another_jim wrote:Which of these sketches describes you?

Jim, I've been passionate about coffee for nearly 10 years. I have been home roasting for 3-4 years and creating blends. I've had several espresso machines including a plumbed-in setup with filters. I give out my roasted coffee to friends for free and usually have had periods of high demand. Lately it's been a bit much to keep up with so I haven't been roasting at home as much but I have recorded all the blends and roast profiles I've used.

Lucky for me the director who is talking to me about starting this is also passionate about coffee. The company is a non profit that supports people with disabilities in employment settings. We're hoping to create extra income and employ a few folks who might otherwise have a difficult time finding employment. Roasting would probably be done by me.

VS_DoubleShot wrote:The company is a non profit that supports people with disabilities in employment settings. We're hoping to create extra income and employ a few folks who might otherwise have a difficult time finding employment.

Be sure that the organization and its accountant have factored possible nonprofit "unrelated business income" issues into this venture.

VS_DoubleShot wrote:
Does anyone have any information on how many pounds of coffee new roasters might sell in the first month, first 6 months, etc...

You might want to look at this from a break-even perspective. You need to tot up all your out goings for this venture over a year and divide by 12. This tells you the revenue you need to generate to cover your costs on a monthly basis. If you know what your coffee is going to sell for then from that you get the number of bags.

A different approach would be to look at all the businesses that sell coffee in your area, bars restaurants, cafes etc. From that take a sample to go and visit and try to find out how much coffee they use per month. That gives you a ballpark average to apply to all businesses. Now work on getting either 1 in 3 or 1 in 10 as customers. This should give you two income streams to compare to your break even analysis.

Remember this is all hypothetical, and as Marshall pointed out there are a number of real world factors that will influence your success.

VS_DoubleShot wrote:Does anyone have any information on how many pounds of coffee new roasters might sell in the first month, first 6 months, etc...

If you are selling predominantly online you can potentially appeal to more customers, although there is a significant amount of competition from reputable, already established high end roasters, as opposed to the lack of local competition that you mentioned.
As a start-up roaster selling your beans locally at a small retail location, farmers markets, etc... you are looking at 300 pounds a month (conservative guess) assuming approx. $20/lb. for say single origin, direct trade, gourmet (I am bringing this word back ) quality coffee. I would think concentrating initially on tapping retail markets i.e. through your shop, friends, farmer's markets, donating to churches, getting your name out there locally first would make more sense, then worry about costly online sales later on.

Heckie, thanks very much for your response. Yes, we should be selling predominantly online. Ads will be bought for a couple of big magazines and probably for some online venues like HB and maybe CG. We will aim for high end product marketed to espresso nuts (like us). We may market local but there are already a couple of local roasters.

I do know we will lose money and maybe break even for a while. We aren't even hoping for wild success but to get some great coffee roasted and to create a little profit eventually.

I'm also curious if anyone has experience with roaster maintenance costs and gas costs. Assuming roasting 20lbs per day 5 days per week on a roaster that can do 3 - 5 lbs per session.

1. You have the cart waaaaaaaaaaaaaaaaaaaaaaaaaay before the horse. You have to learn to make espresso in commercially viable amounts before even guessing at income.

1!. Even then, a non-profit, special-needs friendly, online-only, coffee-retailer is so damn sui generis, and there are so many marketing and other contingencies, I wouldn't trust anyone who gave you a number. "Could work, but maybe not" is probably about as good an honest guess as you can get.

At some rapidly approaching point, this is a leap of faith either way.

1a. Before leaping, listen to Marshall. If you're going to pump more than a few grand into it, or even if your company wants a grown-up report before deciding, you'll need a more sophisticated model than dividing everything by 12. Talk to your accountant -- not just about integrating non-profit ventures into a for-profit corporation, but ask for a basic run down on all the accounting issues.

At the end of the day you might find that start up costs are relatively low and that the parent company doesn't need to make anything resembling a profit soon or at all. That's not a prediction or advice, that's a "you might find." I was never a corporate, transactional or tax guy, and know zip about them. Just some idle, layman's speculation is all.

2. You think you know something about roasting, but you don't know squat (and neither do I). Take a class or two in commercial coffee roasting. Learn what's involved on the business and artisanal sides. Get some insight into training new, special-needs roast masters. It's probably a write-off anyway; hell, it could even be a credit.

2a. Buy a used 5# roaster which you can re-sell without too much loss, get some specific training for it, and take the leap.

Alternatively, skip 1a and go from 1! directly to 2. Who needs due diligence?

Good luck,
BDL

Another issue is sourcing the best green beans if you plan to compete in the high end online market. Most of the top roasters are developing direct relationships with farmers and co-ops to secure the best micro lots. Great micro lots brought in by wholesalers will go fast. Getting a hold of anything in limited supply will be quite competitive. When I farmed (not coffee) I always had standing orders from long term relationship buyers for anything of exceptional quality I produced. Wholesalers are going to have similar relationships with established roasters.

Some good advice already offered. On the face of it there is no reason not to think you could not make it work. 20lbs a day could be mopped up by a single cafe customer, and you would only have to work a few hours per day(or a big day per week), even on the the smallest roasters. You have an interesting usp which will appeal to some regardless of the coffee standard. Keep the costs low enough and grow steadily and all will be fine, worst thing you could do is overspend on flash ads and then have trouble delivering.
The smaller the roaster you buy at the start, the quicker you will learn. You will also be less inclined to try to sell that which is not perfect, when you do need a 30kg you will be left with a nice 'training/shop roaster.
There is a simple way round the issue of getting excellent coffee, just work with an excellent importer, you guys have Mercanta over there. Coffee buying is very difficult when you need less than a pallet(600kg odd) I would assume the difficulties get even more extreme when you need whole lots/crop/stock for whole seasons but have not tried that yet.
Anything can bomb, just don't step to far away from your roasting roots early on, keep the costs down, be really honest with yourself. Order coffee from the best and get the green too, check you can do everything they can, try to align with cafes that might share your values. Get a fire extinguisher.

FWIW your priorities should be:

1) Understand roasting professionally (the roasting end)

2) Understand roasting as a profession. (the business end - Pros and Cons of online only vs. brick and mortar vs. combination of both. VASTLY different)

Each aspect is as important as the other. With the ability for people to get great coffee within a couple of days from top tier roasters nearly anywhere in the country, it's more realistic that you focus on what business you can develop locally, and any additional is a bonus. Either way, you need someone with proven PR skills or it will be a difficult road.

Most of the roasters who do significant business online were already an established brand. And in comparison the amount they are selling online is insignificant compared to their established accounts and what goes out the doors on a daily basis.

I would think for a small roasting only facility - if you shop and find the right roaster to start with, maybe $50-$75K would be a bare minimum number to shoot for to cover roaster, necessary venting, fire suppression systems and afterburner (depending on local codes) lease, any minor build out, inspection, inventory, bags, filling and weighing machines (or labor to do it by hand), along with any sustained PR campaign... And a little extra to cushion the business until it can sustain itself. It's not whether you CAN do it for less, but it's really about how much capital you should have as a foundation. Too little and you will crumble. It never hurts to have surplus.