1. Expect Reality
Yes, I know, you’ve been thinking about opening a food truck for a long time. You’ve eaten at a food truck, and it looks pretty simple. Park, Sell, Drive Away. In your mind, it seems like a carefree way to make a bundle of cash on a sunny day. You’ll drive a brightly colored truck around town, and your friends will high-five you and throw $20 bills at you to get a taste of your secret family recipe for meatballs or fried chicken or ice cream.
The reality is a bit different. It’s hard work. You will spend hours prepping for every hour of service. Your truck will break down. People on social media will unfairly criticize your food. You will be sweaty and tired all the time. But for those who have a passion for it, owning a food truck can be worth every hassle and more.
If you want to be your own boss, be prepared to be more accountable to MORE people: your investors, your bank, your vendors who extend you credit, your customers who are counting on you, your employees looking for more shifts. This is a substantial undertaking, but it’s been done before, and it will be done again. Go forth clearheaded with a detailed vision for your business, and you’re already a step in the right direction.
2. Take Inventory of Yourself
It takes a certain amount of hubris to be an entrepreneur. A boldness to stand in the face of innumerable challenges to pursue your passion. That headstrong conviction and recklessness is going to be necessary because most rational people don’t have the appetite for risk for opening a new venture.
However, that isn’t the only thing you’ll need. You’ll need to make a lot of hard decisions. Personal relationships can be a challenge, especially in the beginning. You’ll have to work long hours and will be pushed far outside your comfort zone. You’ll need to develop a brand, refine recipes, market your business every day, go shopping, prep food, wash your truck, train staff, charm customers, fix your generator, update your books and handle much more on any given day.
Additionally, be sure to keep these two points in mind:
As an owner you’ll need to make a lot of hard decisions with limited information. Many entrepreneurs get frustrated with the number of questions that come their way. The best thing you can do to combat being overwhelmed by decision fatigue is to prepare like crazy (read all you can, talk to other entrepreneurs and build out a robust business and operating plan). After that, the best thing to do is not sweat the small stuff.
In most businesses, hospitality in particular, the advantage goes to whoever can execute best. That means working harder (until you figure out how to work smarter). As you start your business you’ll probably have to work long hours and be pushed far outside your comfort zone. While you figure out the best way to prep, to clean, to fix a flat tire, you’re going to be putting in extra hours just to keep up. The best thing you can do is to make sure you have a great support system. Make sure your family and friends are on board for the big commitment you’re about to make. You’ll need all the help you can get.
Knowing how much of yourself you can commit to this business and where your strengths and opportunities lie will give you an edge. It will help you find the right partners, hire the right team and learn where to let go and delegate first.
Do you have a knack for customer service? Are you a talented chef? Are you a strong negotiator? Are you marketing savvy? Are you a number cruncher?
Make a two-by-two chart: What are you good at versus what you like to do. Here is an example:
As an entrepreneur, you must be prepared to do things you’re not good at and don’t like doing. But, if you work hard and have a bit of luck, as your business grows, you’ll be able to get into the sweet spot of doing things you like to do most of the time.
3. Practice Makes Perfect
Entrepreneurship is about hustle. And that hustle starts long before opening day. The No. 1 thing you can do to succeed in this business is to learn as much as you can before you start. Knowing how to run a truck, where to vend, how much to prepare, where to source ingredients, where to get repairs and how to connect with customers comes with experience. I wrote a book to help, “The Food Truck Handbook.” I hope this book helps aspiring entrepreneurs get a grip on the industry, but reading a book is no substitute for real experience.
- Get a job on a truck – My No. 1 piece of advice to those interested in starting their own food truck is to get a job on one. Many may not realize that this opportunity is available to them, but it’s a great test to see if you’re really right for the industry.
- Get a job in a restaurant – If the first piece of advice isn’t possible, then get a job in a restaurant. Get to know the hospitality industry. A restaurant is the closest thing to a food truck, but it still isn’t the same. Restaurants offer a host of amenities like stability, seating and air-conditioning that you won’t find on the street.
- Talk to food truck owners – Chat with truckers. Learn about what got them into the industry, ask about their hardest challenges, the biggest surprises and the most important thing they learned.
- Read great books – Read books on entrepreneurship, service, marketing, finance and street vending. While you’ll be going through opening the business on your own, you can benefit from others who have learned before you. Here are a few examples of books that have been helpful for me:
- “Setting The Table: The Transforming Power of Hospitality in Business,” Danny Meyer
- “Radical Candor: Be a Kick-Ass Boss Without Losing Your Humanity,” Kim Scott
- “Influence: Science and Practice,” Robert Cialdini
- “Good to Great: Why Some Companies Leap … and Others Don’t,” John Collins
- “Servant Leadership: A Journey Into the Nature of Legitimate Power and Greatness,” Robert Greenleaf
- “Fundamentals of Menu Planning,” Paul McVety, Bradley Ware and Claudette Ware
- “Multi-Unit Leadership: The 7 Stages of Building Profitable Store Across Multiple Markets,” Jim Sullivan
- “Jab, Jab, Jab, Right Hook: How to Tell Your Story in a Noisy Social World,” Gary Vaynerchuk
- “Why We Buy: The Science of Shopping,” Paco Underhill
- “Resonate: Present Visual Stories That Transform Audiences,” Nancy Duarte
- “The Death and Life of Great American Cities,” Jane Jacobs
4. Know the Rules. Play by the Rules. (Change the Rules!)
Every industry has rules and licenses. In the food truck industry they can change from city to city. It is incumbent upon you as an entrepreneur to learn the rules and play by them. It is no excuse not to know the local health code and the local rules and regulations on street vending or event vending.
In New York City there is a cap on permits and a decades-long waiting list for permits. In Los Angeles, where I operate, there are challenges as well. The city wants to pass a law that allows the police to ticket food trucks every 30 minutes versus just once a day. These examples are unfortunate, but it’s important to work in collaboration with other vendors to change these rules. For now, though, do not ignore them.
As a side note, sales tax, payroll tax, income tax … this is all normal. Every business wrestles with these. In fact, it is incumbent upon you as an entrepreneur in a growing industry to pay your taxes and help bring legitimacy to street vending.
5. Eat the Competition
Spend some time examining the market. Compare your concept with other concepts in your city. Look at food trucks, restaurants, kiosks, delis and even grocery stores and delivery services. These days, even Uber and online grocery stores compete for lunch dollars. Make a spreadsheet to summarize these businesses, their core menu offerings, their price point and the customers they appeal to.
If you find a menu item you like, try to learn more about the recipe and what makes it special. Watch for deliveries to learn the vendors that supplied the meats or cheeses.
Also, competition isn’t just about differentiated food. It is also about operations. In general, faster operations are more profitable. Watch other food truck operators to see how fast they can serve customers. What are they prepping ahead, and what are they doing at the time of order?
6. Do One Thing and Do It Well
There are massive outsized returns for being the best in the world. Typically the best outperforms second best by five times. Now, how can you be the best in the world with one little truck? You need to be the best in YOUR WORLD.
Pick a product that is authentic to who you are where you can bring something special. Because trucks are small and you have limited space, it is even more important to be judicious about every item on the menu.
Make sure there is some magic in what you make! Food trucks are very transparent. It is like sitting at the chef’s table of a fancy restaurant. Customers can look inside the window and see everything …
- If you sell tacos. Bam. Top them with some fresh cilantro. Magic.
- If you sell cupcakes, make a show of putting on the frosting. Magic.
- If you sell creme brulee, torch the crust. Magic.
The more you can add to the overall experience, the more you can bring them back – not just for the food, but for the show.
7. Consider Partners Carefully
The most important aspect of any business is the people. As the founder of a food truck, you will be instrumental in getting your business to market, but no one can do it on their own. Depending on your background and resources, you may consider inviting a partner. Experienced venture capitalists list the founding team as the most important criteria in assessing the prospects of a new investment. This is because the experience, skills and resourcefulness of a founding team can make the difference in whether or not a business can get started, run profitably and survive.
A great business partner can be great, and a bad business partner can be horrible. You should be extremely thoughtful in assessing a potential partner. The key to a great co-founding relationship is a strongly aligned vision and complementary skill sets. Each partner should bring tangible value to the business. Some bring experience, some bring relationships and some bring money.
One thing to keep in mind is more partners mean more dilution. If you add one partner in equal terms, you’ll each own 50 percent of the business. Two partners mean you’re down to 33 percent.
8. Write a Business Plan
Science has shown us that people who define a plan of action and set goals perform better than people who don’t. If you want to win, you’ll take the time to articulate a business plan. Writing a plan will help you anticipate challenges, keep you focused and keep you on a budget as you start your truck. Finally, a business plan will be essential in raising money if you want to get cash from anyone other than your parents.
There are a ton of great templates online that are easy to find with a quick search. There are also national and local organizations that can help you through this, like SCORE or your local chamber of commerce.
Every entrepreneur has his or her own ambitions or goals. Some entrepreneurs are looking for flexibility to work when they want, while others want to start the next fast-food chain to sweep the nation. All of these figure into the business you’ll be creating:
- How big do I want to grow?
- What do I want to be doing on a daily basis?
- How much time do I want to put into this business?
Some other key assumptions to building out a business plan:
- How much time will I devote to this project?
- How much money do I need to make back to survive?
- What will be on my menu? How much does that food cost?
- How will I operate?
9. Raise as Much Cash as You Can
Cash? You’re going to need potentially $80,000-$100,000 to start your truck business, but from where? Friends, family, bank, sock drawer, crowdfunding? Or loan shark? Of course not, but people aren’t giving you their hard-earned cash on a whim. That plan you just wrote is your key to demonstrate that you are serious, you understand the business and that you have the focus and direction to succeed.
Here is where to find the cash:
- Your wallet – If you’re going to ask for money from anyone else, they’re going to want to see you have skin in the game.
- Friends and family – It is easier to ask friends for money, but realize if your venture fails it could have a profound negative effect on your relationships.
- Crowdsourcing – Amazing innovation. Kickstarter, Indiegogo, Prosper … do it.
- Bank loans – I hope you have a great business plan and are ready to pitch it. That’s how you’ll convince bank lenders to loan you their cash.
- Small business loans – The Small Business Administration backs loans to small businesses to make it easier for banks to loan to a risky venture. Look for participating banks in your area. Even if you cannot get a loan yet, it will be good to build relationships for the future if you want to expand once the operation is up and running.
- Asset-backed loans – The interest on these can be expensive, but it can be a reasonable way to finance a truck or kitchen equipment.
10. Bootstrapping, Scrappiness and Embracing Scarcity
Remember all that money you just raised? You’re going to need it to win. Every dollar is a bit of leverage that can help you work toward success. The constraints you face are not limits – they are focus and clarity that you can leverage to succeed.
The most well-capitalized business doesn’t always win. New coffee shops open that compete with Starbucks every day. New burger joints open all the time and steal market share from McDonald’s and Burger King.
While the big operators have honed efficiency, massive purchasing power and resources to absorb mistakes, they are not as nimble as a new operation. Use your small size to your advantage. Be prepared to change quickly if you need to adjust on the fly.
Embrace being resource-constrained and learn to love operating with less. Focus on playing your game, not someone else’s, and making decisions that drive execution.
Check out more from Small Biz Battles:
Getting Down to Business with Hosts and Contestants