How To Start A Coffee Roastery in Wuhan, China - Part 4
Starting a new business is exhilarating! Rewind 100 days from our Grand Opening and our story finds itself in the beginning of July, 2012.
In the birthing stage of a business cost analysis, projected cash flow, startup equipment, budgets, design plans, marketing assumptions and stuff like visual identity systems consume incredible time and energy. But its ok! Before you have a business to run this stuff is fun. It feels real, even if its just plans and PowerPoints and spreadsheets.
In 2012 it didn't matter if you were a "waiguoren" foreigner or a "zhongguoren" Chinese in Central China; you couldn't find a local coffee roaster. No one was talking about fresh roasted coffee and no one seemed to care. How could a group of fanatical hand craft artisans not find a market for their premium product in China's 5th most populous urban center Wuhan?
* Insert “A Dream Alive” - this is how we told it on the back of our coffee bags.
Since December 2011, Paul and I had scoured our financials looking to extract every possible source of "lirun" profit. All good roasters should sell B2B "pifa" wholesale and B2C "lingshou" retail. Roasting your own private label is a mainstay whilst roasting custom labels for others (toll roasting) can also be an income source. Catering and providing services can be a reliable revenue stream for a new roastery, while activities and training provide intermittent income with a marketing bonus.
We estimated (too generously) how much coffee our wholesale customers would buy each month and built in a too-hefty growth curve at 15%. Market research showed then (and still today) that China's coffee market has grown at an annual rate of about 20% for the last decade.
Although the financials were far too optimistic, their underlying spreadsheets were rock solid and useful for years. Knowing the cost of each green coffee bean, down to the gram; counting "fen" Chinese pennies spent in bags and labels; or scrutinizing "shuifen" water moisture variance by roast level helped the whole team understand the value gained or lost in each step of our operations.
Whatever free time Paul and I had from December 2011 to June 2012 was spent researching the China Coffee market, formulating plans and drumming up enthusiasm.
Louis joined the team at the end of June 2012 after a small coffee brewing demonstration and business plan presentation in Huangshi at the ManJing Hotel. It wasn't immediate, but a few days after the June 23rd presentation he told me that the exciting possibility of starting a business and launching into a coffee career path was a chance he couldn't miss. His dad was an entrepreneur fish farmer and the entire family was amazing - supporting Louis both emotionally and financially.
However, the whole business plan was nearly scrapped just before Louis called me. The presentation was on Saturday and by the following Monday I was on a plane with my family back to the USA for a summer holiday. Meanwhile Paul had decided, "if money doesn't come in by the end of June, I need to tell Adam I'm out." Well, needless to say, ROCC Coffee was launched as a tribute to the Higher Power at work in our summer 2012.
As Paul (who stayed in China for the summer) was getting ready to send me his message, "I'm out!", he received my email stating effectively, "Louis is in!". Paul made an abrupt 180 degree turn.
While in flight I received Louis' email stating "Count me in for a $20k investment into ROCC! But by the way I have decided to quit my job and I will come to work for ROCC full-time... immediately."
I was amazed and encouraged! Someone believed in my dream called ROCC Coffee!
Paul was affirmed and confidently made a 2 year commitment to build the business.
Louis already cashed in his chips with his former employer HuaXin Cement Company (a huge Chinese Government Owned Company) and was ready for a call to coffee-action.
ROCC - Roasters Of Central China was moving from dream to reality!