Lean Startup of Coffee Roasters

IMG_1320CoffeeMind staff Michelle Hart, Simon Borrit and Morten Münchow did a well attended presentation on Lean Startup Methodology for Roasters during World of Coffee in Gothenburg.

Please find the full presentation here:

Lean Startup Presentation

And also get your free copy of The CoffeeMind Business Model Canvas

This presentation is based on a study we do with Copenhagen Business School, London School of Coffee and SCAE and is based on CoffeeMind’s approach to helping with the business aspect of any coffee startup. Particularly we have been working with roastery startups where a big risk is the investment in equipment, so if you can det info on the local market (or global if that is your goal) with the value propositions you have in mind, then you reduce your risk of failure drastically. Morten has done sessions with startups BEFORE they invest in equipment and together brainstormed and designed a number of expected customer segments for the business they hope to create and based on that session we have created a test product range (green coffee selection, roast degree, roast profile, blends) for the expected customers (in Lean Startup terminology called a ‘minimum viable product’). The expected customer segments is then approached with the appropriate products and a true sales process is then carried out. After selling this test product range the startup is getting information to create next iteration of the minimum viable products or just make the investment in roasting equipment since the expected market has proven to exist!

 

Profile log for SCAE Roasting Pro

For the tasks and challenges in the new Roating Professional module for the SCAE Certification Diploma System I have developed this Profile log:

ProfileLogSCAE-Professional

Please refer to these two blogpost to have the concepts on the Profile log explained:

Percentage difference

This blogpost explains how to understand and calculate percentage change as this calculation is part of the SCAE certification system on the roast log template you can download: here

So let us get right go business:
If a process changes from x to y the percentage of change is referring to how big the change is seen in relationship to where the process ‘came from’ namely x.

So the general formula for a percentage change is

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If you are not used to do these kinds of calculations, I would like to explain you this formula in more detail as follows:

In the figure below you see a process that goes from value x to y (could be an increasing temperature during roasting) and you can see how you can calculate the difference between the starting point of the process to the endpoint of the process by subtracting x from y.

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Let us take an example. You started you coffee roastery 12 months ago and you currently you have 15 customers. After 9 months you had 10 customers. How many more customers do you have now compared to when you business was 9 months old? In other words: what is the difference between the number of customers you have now compared to when the company was 9 months old:

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So in absolute numbers of customers this is 5 more than after 9 months.

But how to calculate this value as a percentage?

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As you can see from the above calculation, you relate the change (5 customers difference) to the starting point of comparison (10 customers after 9 months) by deviding the change with the starting point of comparison. And as you can also see from the above figure the value is +50% which is a positive number since the process increased in the period.
So the following figure shows you the general formula for the above calculation:

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But what happens if you monitor a process that is decreasing? Namely where y is smaller than x because the process is decreasing. This is illustrated graphically here:

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The value of y – x becomes negative because x is bigger then y so a decreasing process would give you a negative change and if you have a negative change that you divide with the starting point of comparison you also get a negative percentage.

In the following example we look at roast loss which is a process where you compare the result of the roast (y) with the initial amount of coffee you added (x) and find a negative value for the percentage of change. Let us assume that we put in 1kg (1000g) into a roaster and perform a light roast and measure the weight of the roasted coffee (when calculating roast lost please remember to NEVER remove any beans with the sample spoon during the roast!) and find out that 850g of roasted coffee came out of 1000g of green. The calculation looks like this:

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So the percentage of change is -15% which roast masters would refer to as 15% roast loss since the word ‘loss’ implies a negative change.

How to never run out of your favorite green coffee

Origins sell out. I can always guarantee my costumers ‘Brazilian’ or ‘Guatemalan’ coffee. In commodity this is the most specific level products are defined on. Actually, often this is even way more specific than the supermarket blends where sometimes you wonder, if it is 100% coffee at all…

In specialty its different. Here transparency is key. Which is great. At least for the customer 😉  Don’t get me wrong. Its great. The only challenge is that good coffee sell out. Quickly that is… So in order to get the good coffee, you have to be quick when the coffee is released and land at your green coffee suppliers warehouse. Otherwise it is sold out when you need it. Often your are enchanted with a specific coffee from a specific farm and get the whole story form your supplier. You tell passionate about Jose who is 8th generation farmer in the family business and how he have improved quality by working hard with longtime strategy and investment in quality and so on. You invest in a whole pallet to supply your customers with the coffee you have been praising so high. Only to find out that there is no more left, when your first pallet is sold. “It will be 4 months before we get the new crop from that farm” your green coffee supplier tells you. “But my customers expect this on Thursday!”… And there is nothing you can do…

Except planning. If you just knew when the harvest is scheduled, you can prepare for when to be first to order fresh crop green coffee samples to get your hands on the fresh crop. If you know the schedule you can also estimate how much coffee you need from the different origins to not run out between harvests and not to store to much past crop when the fresh crop is coming in.

So planning is the key. And the below pdf I hope you find useful for exactly this. Print it out, frame it and hang it in your office to have it always at hand when planning green coffee contracts with your green coffee supplier!

Get your pdf here: Coffee harvest calendar