Starting an online coffee business is the perfect balance of pursuing coffee-fueled passions, without all the overhead and thin margins of opening up a local cafe. An online coffee business can be as hands-on as you want, but generally has low upfront costs and is easy to get started.
With any business, there are risks and starting an online coffee business is no exception. I’m here to help you minimize those risks with this list of 8 necessary steps to get you started.
8 Steps to Start an Online Coffee Business
1. Research Your Target Market
There are so many varieties of coffee types and coffee vendors, so it’s vital to clearly define what your target market is. You could sell coffee to consumers, sell bulk coffee or raw beans to other coffee companies, or sell coffee to offices, hospitals, and other businesses.
To start, figure out who you want to sell to – individuals, restaurants, roasteries, hospitals, or any number of other business types. Narrowing down ensures you don’t overstretch your business, especially in the beginning.
Once you’ve narrowed down your market, do some research into your competitors. Look into what products they sell, how they brand themselves, their pricing, and their reputation. This will give you a sense of how you can offer something different and unique, to stand out in the market.
No matter what you choose it’s important to focus on a specific market and target customer, as this will influence how you source, run, and market your coffee business.
2. Choose Your Products
After you’ve done the research into your target market, now it’s time to decide what products you’ll offer. While you might want to offer a whole range of different goods, it’s best to keep your product catalog small – at least to start. It’s always easier to add on new products as you grow, but keeping it simple will allow you to hone in on that specific market.
The most crucial aspect is deciding on the coffee type. Do you want to sell single-origin beans to coffee connoisseurs? Or a variety of flavored instant coffee for busy people on the go? Or maybe you want to get into the coffee pod market with high-quality, fair trade coffee pods?
From there you can also decide if you want to have any coffee-adjacent products such as:
- Other hot drinks like teas and hot chocolates
- Speciality flavored syrups
- Brewing equipment like Aeropresses, pour-overs, or stovetop coffee makers
- Brewing accessories like bean grinders, filters, cleaners, scales, and more
- Merchandise like branded mugs
Whether you decide to offer any other product really depends on your target market, but it’s definitely not necessary to get started. Additionally, decide if you’ll sell everything in an online store for one-off purchases, offer subscription options, or a mixture of both.
3. Determine Your Business Model
With coffee, the roast is essential to a good cup. As a business owner, you’ll want to figure out what’s best for your business before you begin. Most online coffee businesses get their products either by roasting coffee at home or by dropshipping. These both have plenty of pros and cons, so figure out early what’s right for you.
- Home Roasting: If you’re a coffee snob and love perfecting the art of coffee, home roasting might be a good option for you. It’s great if you already have coffee experience and want to create something truly unique.
However, it also requires a lot of hands-on time and additional costs of the equipment needed to roast the coffee at home. Plus, perfecting the roast can take a bit of practice and roasting at home may require additional permits to do so legally.
- Dropshipping: Dropshipping is more affordable and easy to set up than home roasting. With dropshipping, you find a reputable coffee supplier, and act as the middleman between the customer and the coffee. When they order on your website, the order goes to the supplier who packages and ships it directly to them.
This means you don’t have to deal with roasting the coffee yourself or even hold onto any inventory. However, it also means it’s less unique than home roasted coffee and there is less control over the quality of the batches and less oversight into the coffee’s origin – which may matter to your customers.
No matter what route you go, you’ll need to find suppliers – either of the coffee itself or of whole beans to roast. Additionally, if you are selling other products, you’ll want to find suppliers for those as well. When looking for a supplier, ensure they are reputable and affordable.
4. Formalize Your Plan
Now that you’ve worked out the details, it’s time to formalize your business plan. I always recommend that every new business owner creates a detailed business plan. It’s a great way to sum up your goals, plans, and logistics.
Unless you are self-funding, you may need to get outside finance support either in the form of a business loan, a line of credit, or investment. A well-thought out business plan will be crucial to convincing the bank to provide you with funding.
A plan should lay out all the logistics from above, plus:
- An executive summary
- Financial forecasting
- A marketing and sales plan
- Short and long term goals
Don’t worry if your business plan isn’t perfect, or changes as you grow – that’s perfectly normal! Your business plan should act as a living document for your business, which changes as your business shifts and adjusts in the market.
5. Sort Out the Legalese
As a new business owner, you’ll need to register your business as one of four business entities: sole proprietor, LLC (limited liability corporation), Partnership, or Corporation. For dropshippers or small home roasting operations, an LLC will generally be the best option. It allows you to easily keep your personal and business liabilities and finances separate.
If you’ve decided to home roast, you may need additional permits from your health department or local government since you’ll be making and selling a consumable product. It may require an inspection of the space or a food safety test, for instance. The exact requirements vary by location, so do your research before you begin.
Finally, be aware about your tax obligations to ensure you remain compliant. Nothing will derail your new coffee business more than a government audit. Consult with a local advisor or accountant if you’re unsure, and have a thorough read through your country’s tax website to understand timelines and filing requirements.
6. Build Your Online Store
Now that you’ve figured out the logistics, it’s time to set up the actual web store. While you could sell through third parties like Amazon or Etsy, having your own website will ensure you have the most control over your business and your brand.
Hosting your own site doesn’t have to be difficult. There are many affordable tools online to help you build a functional, easy-to-navigate, and beautiful site with no experience at all. By going this route, it will be easier to expand or change your product lines, have full branding control, and avoid third-party fees cutting into your income.
Since coffee is a competitive industry, you’ll want well-designed branding to help catch the eye of consumers. Take time to create a brand that matches your market and make sure your website convenes this through style, coloring, and copy. Also ensure your site is optimized with keywords to help search engines better suggest and index your pages for organic traffic.
7. Set Up a Payment System
Since you’ll be selling exclusively online, you need a payment service provider that offers convenient payment options for your customers. It’s crucial that the system is quick, logical, and most importantly, secure, or else you might lose out on business.
Pay.com is a full payment service infrastructure that you can easily integrate into your site for a customized checkout page. Through your Pay Dashboard, you can easily control which payment methods you’re willing to accept, including credit and debit cards, digital wallets, and more.
Additionally, if you’re selling to businesses or corporations, you may instead use invoicing to accept payments. With Pay.com you can easily create invoice links to send directly to your customer to make it convenient for them to pay in a timely manner.
8. Launch Your Store
It’s finally time to launch and get your first customers. This can often be the hardest part, as breaking into any established market will always be a challenge. However, with a solid marketing strategy, you can easily make a name for your brand.
Building brand awareness takes time, so be sure to keep at it. Use social media to promote your business, offer discounts, and engage with potential customers. You can also create google ads or website content to promote your coffee, and network with other coffee professionals online and in your community to help grow your business.
Once you start making sales, keep the momentum up by asking for reviews and referrals from satisfied customers. You can also build loyalty by offering occasional deals and discounts to keep them coming back for more.
The Pros and Cons of Starting Your Own Coffee Business
- There is a huge global market for coffee
- Many coffee enthusiasts prefer small brands over large corporations
- You can set up shop at home, meaning low overhead costs
- Breaking into a competitive market can be challenging
- Perfecting the roast (if home roasting) or finding a quality supplier can make or break your coffee reputation
- Can take a while to become profitable
The Bottom Line: Is Starting an Online Coffee Business Right for You?
Like any new business, starting an online coffee business requires determination and dedication. If you’re passionate about coffee, though, and want to provide a great product to consumers or businesses, then it might just be right for you.
The hardest part is developing a brand and finding a supplier that meets your needs, but once your business is set up, it can be a great way to earn income right from your home. If you follow the steps laid out above, you’ll have an online coffee business up and running in no time.
With a convenient payment service provider like Pay.com, you can stay on top of customer payments, choose with payment methods you want to accept, and easily add a customized, secure checkout page directly onto your website. Click here to sign up and get started!