Food Truck Business Plan

The person that doesn’t have one [a business plan] sets themselves up for failure. – Anthony Salvagno on the importance of thinking before leaping into a business. Note to Reader: This is the first in a series of posts that follow the co-founder of S’wich It Up food truck Anthony Salvagno (shown on the right) as he creates a business plan, seeks funding, develops a concept, builds a menu, and ultimately launches his first food truck. Each interview will highlight a different step in the business building process. The hope is that as we follow Salvagno over the course of the next 6 – 12 months so that you can follow along as he launches his own truck. I sincerely hope you enjoy this series of posts. I also want to point out to the listeners that this case study is going to be a little bit different than my traditional shows. I want it to have the kind of vibe that you’re just speaking with a buddy and asking a few friendly questions about the food truck business. There just happens to be a microphone in that room and we’re publishing it online so you all can listen in. BUILDING A BUSINESS PLAN In this, the first chapter in the story we talk about Salvagno’s background (Hint: It doesn’t have anything to do with the food industry.) and go into detail about how he researched and developed his business plan. In the future I will create a table of contents page that allows you to jump the different topics of content, but for right now this is it. Before Salvago began taking the steps needed to launch a food truck, he wrote a business plan for a competition at his university and as a result was able to secure $5,000 in funding. What began as a simple contest and idea would eventually lead him down a path to business ownership. SERIOUS ABOUT STARTING A FOOD TRUCK? CLICK HERE TO LEARN HOW ANTHONY SALVAGNO’S JOURNEY CAN HELP YOU START A FOOD TRUCK FASTER.  HOW TO USE THIS TRAINING In my opinion, this case study is most effective when listening to the audio and downloading the example that Salvagno was kind enough to provide for this post. I’ve also linked out to some other resources that can help you write your own business plan. Download Business Plan – Yes, this is the real business plan that Salvagno used to acquire $5,000 toward his truck. This document is referenced in the podcast. You can learn more about Salvagno at his website. Download Business Plan Template – Here’s a simple template you can use and edit for your own truck. SBA – Create Your Business Plan – The Small Business Administration (SBA) does an excellent job outlining the steps needed to create a business plan. It’s not food truck specific, but it gives you what you need and there’s plenty of valuable information here. This business plans aren’t for food trucks specifically, but I found a couple that you can take a peek at from other industries that might provide some additional information: Example 1 and Example 2. Enjoy! INTRODUCTION In this, the first chapter in the story we talk about Salvagno’s background (Hint: It doesn’t have anything to do with the food industry.) and go into detail about how he researched and developed his business plan. In the future I will create a table of contents page that allows you to jump the different topics of content, but for right now this is it. Before Salvago began taking the steps needed to launch a food truck, he wrote a business plan for a competition at his university and as a result was able to secure $5,000 in funding. What began as a fun contest would eventually lead him down a path to business ownership. COMPONENTS OF A BUSINESS PLAN Below is an outline of the key sections you’ll need to complete for a standard business plan with a brief description of the contents. Keep in mind that if you’re creating this document for yourself and not a banker you don’t need to get fancy with the formatting on this stuff. The important thing is to have a plan for the business. It’s tough to argue that creating a formal plan will make you less likely to succeed in the business. Title: Think of this as the first page of a book report. Do you best to make it look pretty. Include your business name and applicable contact information in this section. Executive Summary: This is an overview of the information that is contained in the business plan and should introduce the name of your food truck and what it is you plan to serve at a high level. Typically, this section is one page in length. Food Truck Concept and Description: This is the fun part. Here you will describe what you hope the food truck will become, the food you plan to serve, and why you believe it will be a successful business. Make sure to include information on why your food is both desirable and unique to customers in the area. Also, if you have some type of theme, like an islander theme for example, be sure include that into the description. You want folks that read this section to be able to clearly envision the kind of sensual experience they’ll receive at your food truck. Market Analysis: For smaller markets with a couple hundred thousand people living nearby this section might be short and include just 4 – 5 other trucks. However, if you’re entering a market like Los Angeles this section will be larger and more in-depth. If you’re planning to enter a market that has 10 traditional taco trucks and you plan to start a traditional taco truck too, it will be to differentiate yourself from other vendors in the area. Consider adding a spin to your own food concept like serving Asian tacos instead to provide local consumers will more variety and fill a potential need. If you’re not sure about the type of truck you want to create yet, looking at the market and seeing what type of food is missing can be a smart way to approach this. In this area you’ll also want to identify the type of customer that will frequent your establishment. Any data about local trends that you can find will be useful to include as well like this report from IBIS World that forecasts growth in the United States food truck industry for the next 5 years. Google can be a good friend in locating the data to include in the document. Management Structure: This section is simple for solo food vendors. List yourself as the owner and operator if that applies. But don’t forget about potential employees as well. Many food trucks need a team of 3 – 5 employees to operate successfully during a lunch rush. For some vendors this section will become a bit more complicated if you’ve got investors or other partners that are helping to operate the business. Completing this process can be helpful in understanding everyone’s role on the team. Product Line and Services: Finally… This is the section you finally get to describe your food. I recommend outlining the main menu items and any signature dishes that you have in this section. But don’t stop at just the food that you plan to serve. Other products and services that you plan to offer could include corporate catering gigs or weddings. These can be big money makers for a mobile food vendor. It pays to think outside the box too. Some vendors that started out by serving food out the window of a truck exclusively have now begun to sell their trademark dishes in stores and online. Previous guest of the show Martie Richie of Motley Crews is an excellent example of someone that is doing just that. Sales and Marketing: How do you plan to market your business and get sales? One of the biggest factors that determine the success / failure of a lunch truck is location. Are you planning to setup shop near a lot of potential customers or not so much? Make sure to have a few different parking location options before getting started. That way you’ve got a plan the first time you roll out and hit the streets. Additionally, many new food trucks have a social media marketing plan as well to help attract local customers. Funding Request: If you’re not planning to seek funding through a traditional bank you can disregard this section. However, if you are seeking capital through a traditional loan outline exactly what you plan to use the funding towards (often outside investment is needed to fund the truck) and a time frame for when you plan on returning that money with interest. Financial Projections: Focus primarily on determining how much money you will make in the first year here. Investing too much time on longterm projections 5-years out doesn’t make any sense since you haven’t actually started the business yet. That being said you should budget significant time to determining your expenses. You don’t want to discover you’re underfunded in the first week so you can’t purchase supplies. You may need to make a few “educated guesses” in this section. But remember, the whole point of completing this process is to understand how much money you’ll require to operate the business. Appendix: This is the place to include your permit from the health department, photos of the vehicle, and other legal documents needed to operate a mobile food business. Add in anything else you feel could be helpful as well. BONUS TIPS WHEN CREATING YOUR BUILDING PLAN Here are a few key concepts pulled straight from the audio. Don’t be afraid to ask current food truck owners for help when writing a plan. They will have the best understanding of what the market looks like and may even help you to create more accurate market projections. Not everyone will be willing to lend a hand, but as Salvagno points out in the interview many of them will. According to Salvagno, the financial projections section is the most important element of the business plan. You need this to be able to evaluate how much money you’ll to start the business and charge for longterm success. Don’t invest a ton of your time into longterm projections especially years 3, 4, and 5 of the food truck. Restaurants come and go. You won’t be able to make accurate projections out that far anyway. You should be extremely detailed when considering your expenses including often overlooked items like sandwich wrappers, napkins, mops, buckets, and cleaning supplies. Knowing how much cash you need for day 1 of starting the truck right is critical. IS CREATING A BUSINESS PLAN A TOTAL WASTE OF TIME? Good question. That really depends on who you ask. There’s a whole group of like savvy entrepreneurs and business people who don’t believe in the business plan at all. They’re like okay, you have this written document that you never ever use again. But then there’s this whole other group of people that actually believe in the business plan. – Anthony Salvagno of S’wich It Up on business philosophies. If you’re planning to try to get a traditional bank loan you will need to create a business plan. Having a plan will by no means get you approved for a loan. In fact, you might get turned down with a strong credit history. Still, it is a requires a certain measure of effort to get complete this process and can aid you in getting such a loan. This is probably the most important thing to remember when creating your own business plan: Don’t get caught up in the mechanics writing this document but think about the ultimate point of creating a plan. You want to understand your competition. You want to understand where you plan to park. You want to have a few ideas about how you might market your business and what your overhead is going to be. This document should help you make educated decisions. This is not meant to be a book report for school. The Sidebar: Does drafting a business plan seem like it will take a long time? If you do it right, it probably will consume a couple weeks. But the benefits of doing so can be worth it. Upcoming guest Sameer Siddiqui of RickShaw Shack invested a full-year researching and creating his business plan prior cracking the window of his food truck. While Siddiqui doesn’t recommend spending a year writing a business plan, he does believe it’s one of the most important actions you can take to set yourself up for longterm success. Considering Siddiqui is operating one of the most popular trucks in the San Antonio area, has been featured on an episode of Eat St., and was cited as one of the top 10 food trucks in America by Yahoo! Shine this seems like pretty smart advice to follow