Many people see starting a franchise as a less risky way of opening a small business. Franchises have been proven to work, they have national marketing campaigns, and if you’ve never owned or run a business before, you’ll be able to seek guidance from the corporation. These are just a few of the many benefits of starting your own franchise.

If you’ve never started a franchise before you may not be sure where to start. That’s why we’ve created this article. It’s designed to help you get through the process of starting a franchise as quickly as possible, while ensuring that you don’t make any mistakes that you may regret later on. Let’s get started.

Step 1 – Figure out What Your Goals Are

Some franchises require that you be involved with the day to day operations. Other franchises have no such requirements. With these franchises, called absentee franchises, you can simply hire a complete staff to run everything for you. You fund the operation, pay someone else to run it, and then collect any profits. These are two radically different styles of business ownership. You should ask yourself, which one is right for me?

You should also ask yourself this questions: what am I passionate about? It’s a bad idea to pick a franchise just because it has a higher profit margin or is easier to manage. Hopefully besides just making money, you actually want to enjoy the process of being a franchise owner. So think long term, what are you going to be happy to be involved with ten years down the line?

Step 2 – Figure out your Budget

Every franchise has different budget requirements. Some franchises offer an initial investment that’s as low as $50,000. On the other hand, more expensive franchises may require an initial investment that’s more than half a million dollar. Figure out your budget and stick to it. It’s important to think ahead. If the franchise doesn’t work, will you be able to handle it financially? Just because a franchise has the potential to offer a nice rate of return doesn’t mean that you should stretch your budget to start it.

Step 3 – Research Your Franchise

Starting your own franchise involves a lot of responsibility. Before you invest in it, you want to make sure that the franchise you open will continue to be supported at a corporate level well into the future. Check to see if your potential franchise has a national marketing campaign, corporate support, and training programs for yourself and other managers. These call all help to ensure that you’re successful when you’re buying a franchise.

Don’t be afraid to talk to franchise owners, and research their experiences. This is a good way to get a first hand account of what it’s actually like to own and operate the franchise. If you hear good things from different owners, go over the franchise agreement with a fine tooth comb. Make sure that you thoroughly understand the contract, and know exactly what you’re agreeing to. You may want to talk to a lawyer to help you with this step.

Also, be sure find out what the royalty fee is for your potential franchise. Typically this is collected weekly, monthly, or quarterly, depending on the corporation. Sometimes this fee is a percentage of your overall sales and other times it’s a flat fee. Established corporations may be safer to open, but their royalty fee tends to be higher. Alternatively, new franchises that are riskier to open tend to offer their franchise owners a lower royalty fee. You can learn more about franchise royalty fees by reading this article from Entrepreneur.com.  

Step 4 – Complete the Interview Process

The interview process is a chance for the franchise to find out more about you. They’ll typically perform a background check as part of this process. Don’t worry about this or take it personally. Many franchises have this practice and it’s a routine of ensuring that a potential franchise owner is correct for the corporation.

During the interview you’ll probably be asked questions like: what will you do to run your business efficiently? Where do you see yourself in five years time? Why do you want to be involved with our franchise? You can prepare for the interview by asking existing franchise owners what they were asked during the interview.

 

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Step 5 – Sign the Franchise Agreement

If everything goes smoothly up to this point then it’s time to sign the franchise agreement. This is the final step, and you should only take it if you’re truly committed to the franchise and the responsibility of running it correctly. After you’ve signed the franchise agreement you’ll need to make your investment. This will be the agreed upon amount that you’re going to pay the franchise, pay for the building, and so forth.

In some cases you may be able to convert an existing structure and use it for your new franchise. In other cases you may need to build a brand new structure building from the ground up. This can radically affect the costs involved with starting your own franchise, and it’s something that you should talk about during the interview stage.

Conclusions

If you’ve been looking for information about how to start your own franchise, we hope that you’ve found this guide useful. While starting your own franchise is a long term investment, it doesn’t have to be overly complicated process. Start with looking at your own goals and figuring out what kind of franchise is correct for yourself. Next, figure out your budget. A franchise won’t do you any good if it’s so expensive that you can’t afford it.

Next, investigate your franchise. Ensure that they provide a level of support that will help to make your business successful. After all, you’ll be paying a yearly franchise fee and you should receive an appropriate benefit from this. Finally, you’ll complete the interview process and then sign the franchise agreement. These are the final two steps in starting a franchise. After you’ve signed the agreement, there’s nothing left to do but start construction and hire a staff.

 

 

Hopefully, you have read PART ONE and have written your detailed business plan; as well as PART TWO, which maps out the financial plan for your food truck business. Now, for part three of this series, it’s time to start your action plan with a step-by-step walk-through of starting your business.

This is a comprehensive list to help you get your food truck business started:

  • Identify your target market:

      • Choose your menu based on your target clientele. If you choose menu items that are popular amongst your customers in your chosen location, you should have better success.
      • Do research, plan ahead, distribute surveys and identify your competition to make sure you are prepared for your new food truck business.
  • Make your brand unique:

      • Create a logo or a slogan to help your customers identify your individual brand. This logo or slogan will help your brand to be seen and heard through several outlets including the internet reviews, word-of-mouth, and social media accounts.
  • Plan your menu:

      • After doing research, apply your findings from your target market customer surveys and plan the menu accordingly.
  • Purchasing your food truck:

      • Research the type of truck that you need for your food truck business. Consult with experts to find the best truck to purchase for your needs. Stay within your budget.
      • Keep in mind that it’s best not to skimp on the necessities and required equipment for your specifications. It’s suggested to have the food truck outfitted with everything you need/want in the beginning to prevent dissatisfaction with your overall purchase. A resource to start with would be Gorilla Fabrication located in South Carolina. 
  • Obtain permits/licenses:

      • Research and gather all required state/city/county permits or licenses for the specific location(s) for your food truck business.
  • Acquire vendors for your supplies:

      • Research and sign up with different vendors to secure the best price for product supplies for your business. This will help to keep your expenses within budget.
  • Set up business accounts:

      • Set up business bank accounts and business credit card accounts. Think about which cards or bank accounts that you want to set up with each vendor and proceed.
  • Hiring staff:

      • If you are planning to have employees, interview and hire the qualified people that you need to fill the positions.
      • Begin to train your new staff. Keep in mind to take the appropriate time to train them well. This training of staff needs to be added to your files to document expenses for overhead costs.
  • Purchase starting inventory:

      • Contact vendors and begin to purchase inventory. Keep fresh product inventory documented in your inventory checklist to eliminate wasting product. This also helps you to stay within your allotted budget and business plan.  
  • Advertise and marketing:

      • Long before your grand opening, spread the word about your new food truck business. Begin by advertising, promote locally and online. Invite local customers to your opening celebration.
  • Open your food truck business:

    • You’re now open for business. Keep track of everything. Just remember that this is your dream and all your hard work has paid off.

Things to Consider

The comprehensive list sounds easy, but it’s a start. It’s a good breakdown of the basic steps required to get your food truck business off the ground. It is suggested that you focus on making a list and checking off each task that you accomplish. This will set you on the path to your goal.

Starting a food truck business entails dedication and commitment to each individual step and task in order to get everything done in order to succeed. There are inherent risks that may occur if steps are skipped. This will cause delays and set-backs. Each obstacle that you encounter will cost money.

Finding a Mechanic

Take your time and do it right. One of the most common obstacles that you may face is vehicle repairs. Before you need one, find a reputable mechanic who will do good work while keeping your expenses within reason.

It is smart to research and locate a local mechanic with experience and knowledge long before you open your business. This mechanic should be qualified in food trucks to do the repairs. This research will save time and money later down the road.  

Buying in Bulk

A good money-saving tip to keep food costs down is to buy in bulk whenever possible. Keep in mind, if you are using all fresh ingredients and are choosing new products each and every day that you may run into a hassle of availability and costs. If it is necessary to purchase the food each day, then do so. But, if possible, purchase ingredients that will not spoil before use in bulk to help stay in budget.

Special Events and Functions

For additional income, you might want to consider becoming a vendor for special events and functions. If you haven’t networked within the local business community, it would be a good time to contact them to make the connections.

Catering special events and functions helps to promote and advertise your food truck business. Word of mouth is one of the best advertisements available. Providing excellent customer service, leaving your business cards, and asking for your clients to provide feedback and online reviews can help market your business.

Advertising and Social Media

Another way to promote your business and to get new catering jobs for special events and functions is to advertise on social media. You can potentially reach millions of people through social media outlets such as Twitter, Facebook, and Instagram.

There are also other avenues of advertising at your disposal. Post specialized menus, even if it’s the classics. Advertise special interactive events, allow your customers to vote on their favorite menu items. You can have them name new menu items through contests as well. These are just some suggestions of some of the different ways you can find opportunities to promote and advertise your food truck business online to get new catering jobs.

Growing Your Business

It’s important to market your business for as long as the business is open. Even if you have a good, solid, local following; it is always in your best interest to continue to grow. Create a logo or a slogan and place it on all your items.

Selling promotional items, such as t-shirts, shorts, buttons, stickers, coffee mugs, pens, bottle openers and aprons etc., will help your logo reach a larger audience. The more recognition you get, the easier it will be to approach larger vendors and grocery stores to see if they are willing to sell your products.

Food Specialization

It’s sometimes easier to market if you specialize in one type of food. For example, selling Mexican food, subs/hoagies, pizza and other favorites can appeal to a large part of the local community. If you do choose a specialty, then stay with it. There’s a risk to switching up the menu. On the one hand, it could appeal to a wider audience, but at the same time, it may cause confusion and customers may not return.

Get to Know Your Customers

Get to know your customers; word of mouth is a great advertisement. It’s good to be personable. You don’t need to be working behind the counter or at the grill to interact with customers. The opportunity to meet the owner of a food truck business is an attraction to many people. When customers find out that you are interesting, smart and charismatic, they will remember your food truck and will tell their friends. Word of mouth is a powerful advertisement.

Conclusion

You’ve taken the time to get the truck you want, stocked it with all the proper equipment and necessities that you need for your new food truck business. You’ve hired your employees, and you’ve begun to advertise. Remember to make your business unique. Be aware of your competition in your local market.

Remember your checklists. Mark off each task as you complete them. Research and be prepared. Keep to your budget and your business plan.

There will be plenty for you to do and many roles you will likely have to fulfill. Your food truck business will require a lot of attention and determination. This is your dream. You have put forth all the time and effort into getting your food truck business off the ground. Before you know it, you will have everything set in motion, your business will be up and running on the fast track to success.

Good Luck!

If you have any more questions about starting a food truck business please CONTACT EntreDot to get proven business advice on how to proceed.

After reading Part One of this series, you should have a good foundation for writing a detailed and descriptive business plan. The next part is to help you focus on the important financial aspects of your food truck business. This is important to keep your business organized and on track to achieving your business plan goals. Even if this food truck business is a dream fulfillment, you don’t want to be left financially destitute or lose the business because of poorly kept financial records.

Keep it Legal

Before you do anything else, keep it legal. Your license is at the top of this list. Check with city, state and county laws to make sure you have any and all permits in place that are required by law.

Take into account the fees that are necessary for the licenses/permits. Keep in mind, that there are forms, applications and possibly safety training classes, depending on the requirements for the location of the food truck business.

There might be restrictions in the industry for the location of the business. Fees can vary from one location to another, just as the requirements for operation can also vary based on location.

List of expenses to take into consideration:

  • Your Truck
  • Permits and Licenses
  • Business and Truck Insurance
  • Kitchen/Equipment
  • Worker’s Compensation (If you plan to hire employees.)
  • Accountant
  • Public Relations

Start-up Costs

These are all part of the food truck business start-up costs. Don’t forget to add a section for miscellaneous expenses such as food, advertising materials, vehicle/kitchen repairs and more. The average start-up costs usually run at around $150,000+ for the first year of business.

It is imperative to remember that entering a food truck business is not cheap. Expect high monthly costs and that it costs money to keep the business going. Yes, it will take some time to get into the business before you start seeing a significant profit.

Overhead Costs

These costs tend to be fairly high. If employees are hired, then expect those costs to rise. If you do hire employees, there needs to be a section in your overall financial plan for their wages and worker’s compensation. Worker’s compensation is required by law.

It’s true that using a vehicle as the primary mode of business will prevent you from entering any real estate leases. However, there are other costs that are added to the vehicle business to make up for it.

It’s a smart move to leave room in your overall budget for vehicle and equipment repairs. It’s also a good idea to separate the two. Make one part of the budget for vehicle, and the other part for equipment repair and maintenance.

List all equipment used in your food truck business. Keeping records and documenting everything will help your business to be prepared for the inevitable routine or emergency maintenance.  Preparing these documents will help you to keep your budget on track.

Fuel Costs

Fuel costs will be constant and will also vary tremendously. It’s possible that your food truck business will be in a central location, only moving for special events and occasions for additional income. Or instead, you may choose to drive your truck around to different locations and sell to a variety of customers.

It’s good to keep fuel logs and mileage to document your expenses as the cost of fuel changes constantly. If your route alters day to day, the estimate needed to budget fuel costs is likely to also fluctuate. This can be a challenge to estimate fuel costs month to month. It’s recommended to keep this area of your budget open to change.

Marketing and Advertising

Marketing and advertising are extremely important. How are consumers going to know about your food truck business if they don’t know about it? Customers are not going to show up out of the blue. It is important to get your name out there to market what you have to sell.

There’s websites, social media, flyers, posters, business cards, television, radio, newspapers, magazines, events and more to promote and market your food truck business.

There are free servers to help you build a website for your business. If you can afford to do it, hire a reputable professional that can help build and promote your website. This will help to get your business out there to the public in your chosen location. This is ideal to get your business to look as appealing as possible to potential new customers.

Don’t forget, there are many opportunities that your website represents for your food truck business. This is part of advertising. If you have an app or a link on your website that allows customers to pay for their items online, it can help increase profit.

Keep in mind, you should still allow money in the overall budget to be in your register.

Record Keeping

It is vital to keep excellent records, as well as to work in unison with a professional and reputable accountant to keep all your finances of your food truck business on track.

Keep in Mind:

  • Be involved when it comes to the financial part of your food truck business. You do not want to be taken advantage of when it comes to the financial state of your business.
  • There is a chance that if you rely solely on an accountant and it unfortunately turns out that they were not trustworthy, it’s possible that you could lose everything you worked so hard to obtain.

However, the knowledge gained from an experienced accountant can help your food truck business to be successful. Consulting a reputable one is a good idea.

Choosing Your Equipment

Truck

Your food truck business is an investment. The biggest investment should be the truck. This is the foundation of the business and ideally, should come with all the specific equipment and necessities right away. This truck is where you will spend all of your time; therefore it needs to be functional and comfortable for you and your employees.

Factor in that this truck will also double as advertisement. The right colors and logos will help to support and market your brand. Choose a truck that is within budget. Set a minimum and a maximum amount that can be spent on the food truck.

Experts say to not go too cheap, because in the end, you will spend just as much in repairs and maintenance as you would have spent on higher quality equipment. The reasoning is simple, the higher the quality of equipment, the longer it will last without needing repairs and maintenance.  

Product Inventory

The cost of your food truck business’ product inventory will vary, depending on the type of food and the amount that is expecting to sell. This will change every month, hopefully increasing as the business grows, while narrowing down the menu of good selling items versus items that are not.

Restocking food costs will vary, again, depending on how well food items are selling. It’s recommended to leave the area open on your inventory forms to fill in at a later date. This specifically helps to keep food costs on track. Documenting inventory and product selling trends will help reduce unnecessary buying.

Miscellaneous Inventory

Make a list of everything, down to the smallest detailed inventory item.

This includes:

    • Condiment packets, to-go boxes
    • Napkins, cups, plates, utensils
    • Cooking pots, trays, oven-mitts
    • Uniforms, menu-boards and more.

It’s a good idea to study models of successful food truck businesses and document everything that you will need. Research and learning the necessities will help you to see an item or two that you probably overlooked or didn’t know. One of the most common forgotten items in the food truck business is fire extinguishers. Remember; don’t skimp on safety precautions, if you can go overboard. It’s better to be safe than sorry.

Do you want to start a food truck business? Contact EntreDot.org and we can help step you through our Six Steps to Success™ to launch you franchise.

NEXT UP……..PART 3: Step by Step On How To Get Your Food Truck Business Off The Ground…

There are many different varieties of food trucks and mobile food businesses. Each comes with its own unique taste, flair, and menu. For those who are interested in starting their own food truck business, the first step is to decide if this is a goal you want to pursue. If it is, this series of articles should help you to achieve the goal of starting a food truck business.

Writing a Business Plan

The first step in starting a food truck business is to understand that there is a significant amount of time, thought, effort and money that goes into achieving this goal. It’s not as simple as just buying a truck, gathering food, and starting a business. Owning a food truck business starts by laying out a business plan that works best for your market.

Tips on Writing an Individualized Business Plan

A business plan for a food truck will help organize all thoughts and ideas in a way that sounds appealing to potential investors. It will help outline a schedule for the course of action and help to ensure that one stays on track to reach the end goal of a food truck business.

Writing a business plan will also focus on making a profit. The plan should include the following details on the financial aspects of running a food truck business.

A few things to think about first:

  • Type of food you want to serve
  • Prices
  • Competition
  • Advertising
  • Finances
  • Investors

Formulating Important Lists

It’s time to start writing lists. There’s no limit to dreams and ambitions on these lists, but remember to focus on narrowing them down to achieve these goals.

Write out a summary of the food truck business. This will help lay out the foundation of the exact specifications and details of your goals. This is imperative for when approaching a bank, potential investors, advertisers and promoters to explain what your food truck business entails.  

Key questions to consider:

  • What are you going to sell?
  • How much will you charge for each individual menu item?
  • How will you advertise/promote?

By creating this summary of the business layout first and foremost, it will help to explain in detail how the food truck business will sound appealing and clarify the overall business goals.

Other Aspects to Consider in the Summary

Length of Summary

  • The summary should sound appealing without being too long winded. The more attractive the food truck business sounds increases the speed with which the business potentially starts.

Company Description

  • According to the United States Small Business Association, the business plan should also include a company description. The purpose of the outline is to show what the food truck business will stand for, it’s mission statement.

Samples of ideas to include:

  • How will this food truck business benefit the community?
  • Do you plan to give back to the customers who become regulars?
    • For example, a frequent buyer incentive program. This could be a punch card, where they visit ten times, and earn a free food item.
    • Focus on the quality and value of the overall product.
    • Remember, this is another area where it is important to be charismatic because you are selling your business idea to potential investors and consumers.

Target Consumer  

  • Identify who is your target customer base. What menu items will appeal most to them? Survey the target population/consumer in the location. What do they prefer to eat? What do they avoid?
  • What are the reports in the market at the time? How will this affect your food truck business? Will you have potential to make a good profit? List these possibilities in the business plan.
  • Adding this information will help narrow down and eliminate some obstacles or inadequate concepts.

Dealing with the Competition

  • Describe how your food truck business will stand out with the local competition. Remember to focus on the selected location, funding the truck as well as how much experience you have or know about the industry.
  • Study and learn what is already available in the chosen location. It will help your food truck business stand out amongst the competitors.  

Ultimate Goal

  • It is imperative to write down the overall goal. For example, if you plan to stick with one truck, and be your own boss, then do not forget to mention it in the summary.
  • If your goals are bigger, as in starting out as a food truck, and ending up as the boss/owner of your own restaurant, then remember to indicate that in the summary as well.  

Your Business Plan and The Small Business Administration (www.sba.gov)

The SBA suggests that the next step is to follow up this information with a section about how the business will be organized and managed.

This includes:

  • The day-to-day details of operations of your food truck business.
  • Who will be working behind-the-scenes? Who will be taking care of management, finances, office duties, scheduling, marketing, etc.?
  • List any partners or employees. How will they operate in the business?
  • What are their qualifications? Why are the suited to the specific job task?
  • Every function in the business must be covered so that nothing goes overlooked or unnoticed. It reduces the potential for future problems.

Product Details

Your business plan must include a section that describes, in detail of all of your products. (At this point, if the menu has been written, this is the place to include it.)

Marketing Ideas

This is essential. The marketing ideas for the food truck business need to be included in the report.

  • Will you plaster posters and flyers around the location of your food truck business?
  • Will you hand out business cards?
  • Will you put out a press release on television, radio, newspapers and internet?
  • Will you advertise in local magazines?

Write out all details to let your potential investors/bank/partners know the intentions of the food truck business.

Plans for Growth

Do you plan on growing your business? If the answer is yes, then make sure to mention any and all goals for expanding the business. Will this affect your target customer base? Think about all potential business goals in the marketing section. It’s a smart move to pursue all avenues to keep your customers coming back as the business grows.

Financial Assistance

If asking for financial assistance for your food truck business, then a complete list of financial projections is needed for the first year of business.

Include annual estimates for the first year and well as for the following four years.  To clarify, it is fine to not know the exact numbers to fill in for these areas because of the unfamiliar knowledge with running a food truck business. It is safe to assume that you will learn over time so an exact number is not needed for this section.

Conclusion of Food Truck Business Plan

In the conclusion of your food truck business plan, place an Appendix.

Include the following:

  • Resumes
  • Concepts
  • Research/Reports
  • Statistics
  • Licenses/Permits necessary to the location of your food truck business
  • Anything else that you deem necessary to the success of your business.

For more information on writing a business plan, contact EntreDot.org for individual guidance or you can get started with the SBA Create Busines Plan page.

NEXT UP….Part 2: How to Handle the Finances of Your Food Truck Business!