Table of Content

    Do you want to start a coffee roasting business?

    Starting a coffee roasting business is one of the best decisions you can ever make given the increasing popularity of coffee uptake. According to statistics from the National Coffee Association, the number of Americans consuming coffee has reached the peak since 2012. Figures indicate over 64% of Americans aged 18 and above have a cup of coffee on a daily basis with a further increase expected which is attributed to the popularity of gourmet drinks. Coffee roasting business is a superb business idea that is poised for success so long you plan adequately. Coffee roasting is more than just a business, it’s an art. Being passionate about your craft and having a good business plan is the secret to succeeding in this business.

    Executive Summary

    2.1 The Business

    The coffee roasting business will be registered as Blonch Coffee and will be located in Harlem neighborhood of New York City. The business will be managed by Maria Rodriguez who is a professional and licensed Q Grader.

    2.2 Management Team

    Maria Rodriguez, Owner and Proprietor of Blonch Coffee is a licensed and experienced Q Grader with extensive experience in the U.S coffee industry. Prior to starting coffee roasting business, Maria worked for high profile coffee brands across the United States and participated in numerous local, regional and international coffee tasting events.

    2.3 Customer Focus

    In order for the coffee roasting business to succeed, Maria has carefully studied the market and relied on her vast industry experience to come up with an appropriate approach that Blonch Coffee will use to reach out to the target market.

    2.4 Business Target

    Before starting her own coffee roasting business, Rodriguez did an extensive market research coupled with her intricate knowledge of the business to identify the right business target. The key is to find creative marketing approaches to effectively reach out to the customer target.

    Coffee Roasting Business Plan - 3 Years Profit Forecast

    Company Summary

    3.1 Company Owner

    Maria Rodriguez is an experienced Q Grader whose successful career in the coffee making and tasting industry spans over two decades. Having worked for various top brands across the U.S. and participated in high profile events, Maria definitely has what it takes and hands-on skills of how to start a coffee roasting business.

    3.2 Aim of Starting the Business

    The coffee culture is constantly evolving for this reason, the demand for roasted coffee has increased significantly. Not only is coffee taken as a daily beverage, specialty coffees have now become the norm. Discerning coffee lovers are keen on quality coffee which lays a huge emphasis on how people drink and perceive coffee. To be part of this new exciting culture change, Maria Rodriguez thought of starting a coffee bean business that adopts a unique and transformational approach of coffee roasting.

    3.3 How the Business will be Started

    With over 20 years of experience in the coffee industry, Maria Rodriguez has a deep understanding of emerging coffee roasting trends and customer expectations. Given her involvement in the industry on a day-to-day basis, she knows what is required to start a successful coffee roasting business. To actualize her plan, Maria has worked closely with a team of experienced financial experts to formulate a comprehensive financial analysis and business plan that will guide the entire setup and operation of the business.

    Coffee Roasting Business Plan - Startup Cost

    Start-up Expenses  
    Legal $5,000
    Consultants $7,000
    Insurance $10,000
    Rent $5,000
    Research and Development $20,000
    Expensed Equipment $7,000
    Signs $6,000
    TOTAL START-UP EXPENSES $60,000
    Start-up Assets $0
    Cash Required $30,000
    Start-up Inventory $20,000
    Other Current Assets $160,000
    Long-term Assets $10,000
    TOTAL ASSETS $8,000
    Total Requirements $12,000
    START-UP FUNDING $0
    START-UP FUNDING $30,000
    Start-up Expenses to Fund $15,000
    Start-up Assets to Fund $10,000
    TOTAL FUNDING REQUIRED $55,000
    Assets $5,000
    Non-cash Assets from Start-up $8,000
    Cash Requirements from Start-up $0
    Additional Cash Raised $20,000
    Cash Balance on Starting Date $25,000
    TOTAL ASSETS $0
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $0
    Planned Investment $0
    Investor 1 $15,000
    Investor 2 $18,000
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $9,000
    Loss at Start-up (Start-up Expenses) $28,000
    TOTAL CAPITAL $35,000
    TOTAL CAPITAL AND LIABILITIES $25,000
    Total Funding $150,000

    Services for Customers

    Blonch Coffee has specialized in sourcing, roasting, packaging and organizing delivery for uniquely customized and specialized coffee products. The business offers a wide array of blended and roasted coffees which have been prepared from different kinds of coffee beans. Starting a coffee roasting company poised for success depends on how well blending is done for various kinds of beans.

    Blonch Roasters intends to offer a wide range of coffee specialties which include:

    • Bistro Blend
    • Espresso and Decaf Espresso
    • African Roast
    • French Roast

    Marketing Analysis of Coffee Roasting Business

    Coffee is the second most popular traded commodity in the world after oil. The worldwide coffee retail market is a whopping $56 billion industry. Nowadays, coffee consumers prefer taking high-grade coffees with increased focus on quality and unique blending of beans. In the U.S. the coffee market industry has reached unprecedented levels of growth and for this reason, Blonch Coffee plans to rely on an objective coffee roasting business plan to set up its operations. To succeed in this business, an extensive market analysis has been carried out to identify opportunities available to support business growth. Studying local trends and having a deep understanding of the local coffee roasting market will help Blonch to strategically position its brand.

    5.1 Market Segment

    In order for Blonch Coffee to achieve its targets, the coffee roasting business will focus on offering various kinds of products and services. Identifying the targeted customer segments is an important step Blonch Coffee has to deal with before as part of the plans to start coffee roasting business. After identifying the right market segment, the coffee roasting business can then come up with creative marketing strategy for business in order to woo customers.

    Coffee Roasting Business Plan - Market Segmentation

    5.1.1 Coffee Brewing Premises

    One of the largest potential customers for Blonch Coffee is coffee brewing facilities which heavily rely on coffee products on a daily basis to serve their customers. These customers buy roasted coffee beans for the purposes of preparing and selling coffee and espresso drinks. This category includes Coffee Shops, Restaurants, drive-through and Bakeries. With the increasing uptake of coffee, selling directly to various coffee businesses is a sure way of boosting revenues for the coffee roasting business. Because these businesses require coffee products on a daily basis, this is a lucrative market Blonch Coffee must make an effort to reach out to.

    5.1.2 Corporates

    To start a successful coffee roasting business, you cannot afford to ignore the corporate market which is one of the biggest consumers of coffee products. New York City is a corporate and financial hub with thousands of organizations plying their trade in the city. Office coffee is a popular trend in offices and Blonch Coffee is positioned in a strategic New York neighborhood with easy connections to New York’s Financial District whether a majority of corporates have their offices. Aside from catering for offices, other institutions include schools, hospitals and factories among others.

    5.1.3 Retail Specialty Shops

    Coffee is a popular item that is stocked in various gourmet and gift shops. People nowadays love and appreciate coffee products as gifts which creates a great opportunity for Blonch Coffee to make unique products that are attractive to retailers focusing on selling specialty and gourmet coffee.

    5.1.4 Mail Order

    Mail Order coffee is increasing in popularity as many people now order for coffee online. This is an incredible way of boosting revenue for Blonch Coffee as the business can produce coffee for shipping to various places across the U.S. and worldwide. When you start your own coffee roasting business, you must be willing to go beyond the traditional market.

    5.1.5 Grocery Stores

    Grocery stores buy beans from coffee roasters in bulk for the purposes of resale or prepackaging to their customers. Unlike coffee shops, grocery stores don’t prepare coffee drinks for their customers.

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
    Coffee brewing premises 28% 12,000 14,000 16,000 18,000 20,000 5.00%
    Corporates 20% 10,000 12,000 14,000 16,000 18,000 8.00%
    Retail specialty shops 25% 8,000 10,000 12,000 14,000 16,000 10.00%
    Grocery Stores 17% 6,000 8,000 10,000 12,000 14,000 14.00%
    Mail Order 10% 4,000 6,000 8,000 10,000 12,000 9.00%
    Total 100% 40,000 50,000               60,000 70,000 80,000 4.00%

    5.2 Business Target

    Blonch Coffee has an excellent opportunity to offer its services in the greater New York area thanks to the changing perceptions about coffee. New York is a large city with many coffee bean roasting business establishments, but that doesn’t prevent Blonch Coffee from making an impact.  Using a diversified product range and a good business plan, the business hopes to realize an annual sales increase of 20-30% per annum.

    5.3 Product Pricing

    Before coming up with product prices, Blonch Coffee has carried out an extensive market research that takes into account the prices of competitors. In order to stay afloat, the business has carefully priced its products to compete favorably.

    Strategy

    With the right marketing strategies in place, Blonch Coffee has an exceptional chance to appeal to customers and consistently grow revenue margins. Each marketing strategy is aimed at reaching the target customers with awesome products that exceed client expectations. When planning how to start coffee roasting business, there must be an effective marketing strategy in place in order to remain relevant in a fast growing industry.

    6.1 Competitive Analysis

    Blonch Coffee plans to come up with a business model that will effectively guide its day-to-day operations and ensure customer expectations are fully met. Even though there are numerous coffee roasting businesses in New York, Maria Rodriguez knows how to start a coffee roasting business and put in place the right mechanisms to remain ahead of competitors.

    6.2 Sales Strategy

    For Blonch Coffee to meet its sales and revenue goals, the following strategies will be implemented to help advertise the business.

    • Print Advertising Campaigns is one of the most effective sales strategies that reaches out to a mass target audience. The business intends to print brochures and put advertisements in local dailies as well as local coffee trade publications and journals. By doing this, the local community is made aware about the coffee roasting business.
    • Get the word out and organize an opening party to introduce the business to customers and industry stakeholders. A cupping event is ideal as it allows guests to taste, compare and analyze different varieties of coffee. This is a perfect opportunity for prospective customers to sample what Blonch Coffee has to offer.
    • Digital advertising is the new kid on the block. Social media channels such as Facebook, Twitter and Instagram among others are excellent ways of sending out word about the coffee roasting business. Online advertising such as Google Ads allow for localized advertising which is aimed at the local target.
    • Attend industry related trade shows and exhibitions with an aim of marketing the coffee roasting business. This is an effective sales strategy that connects the business with right people who will be instrumental in growing revenue margins.

    6.3 Sales Forecast

    To achieve its goals, Blonch Coffee has come up with a sales forecast to show the coffee roasting business intends to meet its financial goals. Using a comprehensive business plan, the business knows which areas to focus on to achieve financial success.

    Coffee Roasting Business Plan - Unit Sales

    Personnel Plan

    In order to realize its goals, Blonch Coffee intends to hire a team of qualified and experienced staff to manage day-to-day operations of the business. How to start a coffee roasting company and run it successfully depends on the caliber of staff hired. A good business plan should incorporate a personnel budget to enable the business know how much will be spent on salaries.

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Bistro blend 70,000 80,000 90,000
    Expresso and Decaf expresso 50,000 60,000 70,000
    African roast 30,000 40,000 50,000
    French roast 20,000 30,000 40,000
    TOTAL UNIT SALES 170,000 210,000 250,000
    Unit Prices Year 1 Year 2 Year 3
    Bistro blend $50.00 $55.00 $60.00
    Expresso and Decaf expresso $70.00 $75.00 $80.00
    African roast $90.00 $95.00 $100.00
    French roast $100.00 $110.00 $120.00
    Sales
    Bistro blend $80,000 $90,000 $100,000
    Expresso and Decaf expresso $100,000 $120,000 $140,000
    African roast $120,000 $130,000 $140,000
    French roast $140,000 $150,000 $160,000
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    Bistro blend $3.00 $3.00 $4.00
    Expresso and Decaf expresso $2.00 $2.50 $3.50
    African roast $1.40 $2.00 $2.70
    French roast $1.00 $3.50 $4.00
    Direct Cost of Sales
    Bistro blend $70,000 $80,000 $90,000
    Expresso and Decaf expresso $50,000 $60,000 $70,000
    African roast $30,000 $40,000 $50,000
    French roast $20,000 $30,000 $40,000
    Subtotal Direct Cost of Sales $215,000 $240,000 $265,000

    7.1 Personnel Plan

    To effectively run business operations, Maria Rodriguez who is the Owner and Proprietor of Blonch Coffee will be in charge of running the coffee roasting business on a daily basis. To ensure smooth running of the business, the following staff will be employed in various departments.

    • Business Development and Sales Manager
    • 2 Support Staff
    • 1 Admin Assistant
    • 1 Shipping Executive
    • 1 Cleaner

    Successful applicants will undergo training to familiarize themselves with coffee roasting business operations.

    7.2 Average Salaries

    Blonch Coffee plans to pay its staff the following salaries within the first three years of operation.

     Personnel Plan      
    Year 1 Year 2 Year 3
    Business development and sales manager $20,000 $22,000 $24,000
    2 supoort staff $20,000 $22,000 $24,000
    1 admin assistant $12,000 $14,000 $16,000
    1 shipping executive $14,000 $16,000 $18,000
    1 cleaner $10,000 $12,000 $14,000
    Total Salaries $76,000 $86,000 $96,000

    Financial Plan

    Blonch Coffee has come up with a comprehensive financial plan that will be instrumental in driving success and business growth. In this business plan of how to start coffee roasting, Maria Rodriguez will use her savings to start the business but will be assisted by two investors. In addition, a business plan for a bank loan will be secured to help finance the budget deficit to meet expenses. For a business to be successful, there must be a good plan to guide operations and finances. Below is key financial data for Blonch Coffee.

    8.1 Important Assumptions

    The financial forecast for Blonch Coffee is based on the assumptions below.

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 13.00% 16.00%
    Long-term Interest Rate 5.00% 7.00% 9.00%
    Tax Rate 12.00% 14.00% 16.00%
    Other 0 0 0

    8.2 Brake-even Analysis

    Blonch Coffee Brake-even analysis is illustrated in the graph below.

    Coffee Roasting Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 500
    Monthly Revenue Break-even $80,000
    Assumptions:
    Average Per-Unit Revenue $100.00
    Average Per-Unit Variable Cost $2.00
    Estimated Monthly Fixed Cost $210,000

    8.3 Projected Profit and Loss

    Profit and Loss information for the coffee roasting business is calculated on a monthly and annual basis as shown below.

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $170,000 $190,000 $210,000
    Direct Cost of Sales $24,000 $27,000 $30,000
    Other $0 $0 $0
    TOTAL COST OF SALES $23,000 $26,000 $29,000
    Gross Margin $50,000 $70,000 $100,000
    Gross Margin % 40.00% 50.00% 60.00%
    Expenses
    Payroll $120,000 $140,000 $160,000
    Sales and Marketing and Other Expenses $2,000 $5,000 $8,000
    Depreciation $2,000 $4,000 $6,000
    Leased Equipment $0 $0 $0
    Utilities $1,000 $3,000 $5,000
    Insurance $15,000 $3,000 $4,500
    Rent $4,000 $6,000 $8,000
    Payroll Taxes $40,000 $60,000 $80,000
    Other $0 $0 $0
    Total Operating Expenses $20,000 $25,000 $30,000
    Profit Before Interest and Taxes $35,000 $40,000 $50,000
    EBITDA $3,000 $5,000 $8,000
    Interest Expense $0 $0 $0
    Taxes Incurred $12,000 $15,000 $18,000
    Net Profit $40,000 $46,000 $50,000
    Net Profit/Sales 25.00% 30.00% 35.00%

    8.3.1 Monthly Profit

    Coffee Roasting Business Plan - Profit Monthly

    8.3.2 Yearly Profit

    Coffee Roasting Business Plan - Profit Yearly

    8.3.3 Monthly Gross Margin

    Coffee Roasting Business Plan - Gross Margin Monthly

    8.3.4 Yearly Gross Margin

    Coffee Roasting Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Below is a summary of Pro forma cash flow, subtotal cash spent, subtotal cash received, subtotal cash spent on operations and subtotal cash from operations.

    Coffee Roasting Business Plan - Projected Cash Flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $70,000 $120,000 $150,000
    Cash from Receivables $14,000 $18,000 $22,000
    SUBTOTAL CASH FROM OPERATIONS $84,000 $138,000 $172,000
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $40,000 $60,000 $80,000
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $15,000 $18,000 $20,000
    Bill Payments $14,000 $16,000 $18,000
    SUBTOTAL SPENT ON OPERATIONS $29,000 $34,000 $38,000
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $30,000 $35,000 $40,000
    Net Cash Flow $10,000 $12,000 $14,000
    Cash Balance $18,000 $21,000 $24,000

    8.5 Projected Balance Sheet

    Below is a Projected Balance Sheet for Blonch Coffee that shows capital, assets, liabilities, current liabilities and long term assets.

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $200,000 $220,000 $240,000
    Accounts Receivable $40,000 $45,000 $50,000
    Inventory $4,000 $6,000 $8,000
    Other Current Assets $3,000 $4,000 $5,000
    TOTAL CURRENT ASSETS $247,000 $275,000 $303,000
    Long-term Assets
    Long-term Assets $10,000 $12,000 $15,000
    Accumulated Depreciation $13,000 $15,000 $17,000
    TOTAL LONG-TERM ASSETS $5,000 $3,000 $2,000
    TOTAL ASSETS $275,000 $305,000 $337,000
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $10,000 $13,000 $16,000
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $10,000 $15,000 $20,000
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $20,000 $25,000 $28,000
    Paid-in Capital $23,000 $23,000 $23,000
    Retained Earnings $20,000 $23,000 $26,000
    Earnings $70,000 $80,000 $90,000
    TOTAL CAPITAL $340,000 $350,000 $360,000
    TOTAL LIABILITIES AND CAPITAL $150,000 $155,000 $160,000
    Net Worth $130,000 $150,000 $180,000

    8.6 Business Ratios

    The following is the Ratio Analysis, Business Ratios and Business Net Worth for Blonch Coffee.

     Ratio Analysis        
    Year 1 Year 2 Year 3 INDUSTRY PROFILE
    Sales Growth 5.00% 8.00% 11.00% 14.00%
    Percent of Total Assets
    Accounts Receivable 7.00% 9.00% 11.00% 14.00%
    Inventory 6.00% 8.00% 4.00% 16.00%
    Other Current Assets 4.00% 6.00% 3.00% 40.00%
    Total Current Assets 80.00% 85.00% 120.00% 47.00%
    Long-term Assets -20.00% -40.00% -60.00% 40.00%
    TOTAL ASSETS 80.00% 80.00% 80.00% 80.00%
    Current Liabilities 9.00% 6.00% 3.00% 25.00%
    Long-term Liabilities 0.00% 0.00% 0.00% 20.00%
    Total Liabilities 4.00% 2.00% 4.00% 35.00%
    NET WORTH 90.00% 95.00% 120.00% 30.00%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 75.00% 80.00% 87.00% 0.00%
    Selling, General & Administrative Expenses 60.00% 67.00% 70.00% 75.00%
    Advertising Expenses 4.00% 5.00% 3.00% 9.00%
    Profit Before Interest and Taxes 20.00% 28.00% 34.00% 6.00%
    Main Ratios
    Current 24 35 40 3.3
    Quick 35 40 25 7
    Total Debt to Total Assets 6.00% 4.00% 2.00% 60.00%
    Pre-tax Return on Net Worth 50.00% 70.00% 90.00% 3.50%
    Pre-tax Return on Assets 60.00% 65.00% 70.00% 10.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 25.00% 28.00% 32.00% N.A.
    Return on Equity 60.00% 75.00% 87.00% N.A.
    Activity Ratios
    Accounts Receivable Turnover 3 7 15 N.A.
    Collection Days 150 180 200 N.A.
    Inventory Turnover 20 23 25 N.A.
    Accounts Payable Turnover 15 18 20 N.A.
    Payment Days 24 27 30 N.A.
    Total Asset Turnover 6.5 6 7.3 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.04 -0.06 N.A.
    Current Liab. to Liab. 0 0 0 N.A.
    Liquidity Ratios
    Net Working Capital $170,000 $180,000 $200,000 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.5 0.7 0.6 N.A.
    Current Debt/Total Assets 9% 6% 7% N.A.
    Acid Test 25 28 30 N.A.
    Sales/Net Worth 5.4 4.4 1.5 N.A.
    Dividend Payout 0 0 0 N.A.

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