Coffee beans are the seeds of coffee cherries. In their natural form, they are green, hard, and unbrewable. A coffee roasting company prepares green coffee beans for brewing by roasting them to light (city), medium (full city), and dark (full city+) roast degrees. Roasters may sell their coffee to people directly or via coffee cafes, supermarkets, and other merchants.
If you want to learn how to establish a successful coffee roastery company, this article will teach you all you need to know, from creating a business plan to calculating starting expenses to obtaining typical business licences in the coffee sector.
Table of Contents
Follow these ten steps to start a coffee roasting business:
Plan your Coffee Roasting Company
Create a legal entity for your coffee roasting business.
Register your Coffee Roasting Company for Taxation
Create a Business Bank Account and a Credit Card
Create Accounting for Your Coffee Roasting Company
Get the Permits and Licenses You Need for Your Coffee Roasting Business
Get Coffee Roasting Company Insurance
Create a brand for your coffee roasting company.
Create a website for your coffee roasting business.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. We’ve put up this basic guide to getting started in the coffee roasting industry. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a coffee roasting business?
The initial expenditures for starting a coffee roasting company are substantial. Aside from commercial space, company owners must additionally buy:
A coffee roaster might cost as much as $25,000 or more.
Green coffee, which typically costs $3.00 to $4.50 per pound but is purchased in bulk (e.g., 50-kilogram (110-pound) sacks),
Packaging materials (a few cents per bag or box)
A point-of-sale system
Labels (a few cents each)
A heat sealer, which may range in price from $30 to $300 or more.
A coffee grinder, which may cost $500 to $1,000.
Businesses will also need a computer and internet connectivity to receive orders, as well as a car for delivery.
There are two approaches for entrepreneurs with low resources to dramatically cut their launch expenses.
First, entrepreneurs may “contract roast.” A firm pays a leasing charge to utilise the facilities of a more established roaster in contract roasting. The established company’s roaster may also be engaged in the roasting process. Regardless of whether another roaster is engaged, the roasted coffee is marketed under the rental roaster’s brand. This method not only significantly cuts beginning costs by eliminating the need to acquire a roaster, heat sealer, or coffee grinder, but it also allows novice company owners to rely on the knowledge of more experienced roasters.
Alternatively, roasters might begin with less expensive equipment. Driftaway Coffee is a well-established commercial roaster that roasted its initial commercial batches on a Behmor 1600 – a hobbyist-oriented roaster that generally sells for significantly less than $1,000. Companies may also buy less priced grinders and heat sealers.
What are the continuing costs of running a coffee roasting business?
A coffee roasting business’s recurring expenditures include:
Buying green coffee
Getting fuel for the roasting (which may use propane, natural gas, electricity or another fuel source)
Purchasing packaging materials
Rent and utilities expenses
Monthly/annual POS System Fee
Wages of employees
Costs of shipping and delivery
Service calls for equipment
Who is the intended audience?
The ideal client for a coffee roasting company is a company that sells a lot of speciality coffee. Coffee shops, some grocery stores, and a few boutiques may consume a significant amount of coffee. While these wholesale consumers may not pay as much as retail customers, they will give a more consistent cash stream.
How does a coffee roasting company earn money?
A coffee roasting company generates money by selling roasted coffee to consumers (retail) and companies (commercial) (wholesale).
How much money may you charge your customers?
Roasted coffee is typically priced between $12 and $20 for 12-ounce packages. Wholesale costs are often between $6 and $12 per pound. The quality of coffee is one of the most important criteria in determining where a roaster’s pricing fall within these categories. (A few roasters have pricing that are higher than these.)
Many roasters offer retail bags in sizes other than 12 ounces, although 12-ounce bags are the most common retail container. Because around 25% of the weight of green coffee is lost during the roasting process, 1 pound of green coffee yields about 12 ounces of roasted coffee. Prices may be adjusted depending on the POS system’s reporting. When there is a high demand for a product, the price may be raised.
How much money can a coffee roasting company make?
The financial potential of a coffee roasting firm is determined by the number of outlets through which it can sell its coffee. A roaster with a large number of retail outlets may make hundreds of thousands of dollars or more each year. However, many do not make nearly as much, but rather earn in the tens of thousands of dollars each year.
How can you increase the profitability of your company?
By creating its own coffee shops, a coffee roasting company may enhance its coffee sales and generate new income sources.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
If your coffee roasting firm is sued, forming a formal business organisation, such as an LLC or corporation, prevents you from being held personally accountable.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
The local health department conducts random inspections of establishments that prepare or deal with food on a regular basis. These inspections will verify for compliance with local health rules, which are generally connected to contamination avoidance. Here are some pointers to help you pass a health inspection.
For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A coffee roasting company is often operated from a controlled location (e.g. Any location that passes a local health Inspection). A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you want to rent a space for coffee roasting,
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can get a valid CO for a coffee roasting operation.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
Certification for Fair Trade
To qualify for Fair Trade accreditation, the corporation must submit to fair trade supply chain audits and pay fair trade price surcharges for the quality of bean provided.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Promote and Market a Coffee Roasting Company
Offering cuppings is one of the most successful methods to sell a coffee roasting company. Cuppings are professional coffee tastings that allow prospective buyers to meet with a roaster and learn more about their coffee.
How to Keep Customers Returning
A coffee roasting company must be able to distinguish itself from the competition. A company might achieve this by:
Specializing in a certain roast level or area of coffee
Buying coffee via direct commerce and telling the tales of the farmers who farmed the coffee
Supporting projects by only selling Fair Trade, Organic, or Rainforest Alliance Certified coffee.
In addition to these techniques, coffee roasting companies should promote the availability of freshly roasted coffee. Because coffee loses scent and flavour with age, freshly roasted coffee tastes better than older, stale coffee. Many roasters include the roast date on their bags to indicate that the coffee within was freshly roasted.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.