main retail package. That’s because the weight of green coffee drops from about 1 pound to just over 10 ounces during the roasting process. So, 1 pound of green coffee becomes approximately 12 ounces of roasted coffee. That means instead of charging customers per pound, roasters charge customers for each ounce.
However, prices can vary depending on data generated by their POS system. If a product is popular with customers and there’s a significant demand for it, the price may be increased.
How much profit can a roasting coffee business make?
The more outlets a coffee roasting business has through which to sell its products, the greater its profit potential. A roaster who sells its coffee in dozens of retail locations can earn hundreds of thousands of dollars or more each year. However, many don’t manage to make quite so much; they may only bring in tens of thousands of dollars annually.
Here are some tips for improving your business’s profitability.
A coffee roasting business can increase sales and add additional revenue streams by opening up its own coffee shops.
You might be thinking about a name for your business. What will you name your business?
- When naming your business, it’s important to consider your name carefully. To help you get started, we recommend picking a name that represents your brand.
- If you’re a sole proprietor and want to operate under a different name, we recommend operating under your business name.
- You register a business name for a variety of reasons. When registering, we recommend researching your business name by checking:
- If you have a business in your state, then you’ll need to go through the proper channels.
- Federal and state trademark records
- Social media platforms like Facebook, Twitter, Tiktok, Instagram, Linkedin, etc.
- Web domain availability. It’s important to have a memorable web address that’s not taken. Box shows you the best place to register your domain name, or find rare ones if they’re available.
It’s crucial to secure your domain name before anyone else does.
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STEP 2: Form a Legal Entity
The 4 most common business structure types are sole proprietorship, partnership, LLC, and corporation.
When you establish a legal business entity, such as an LLC or corporation, it protects you from liability. If your coffee roasting business is sued, it will be the responsibility of the business instead of you.
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STEP 3: Prepare your taxes
When you start up your business, it’s important to register for both state and federal taxes.
EINs help businesses file taxes and stay compliant. If you want to register for your taxes, you can do so easily on the IRS website.
As an entrepreneur, it’s important to have your own business identity. You can acquire your EIN for free either through the IRS website or by fax.
Taxes for Small Business Owners
People take different approaches to how they structure their businesses. Legislation is complex, so the right choice for one person might not necessarily be what’s best for you. Of course, this applies only if you’ve chosen an LLC as your business entity. For example, some LLCs might choose to be taxed as an S corps.
ALSO SEE: How Many Espresso Shots Can Kill You?
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STEP 4: Open a Business Bank Account and get a credit card.
Get a business bank account and enjoy the perks that come with it, such as a merchant account for when you sell your products.
When you need asset protection, it’s important to seek out specialized, dedicated business banking and credit accounts. With these, you can safeguard your personal income and assets while successfully running a small business.
One of the risks of mixing your personal and business accounts is if someone sues your company. Not only does that mean a lot of stress, but it also means the person can still go after your other assets, like your home or car. This is called “piercing the corporate veil,” and in business law, it refers to when one entity (a corporation) is held liable for something its officers did.
Additionally, building business credit can help you get the financing and card options you want. This not only provides better interest rates and higher lines of credit, but it can also improve your personal credit score.
So, Open up a business checking account!
Besides being a requirement when applying for business loans, obtaining a new bank account:
- Separate your company’s assets from personal assets which can help provide you with more protection.
- Make accounting and tax filing a whole lot easier.
Open net 30 accounts.
Net 30 accounts allow you to start building credit and also increase your cash flow. Using one, businesses are able to buy goods and pay off the full balance within a 30-day term.
When you purchase a NetMany net 30 credit vendor, the vendors report to one of the three major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This changes how you are perceived by creditors who can then offer you loans and credit cards for use in your line of work.
Get a business credit card
For those of you planning to use a credit card in your business, the following are some reasons why you should do so:
Put your business expenses all in one place so you won’t mix them up with personal expenses.
Building a company’s credit history can help you save money and raise money in the future.
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STEP 5: Set up your business accounting
One of the most important tasks for any entrepreneur is to get a handle on their finances. Keeping accurate and detailed records of all your expenses and sources of income will help you see where you can make improvements or changes in order to keep growing your business. Keeping these accounts up-to-date will also simplify your annual tax filing process.
With this list of handy tips, you’ll make LLC account keeping a breeze!
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STEP 5: Prepare for permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines or even the closure of your business.
Knowing the requirements of your state and local governments can be a daunting task.
Establishments are inspected by the government on a regular basis to make sure they don’t do anything that could potentially cause food contamination. These inspections typically involve checking for compliance with local health laws, which can include preventing contamination. Here are some tips for doing well in an inspection:
- Keep your storage areas clean
- Wash your hands often and stay hydrated
- And try not to stress!
For more information on local licenses and permits:
Contact the municipal (city, county, or town clerks) office that manages legal documents.
If you think you need assistance, search for a business association nearby in the US Small Business Associations directory.
Certificate of Occupancy
A coffee roasting venture is typically run out of a regulated place (e.g. any location that passes a regular health Inspection). Businesses operating out of a physical space frequently need a Certificate of Occupancy (CO). A CO confirms the fact that all building codes, zoning laws, and government regulations have been met.
If you’re looking to lease a location for your coffee roasting company,
It’s usually the landlord’s responsibility to meet these requirements.
Before you start leasing a space, make sure the landlord has a valid CO that is applicable to coffee roasting.
A CO is often needed after a major renovation. It’s highly advised to include the details of any renovations in your lease agreement so that if you need to delay rent payments, it will be written down specifically.
Fair Trade Certification
In order to be certified as a Fair Trade company, the business must submit to fair trade supply chain audits and pay fair trade price premiums for the high-quality set of goods they receive.
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STEP 6: Get business insurance
It’s important to show that you have the proper business insurance. You need a quality policy that offers funds for lost profits or any damages incurred from an accident.
To maintain a safe, lawful business, you’ll need to buy insurance. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
Not knowing your risks as a business owner is not only unfair to your company, but also to you. It can really hurt your chances of survival should something happen. To ensure that this type of risk doesn’t have negative consequences for you and your business, start with General Liability Insurance. This is the most common type of coverage small businesses need, so it’s a great place to begin for yours.
If your business will have employees, then you are likely required to carry Workers’ Compensation Insurance coverage. For a small company, this type of insurance can be a lot cheaper than it would for a larger company.
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STEP 7: Define your brand
You know your brand is important, but do you know why? The thing about branding is that it tells your customers what to expect. It’s what sets you apart from the competition.
If you’re struggling with creating your own logo design, take a look at our Design Guides which provide helpful advice and tips for creating the perfect small business logo.
You might want to consider getting a logo. As you’ll see from the free logo Generator, it only takes a couple of seconds and doesn’t require an email or sign-up. You could also opt for one of our premium logos if that’s what you’re looking for.
Would you like to create your own QR code? Our Free QR Code Generator not only provides you with a free QR code, but it also lets you choose from 13 types of codes. Use the generator to create a code for your business cards and publications, or incorporate a QR code into an awareness campaign online.
How to promote & market a coffee roasting business
Here’s how to market your coffee roasting business.
One of the best ways to market a coffee roasting business is by offering cuppings. Cuppings are professional tasting sessions and they give your potential customers a chance to see what you’re all about.
How to keep customers coming back
Why do customers come back again and again?
As a coffee roasting company, it’s important to be able to distinguish yourself from other roasters. A few ways that you might do this are:
Specializing in one roast level, or just a specific type of coffee
Purchase coffee directly from the farmer, so that you know where it came from and how much it was traded for. Better yet, listen to the experience of a farmer who grew the coffee you’re drinking.
Supporting initiatives by providing clients with exclusively Fair Trade, Organic Certified or Rainforest Alliance Certified coffee
In addition to these strategies, coffee roasters should be focusing on providing freshly roasted beans. Coffee naturally loses aroma and flavor over time, so it’s best to grab fresh beans that have been roasted recently. Many roasters will state the roast date on their bags to let you know that they take freshness seriously.
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STEP 8: Set up your business website
Investing in your brand means creating a logo and website.
For years, the website-building experience was necessary to create a website. However, recent advancements in internet technology have made this a moot point for any small business owner who wants a great website. You no longer need any prior experience with web development—it’s as simple as picking out the best design and going from there.
Here are the reasons why you should not delay building your website:
- It’s important to have a website in order to attract customers.
- Individuals can set up their websites easily, with all of the great tutorials, plugins, and themes available locally.
- A website is an investment that can be used for many other purposes if it doesn’t work out initially.
It’s important for all businesses to have a professional website. It doesn’t matter what size or industry your business is in, we can get you online with a professional website that fits your budget – today!
It’s important to own one or more business websites so that you have a dedicated place online where you can post your brand and other information. There are no Facebook pages or LinkedIn business profiles that can replace this beneficial option.
You can build a simple website with tools like the GoDaddy Website Builder. You don’t need to hire a web developer or graphic designer to create a site you can be proud of.
The process of building a website can seem daunting, but we’re here to help. Our guides will make it easy for you. In only 2-3 hours, you’ll be ready to build your website and start taking orders.
Other popular website builders are WordPress, WIX, Weebly, and Squarespace.
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STEP 9: Set up your business phone system
A cell phone is a great investment for business owners. It helps keep your personal and professional lives separate, which means that you’ll never need to worry about potential customers contacting you at the wrong time. Plus, it makes it easier for potential customers to find and contact your business.
Setting up a small business phone system is hard. There are different services out there and it’s hard to know which ones do the best job. To simplify the search, we reviewed several companies and ranked them based on price, features, and how user-friendly they are.
Conclusion
A successful coffee roasting business is as robust and intricate as the beverage it sells. With a creative strategy, some research on beans and equipment, and a bit of creativity, an entrepreneur can carve out a niche in the multi-billion dollar coffee industry.