Coffee Roaster Financing
Estimated Reading Time: 8 – 10 minutes
Starting a professional coffee roasting business on a shoestring budget is not the most effective way to break into the coffee industry, but with developments in technology, competitive pricing, and availability to coffee roasting equipment, it is now possible.
A passionate coffee fan with the correct mindset, access to coffee professionals, patience, and motivation can quit their job and take on the task of beginning a coffee roasting business with little to no funding.
Each year, we see it again and again: someone passionate about roasting opens a roastery or café and needs a coffee roaster. Alternatively, a current coffee-related business is nearing the threshold of expansion and requires an upgrade. Money is (probably always) tight, and on top of all the hats that a small business owner wears, they now have to put on the hat of an accountant and overnight money expert.
Every would-be entrepreneur encounters a plethora of well-intended but often inapplicable advice on how to start a firm.
You know those inspirational poster-worthy slogans like ‘do what you love,’ ‘follow your passion,’ and the frequently misused ‘no risk, no reward,’ which leads people to believe that ALL risk is rewarded – spoiler alert, it is not.
If this sort of business finance was unavailable, many enterprises, including coffee roasteries and cafés, would be unable to meet consumer demand. Consider this: because there are so many start-up and continuing business costs that cannot be funded (marketing, advertising, supplies), it is worthwhile to save cash flow for those line items, as well as new opportunities, unforeseen expenses, and other charges that may arise.
Credit can be a crucial tool, but the ease with which it is available might short circuit creativity and deprive you of the opportunity to become the professional overcomer you desire and will need to be.
Don’t get the impression that I’m anti-financing or that you should pay cash for everything. Remember that I’ve had much financial training and education. I am well aware that financing has actual tax advantages and that lenders have a symbiotic, rather than exploitative, relationship with company.
To summarize: Financing is not a negative thing. Financing, when used correctly, can help you keep your cash and even generate revenue, preserve existing lines of credit, hedge against inflation, provide tax advantages, and boost your competitive edge.
1) You operate a shop and want to grow into roasting to meet your own need. To floorplan the roaster, you have a built-in source of revenue.
2) You are currently selling coffee to people who have expressed an interest in expanding that relationship and purchasing more coffee from you.
3) You currently spend more than two hours every day in front of a smaller machine and need to enhance your capacity.
4) You’re a start-up, but you know enough about the industry to take a chance, and you can afford to cover the financing obligations personally if things don’t go as planned commercially.
Maintaining your cash flow or working capital is critical to the success of your coffee roasting business. When you have money, you can buy more inventory, pay your employees better, and advertise or bring in more customers.
You can construct a far better business if you have capital to expand it, make improvements, or even engage in research and development. This allows you to make investments that have a higher tax write-off potential than equipment.
Your bank’s credit lines will not be depleted by equipment financing. You may maintain possible lines of credit open for financial emergencies and utilize our financing to help develop your business credentials with any bank or other lending institutions.
Equipment financing is frequently structured in such a way that it decreases the borrower’s tax burden. And, as a business owner, you’re surely aware that working capital equipment purchases can be completely tax-deductible thanks to the IRS’s Section 179.
Using equipment finance can help your company hedge against inflation risk. Consider the consequences of making a substantial down payment on equipment or paying the entire cost at once. It squanders your free cash and makes no financial sense in terms of inflation.
You can finance equipment by making monthly payments, and your lender will absorb the inflation-related devaluation of these payments throughout the borrowing period
Don’t let your rival leave you in the dust. The equipment you buy can help you gain a competitive advantage by expanding capacity, generating revenues, and increasing profitability.
All of these can assist you in transforming your company into a more valuable brand, resulting in more consumers, sales, and profits.
Rather than chasing the leaders in your business, you may very well become one with the proper up-to-date equipment. On the other hand, failing to purchase the necessary equipment may lose your competitive advantage and harm your brand.