Small business is booming! In fact, small business gross profits were up 7.8% on average this year compared to 2015. This is an exciting time for entrepreneurs, especially when they’ve got things going for them like expected tax cuts and other new incentives to grow their business. Speaking of business, which industries are expected to boom in the next few years?
Well unless you’re Elon Musk, oil is always a good bet. So are pharmaceuticals. However, regulatory stipulations prevent most of us from grabbing a piece of that pie. Good news is, there are A LOT easier ways to create revenue without having to deal with all of the regulatory oversight of larger (ish) industries here in the US. The answer? Surprisingly, most of you already drink it every morning for breakfast, and second breakfast, and elevenses, and lunch… and sometimes even dinner. Yupp, coffee.
It just surpassed big pharma, and is even creepin’ on big oil. Coffee is the 2nd most traded commodity in the world. Why? Simple.
- Demand. More than 54% of Americans drink black gold. Thats a ton of qualified, and reachable prospects.
- Market Size. According to Harvard University, more than 180 Million people in the US drink coffee every day.
- Economic Indicators. The largest percentage of coffee drinkers are 60+ which also happen to have the most expendable income out of any age demographic. However, whats more interesting is the fact that the younger generations are increasing their pull on the market. 41% of people, ages 18-24 drink their daily cuppa, which is up from 31% since 2013.
- Market Saturation. In the US, coffee is projected to be a 68 billion dollar business this year, and a very small piece of that pie creates giant dividends. This is especially true if your pricing is competitive and you find any of the plentiful ways to separate yourself from the “mainstream” coffee suppliers.
The most important take away out of all these statistics is the ability for you to make a presence known online. If you look at the indicators, the younger generations are increasingly drinking more and more of the caffeinated beverage. They are also the ones that, according to Neustar, account for 54% more online shopping experiences than older generations, thanks to smart phones. So what’s the point in targeting the 60+ crowd when none of them are shopping for you product? (at least not online)
So should you go and start a coffee shop? Well, maybe. The answer depends on what you want to get out of it. Shops are great ways to generate tax write offs if you’re making bank in other industries. Most shop owners only make 30-40k a year on average, and end up taking a loss the first couple of years on the amount of overhead generated by running the business.
However, if your smart, and create a scalable shop model, your best bet is to invest in a roaster; since coffee is a “cottage good” which eliminates virtually all of the FDA oversight and licensing. You can also eliminate most of your shop and staffing overhead if you are pursuing a roaster space only. A little research goes a long ways in how to roast a great bag of coffee, and consistency can be easily created with most modern roasting machines, and if you buy one, you can buy two, and three and ten. The numbers don’t lie, wholesale and retail accounts are where it’s at. Its scalable, and incredibly profitable, if you want it to be.