There’s an article in the current issue of Roast Magazine about how to build a micro roasting business. I had two thoughts when I read it. First, I consider our little company a micro-roaster, and I know how difficult it is to make a business of it, so I was a bit shocked to learn that the article focused on people making a business one pound at a time. I didn’t really think that was possible; guess it depends on what kind of standard of living you’re trying to achieve. The second thing I realized was that while I agreed with all the advice offered in the article, I had some insights to add.
Here are my additional micro-roaster success factors:
1. Always be selling. Never having been an actual sales guy, I am continually surprised a the amount of selling that needs to happen on an ongoing basis. You even need to stay in front of the customers who really like you. If they don’t hear from you often, they’re moving on.
2. Distribution is everything. The biggest problem for a new roaster, in my opinion, is the lack of an established, non-proprietary distribution network. Vintners and brewers have an entrenched, well-oiled distribution system at their disposal. Sure, they pay handsomely for it, but it’s there. Every roaster is his own distribution system. This will fundamentally continue to limit the growth of the segment.
3. Access to markets is not free. In so many ways… but what I’m referring to is the inability to actually get your product into places where it might sell, even if you can get it delivered there and are willing to pay the necessary fees. Farmer’s markets, grocery stores, and others all have limitations on which vendors they will allow on their shelves or in their markets. For private market operators, this is their prerogative. But even state-run markets or state-supported (via grants, non-profit status and more) apply unfair (and often illegal, in my opinion) restraints to the vendor list. Fighting it is usually futile, and even if you win it’s likely to be a Pyrrhic victory. If your business plan depends on access to these markets, you had better check it out up-front.
4. Keep it new. The article mentions the benefits of origins and blends. What they didn’t say was that customers are always looking for something new. Every week we get several inquiries looking for something they haven’t had before, or in a while. Changing the mix is just as important as having anchors.
5. Ask yourself what you’re trying to achieve, and be realistic about your goals. The brutally efficient capital market is a humbling place, indeed. Ask yourself WHY you’re going into business. Lifestyle goals? To make a decent living? To bring something different to your community? Whatever your goals, take the time to articulate them well, and figure out how achievable they are in your market. Talk to another roaster to get a reality check. Email me, I’ll tell you my experience.
6. Make a conscious choice whether or not to compete. Realize that when you hang out your slate, you are going to siphon business from other locals, and even regional competitors. Competing for customer dollars in a small market, in the near-term at least, is a zero-sum game: for you to win, somebody else needs to loose. The American capitalist will not care, that’s the American Way, after all. The problem is, in a micro-climate, you may both (or all) lose. With coffee, there is only so much consumption that’s going to happen. (It’s unlike beer, where the amount consumed may increase.) If your local competitors are doing a decent job, it’s highly unlikely that you’ll do any better than to take your share of the business, i.e., if you’re the second player in a two-palyer market, you’re each gonna get 50%. If you split it all, there may not be enough for any one of you. You may be better off buying your coffee from the other guy, and figuring out an opportunity where you’re serving an unmet need.
7. Be compliant. There are lots of rules that govern any business, but especially food businesses. Annual reports for corporations, local business privilege licenses, business property reporting, GMP inspections, fire inspection, sales tax collection and remittance, Fair Trade licensing… the list goes on and on (and grows with each new business activity you undertake). We went into this business eyes open, and have made the necessary investments in compliance. It’s what’s right, and fair to customers and competitors. Nothing irks me more than a garage operator, undercutting legitimate competition by a couple bucks a pound because they don’t make the required investments to be compliant. Now, this is different than keeping a low overhead, which is completely legitimate and respectable.
8. Provide something customers can’t get elsewhere. Seems obvious, yet often ignored. People can buy coffee anywhere. What they can’t get is that custom roast Kenya-Ethiopia blend they jones for, or whatever it is they want. The coffee choices in most retail outlets has actually been decreasing of late. We have a lot of customer who come to us because they can’t get what they want elsewhere. Sure, they settle for the available choices when they have to, but they log for something different.
9. Educate. Many coffee consumers don’t even know coffee comes from a tree. The average coffee consumer has virtually no knowledge of the product. Teach them. Bring them along. If you’re not in a position to teach, you’re probably not very well positioned to start a small roasting business.
10. Don’t take yourself too seriously. Life is hard enough. Try to figure out a way to run your business that lets you enjoy it. Maybe that’s branching into new products. Maybe it’s finding new customers to serve. Whatever it is that keeps it fresh and new for you will benefit your customers, too.