New Year Resolutions for Coffee Roasters
Soon we will ring in the New Year. The dust kicked up by the holidays will settle and the extra-long roasting days will be, for a while, in your rear-view mirror. For some, it’s time to look forward and think of what the future might bring, time for your New Year’s Resolutions. Of course, I have some ideas for you.
Align Your Prices with Your Costs
In other words, raise prices. Historically, and adjusted for inflation, green coffee prices are not high, but they are higher than what you’re used to paying, especially if you started buying green coffee after 2015. The C-Market has been ranging in the neighborhood of twice what it was a year ago. You have to raise your prices to reflect this reality. Read more about Coffee Prices and Coffee History.
Tidy Up Your Accounts Receivable
It’s easier to do the math if you’re doing the math, know who is paying late, and have a process in place to address overdue invoices systematically. We address this at length in a blog titled Getting Paid. A few changes you might consider implementing this year are expanded upon in that blog.
- Remove aging from your invoices if your invoices include the age of the past due amount at the bottom, like 30-60 then 60-90 then 90-120.
- Consider changing your net due to 21 days.
- Don’t list the days until due on your invoice (net 30, etc), just provide the due date, the date after which the bill will be past due.
- Consider penalty fees for habitual "slow pays.”
- Contact customers as soon as they are past due.
Create a New Blend
Although blends have always been a part specialty coffee, single origin coffee grew in popularity among new roasters as the industry grew. This trend reached a point where some roasters had no blends at all except, perhaps, for espresso. There are good reasons to have blends as part of your product mix. Read Creating Your First Coffee Blend and All That Jazz.
Bring More Intention to Brand and Marketing
If you’re a relatively new business, maybe 2022 needs to be the year your marketing and brand management becomes proactive and purposeful rather than reactive and a coin toss among opportunities. Take some time to revisit Restaurant Accounts, Local is as Local Does, and The Seven Word Marketing Plan.
Fire “that” Customer
You know the one I’m talking about. Everybody in your company knows who I’m talking about. Maybe their kitchen staff is abusive to your delivery driver. Maybe they are rude, demanding, and dismissive when ordering their coffee or talking to anyone at your company. Maybe they’re always a late pay and when you try and address the fact that they’re habitually past due they use the opportunity to file a list of complaints about the coffee, about your staff, about how you’re not doing anything for them. Maybe they’re always talking about the other roasters that visit them and offer them better prices, free equipment, in-store after-hours training, the moon. Whenever they make a mistake with their order, it is your fault. And … they buy 5 pounds of coffee a week (or whatever is “not a lot” for your company right now). Just the mention of this customer’s name causes people in your company to groan.
I saved this resolution with its longer explanation for last because just like raising prices, breaking up with a customer is among the hardest things for coffee roasters to do and it gets procrastinated, even though avoiding action is hurting your business.
There will always be the problem customer here and there among accounts. Sometimes the challenging customer buys enough coffee that you accept the trade-off (or so much coffee that you have no choice). But sometimes you do the math and find not only do they make everyone miserable all the time, but you’re not making any money with the account. In fact, working with that customer is a negative return. They buy too much coffee, then insist you take coffee back when it’s no longer fresh. They make your delivery driver wait twenty minutes for a check after insisting that coffee be delivered within a narrow window of time.
If you’re not willing to put up with this sort of thing for an account that provides no value to your company, you can simply stop accepting the behavior: No, we won’t take coffee back. No, we won’t send you more coffee until your account is current. No, we won’t be delivering coffee anymore, we’ll be shipping and yes you have to pay for shipping. Either the account will move on or become palatable enough to keep.
Or, you can fire them. If they are disrespectful and abusive to customer service staff, delivery drivers, account managers, this is really your only option (especially if all those jobs are done by one person). There are coffee roasters with a business model that allows them to absorb customers like this with little negative impact, usually larger roasters who have highly automated systems for low volume customers, systems that cannot be persuaded to place an order for coffee even if the previous two invoices have not been paid. It has been said that every coffee has a customer. Well, every wholesale coffee customer has a roaster.
Happy New Year!
Whether you adopt any of these resolutions for your business, come up with your own, or just don’t do the whole resolution thing, we trust you are as committed to the success of your business as we are and we look forward to being part of your 2022.