by Dawn Bormann
Habte Mesfin wants to help farmers by cutting out the middlemen.
When Habte Mesfin launched Revocup Coffee Roasters in 2008, he set out to change the world one cup of coffee at a time.
The native Ethiopian donates $1 from every pound he roasts and 10 cents from every cup he sells at his two popular coffee shops, Revocup and Revocup South in Overland Park. By 2017, the money will have paid for 38 libraries in Ethiopia, where many coffee farmers live in poverty and go without clean water.
Mesfin often stops customers in their tracks when he explains that farmers make pitiful profits—if any—from their beans. A chain of outdated trading practices gobbles up much of their share.
Mesfin’s latest venture, Full Circle Coffee Trading, aims to revolutionize the way coffee beans are bought and sold on the global market. It’s an online market-place that will allow farmers to connect directly to buyers. Mesfin will ensure bean quality and make a small commission from the transactions.
As he prepared to launch Full Circle, Mesfin set aside time to attend ScaleUP! Kansas City, a program offered by the University of Missouri- Kansas City Innovation Center and the U.S. Small Business Administration.
The program helps entrepreneurs adopt best business practices and prepare for bigger growth—a perfect resource for Mesfin as he unveils his new venture.
“We benefited a great deal, obviously,” Mesfin said. “We learned a lot … and now you know, it’s just putting those things into practice.
How ScaleUP! Helped
Before a business owner proceeds with an expansion effort, it’s wise to make sure the current business is running as smoothly as possible. For Mesfin to give Full Circle the attention it needs, he needs to make sure Revocup is in good hands.
On the advice of ScaleUP! consultants, Mesfin plans to hire a manager to take over his day-to-day duties at Revocup. It isn’t easy for him to give up time at Revocup, but the ScaleUP! experts convinced him it’s the best way to succeed.
“Revocup is a small operation, and I wear many hats, but I have to find the time. I know the trading side of it is going to be huge,” he said.
ScaleUP! also connected Mesfin with a range of free or low-cost resources that will help him grow his businesses, including assistance from the federal departments of Commerce and State and a range of databases that can be used for market research.
He had done market research in the past, but these databases (and the trained staff at UMKC and local libraries) will allow him to understand Revocup’s customers in greater detail. “This really helps us expand our scope,” Mesfin said.
ScaleUP! also introduced him to two potential business partners. One is a major restaurant franchise, and the other is a nonprofit with an international presence.
‘I Have to Make It Work’
Ensuring the success of Revocup and the marketplace isn’t simply about being personally successful for Mesfin. It’s about fair trade and sustainability for coffee farmers.
“This is my life mission, and I have to make it work,” Mesfin said.
The current coffee trade, Mesfin said, is a jumble of middlemen. In Ethiopia, small coffee bean farmers sell their crop to a local collector. That entrepreneur then sells it to a larger regional buyer, who sells to a processer. The beans go to a national auction, and exporters buy them. Then importers buy the beans and sell to coffee roasters. Eventually, a consumer purchases them.
Farmers often don’t know what price their product ultimately commands.
“This is a very long chain. It needs to be reduced,” Mesfin said. “Everybody defends their position. Only
the farmers cannot defend.”
Full Circle will short-circuit the current way of doing things by letting farmers skip many of the middlemen. (After farmers list their coffee, they will send Mesfin five pounds of coffee so he can check quality.)
“There are nearly 20 billion pounds of coffee produced every year,” he said. “Can you imagine even saving a dollar per pound?”
‘Ready to Take a Chance’
The advisers at ScaleUP! have reminded Mesfin to focus more on social media and branding as he moves forward with Full Circle. Because of his commitment to fair trade, he can’t really compete on price like the coffee you buy in the grocery store.
ScaleUP! also encouraged him to organize Full Circle Trading as a separate legal entity to protect him legally and provide a sound long-term strategy. The approach is something Mesfin plans to consider as he brings on investors.
That prep work is essential because Mesfin won’t make many friends when he launches his marketplace. The middlemen may feel threatened by Full Circle.
“Now everybody is going to see the origin price, and that is going to create a huge uproar from the importer and the brokers,” Mesfin said. “This is a very disruptive approach. The farmers are ready to take a chance. They don’t have anything to lose.”