Pros & Cons

Start A Tea Business

Pros & Cons

Trying to understand the pros and cons of starting a tea business?

Here are all of the pros and cons of selling tea online:

Pros Description
Flexibility You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
Meaningful business connections You never know who you will meet as a tea business. This could be the start of an incredible business opportunity!
High customer retention rates Once a customer invests in your product, they've invested their time and energy to utilize your product/service which is highly valuable to them. Typically, your product or service becomes indispensable to your customer.
Easy to encourage "impulse buy" In the tea business, you have a much higher chance of encouraging your customers to buy on impulse - you can easily alter the price, placement, packaging, and promotional value to influence the decision of your buyer.
Unlimited income potential With starting a tea business there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.
Amazing perks and discounts Working in the tea business comes with its perks! As a seller for these products/services, you typically also get to enjoy industry perks and discounts.
Predictable income stream Your businesses income stream tends to be predictable based on the number of customers you have signed up. This makes financial planning and outlooks much more seamless!
Higher likelihood of getting referrals This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.
Simple business model A tea business has the advantage of a simple business model, which makes launching and building the business more seamless.
Greater Income Potential With this business, the sky is the limit in regards to your income potential.
Strong Demand & Relatively Recession Proof The demand for tea business is increasing year over year and the business is known to be relatively recession proof.
Can build solid foundation of clients It's unlikely you will have one-off customers as a tea business. Typically, you have a solid foundation of clients that use your product and services regularly.
Low maintenance customers In this industry, customers are known to be very appreciative and low maintenance. This can help with your stress levels and allow you to focus on growing your business.
Results and revenue happen quickly! Unlike other businesses, it can be relatively quick to start seeing results and revenue. As long as you follow [all the steps](https://www.starterstory.com/validate-business-idea) to validate your idea before launch, you are likely to see quick results and ROI.
Cons Description
Motivation of employees If you plan to have a sales/content team on board, finding creative ways to motivate them can be a challenge. It's important that you're able to offer great incentives and a good work environment for your employees.
Longer Sales Process A tea business can be a big time and money investment for your customer, so it's important you plan and predict a longer conversion funnel and stay in communication with potential customers.
Low margins The gross margins for your tea business are typically around 60%, which can make it more challenging to incur new expenses and maintain profitability.
High employee turnover In the tea business, employee turnover is often high, which can be quite costly and time consuming for your business. It's important to try and avoid this as much as possible by offering competitive pay, benefits, and a positive work environment.
Taxes As a tea business, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.
High overhead expenses With starting a tea business, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.
You may need to charge sales tax If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out [this article](https://www.thebalancesmb.com/do-i-need-to-collect-sales-taxes-in-my-state-398913)
Churn In this business, customers can cancel their membership or subscription for your services - which can make revenue forecasting challenging and unpredictable. It's important to focus on your churn rates and trends so that you can prevent this as much as possible.
Time commitment With starting a tea business, all responsibilities and decisions are in your hands. Although this is not necessarily a negative thing, work life can take over at times. This can place a strain on friends and family and add to the pressure of launching a new business.
Difficult to build trust with your customer With starting a tea business, there can be minimal face-to-face interaction, which means it can be a lot more difficult to establish trust with your customers. You'll need to go the extra mile with your customer to grab their attention and business.
Impatient customers You may offer an engaging user experience for your customer, but customers expect a lot and may be impatient if they aren't pleased with your product or service.
Difficult to scale With a tea business, it can be challenging to find ways to scale. Check out [this article](https://www.inc.com/jeff-bussgang/scaling-a-business-is-hard.html) that discusses scaling your business and the challenges that come with it.
Learning Curve When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.
Equipment Breakdowns Over the years, your equipment can get damaged, break down, and may need repairs which can be expensive. It's important you prepare for these expenses and try to avoid damages/wear & tear as much as possible.
More challenging to earn passive income It can be more of a challenge to make passive income in this business. Often times, the amount of revenue you bring in is limited by the amount of time you have in the day.