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Beginner’s Guide on Starting a Coffee Business in Singapore
Coffee shops are, and always will be, in vogue no matter where in the world you happen to be. Forming a nexus of society, it’s where everyone goes to get their daily coffee and catch-up fix. Starting a coffee business in Singapore can be challenging, but done right can also turn a tidy profit.
Singapore’s coffee or kopi culture remains robust, catering to aesthetic activities as well as to-go opportunities. Despite a pandemical impact, statistics indicate coffee consumption in 2020 at a hundred thousand 60 kilogramme bags. This number will double within the next two years as the pace picks up again. This makes it an ideal time to set up your business and get ready for the coffee rush.
You’ll find an information-packed read in this guide, empowering you towards better decision-making processes in your entrepreneurial journey. We address the incorporation process, as well as licencing and permits to be aware of. There are also some valuable tips on growing your business and a quick look at some pertinent statistics.
What is a Coffee Business?
There is a simmering coffee-café dichotomy debate amongst connoisseurs, which differentiates a coffee shop from a café. In a nutshell, a coffee shop is all about the coffee, from brewing methods to bean sourcing, etc. A café, conversely, is a type of restaurant where coffee plays an ancillary role only. Hence, starting a coffee business means that coffee plays a central role in all your business activities.
That’s not to say you can’t serve anything but coffee in your shop, just that the menu is minimal. There is usually a selection of snacks, pastries, and other beverages such as tea, juices, etc. What’s essential is that coffee is the central theme, and some even specialise in a particular brew, etc.
Types of coffee shops tend to vary according to trends, and popular terminology includes some of the following:
- Kopitiam – from the Malay kopi (coffee) and Hainanese tiam (shop), omnipresent in Singapore, especially with toasted bread and kaya (coconut jam).
- Gourmet – more a marketing term that differentiates gourmet coffee from instant coffee; it also refers to 100% Arabica beans as opposed to Robusta beans.
- Speciality – usually denotes rare, high-end coffees such as Kopi Luwak, Monsoon Malabar, Jamaica Blue Mountain, Hawaii Kona, etc.
- Coffee Bar – for quick, brewed coffees with limited seating and usually found in malls or as kiosks.
- Roasters and Retailers – roast and supply their own blend of coffee beans.
- Third Wave – relates to industry movement that focuses on the ethical, sustainable, and artisanal type of coffee experience.
Why Start a Coffee Business in Singapore?
In Singapore, coffee shops are sometimes colloquially known as kopitiams and are a decades-old local and cultural feature. Singapore’s coffee scene has roots as far back as its illustrious colonial past. Coffee shops came into existence primarily to serve their European residents and soon became a community fixture.
Coffee is a profitable business opportunity, and Singapore remains one of the best places to start such a business. With its world-class business reputation, Singapore enjoys being ahead of the curve when it comes to trendsetting. Strong governance, competitive taxes, and ease of doing business make it an entrepreneur’s dream spot for starting a business.
Singapore has one of the most stable economies in Southeast Asia and is a gateway into Asian markets. With a diverse and highly talented multicultural workforce, it boasts one of the best business infrastructures in the world. Thanks to its high earning population, any business has more than a fair chance of success.
Key Steps in Starting a Coffee Business in Singapore
Regardless of whether you’re starting a coffee business or a shipping business, Singapore law requires registering your company. While the process is straightforward, you’ll need to sort a few things out before beginning the process. First, choose your business structure – 3E Accounting’s Singapore company registration guide is an excellent place to start. It’s a great research resource site that explains all you need to know in relevant detail.
It can help you decide whether to operate as a sole trader, limited partnership, or limited liability partnership. Perhaps a limited company structure or a subsidiary, if you’re a foreign investor, might be more suitable. If you’re still unsure, have a quick chat with any of the experts at 3E Accounting.
Next, you’ll need to sort out a company name – ACRA has strict ‘naming rules’ that you’ll need to observe. You’ll also need incorporation documents such as Articles and Memorandum of Association, registered address, directors and shareholders information, etc. With all these in hand, you’re ready to begin the process.
You can engage 3E Accounting – the premier corporate service provider in Singapore – to do this for you. Alternatively, you can log on to BizFile, the Accounting and Corporate Regulatory Authority’s (ACRA) company registration platform. Don’t forget to register for taxes with the Inland Revenue Authority of Singapore (IRAS) and open a bank account. It’s also advisable to get business insurance, hire reliable staff and register them with the Central Provident Fund (CPF).
What Approvals Do You Need for a Coffee Business in Singapore?
When it comes to compliance, Singapore is one of the best places to start your business. Generally, businesses in Singapore do not need licences and permits to operate. Most approvals that are required are industry-specific and will depend on your business activities. A coffee business falls under the food and beverage industry, one which does have quite a few licencing requirements.
The following is a non-exhaustive list of approvals you may need to look into:
- Food shop licences from the Singapore Food Agency (SFA), National Environment Agency (NEA) and Health Science Agency (HAS) and includes Food Hygiene Certification, etc.
- Optional Halal certification from the Islamic Religious Council of Singapore (MUIS or Majlis Ugama Islam Singapore).
- Customs permit from Singapore Customs – if you plan to import coffee beans, etc.
- Renovation permit from Singapore’s Building and Construction Authority (BCA).
- Commercial land use approval from the Urban Redevelopment Authority of Singapore (URA).
- Copyright Licence to stream music and related content from Singapore’s Composers and Authors Society.
- Trademark protection for your business from the Intellectual Property Office of Singapore (IPOS).
While generally straightforward, the application process for some of these approvals may come across as tedious or time-consuming. Engaging companies such as 3E Accounting to get the legwork done can take a considerable burden off your shoulders. Our team of skilled experts will ensure your business operates seamlessly and stays fully compliant.
How to Grow Your Coffee Business
The coffee business has some hard truths – it’s super competitive, niching is tricky, and investment can be high. However, for the intrepid entrepreneur, these are challenges that can be surmounted with innovative strategies and careful planning. One such approach is to find what your community lacks and niche into that. Speak to other baristas, do an ad hoc survey, etc., to build up a picture of what is missing.
For example, your business may be in an affluent locale, popular with millennials and urban executives wanting something fancy. Offering a variety of speciality coffee drinks might be just the ticket for success. Promoting your brand’s uniqueness – such as single-origin or fair-trade beans – is a great way to build awareness. This holds especially true if your shop and products are instagrammable, which can help establish your brand quickly.
Aside from driving a strong and active social media presence, it would help to invest in your staff. Trained and certified baristas have the potential to serve and create genuinely exceptional coffees. They will have the confidence to engage with your clients, thereby building a rapport that leads to customer loyalty. After all, people come for the experience as much as the coffee, and trained staff do make a difference.
Keep costs low by investing in affordable equipment rather than splurging on expensive high-end ones. The money will be better spent on quality beans and roasts, which will allow you to craft better coffees. You should also invest in technology such as a smart POS system that can analyse customer trends. You’ll do better if you can consistently sell unique and better-quality coffees and pair them up with loyalty programmes.
Singapore’s coffee houses or kopitiams are ubiquitous and very much a part of the local culture. If your entrepreneurial dream is starting a coffee business, do ensure that you don’t skimp on the necessities. Carving out a name for your business may take some effort, but the rewards will certainly be worth it.
To ensure a seamless incorporation experience, consider engaging the best service providers in the industry. 3E Accounting fits the profile to a tee as an award-winning firm, offering the very best company incorporation services. All our packages are comprehensive, customisable, and fully digitalised to ensure a 21st-century experience and rollout. For more information on starting your business, contact 3E Accounting today.