Thinking about starting a new food truck and need a business plan for yourself or possible lenders? You’ve come to the right place. Compiling a business plan takes time and effort, but the process can be productive in a number of ways. Think of your business plan as a road map to your food truck’s success. Today we’ll share 10 important food truck business plan tips to help you start out on the right foot.
10 Food Truck Business Plan Tips
- Do your research and understand it. The first of our food truck business plan tips is to find out what you’re dealing with before taking the leap. Take some time to research the food truck market in your region. Find out who the major vendors are. Find out what the restaurant competition is like. You don’t want to get bogged down in researching, but you also don’t want to enter a market that isn’t ready for your concept.
- Avoid common mistakes. Our next tip is to look at what other food trucks and restaurants are doing wrong so you can do the opposite. Take a step back while you are brainstorming, and come up with strategies that will help you avoid falling into those traps that make so many other food service businesses fail. You should ensure that your business plan accomplishes these 3 goals: 1) Appeals to your target customers, 2) Differentiates your food truck as unique, 3) Communicates your value propositions.
- Craft a list of assumptions. Spend a lot of your time on this tip. This is where the deep thinking happens. What do you think the economy is going to do? Will you need additional help? What menu items are apt to grow in the future? Which aren’t?
- Lay your assumptions into three scenarios: a bad year, a good year and a fantastic year. The purpose of this exercise isn’t just to create a game plan for all the bad things that could happen. It’s also to set high goals for the best case scenario you can envision.
- When building your food truck budget, use your most conservative scenario. You have to make sure that you can handle surprises. Even in the best of times, there will be challenges to manage such as having to deal with a key employee that leaves for another opportunity or something damages a relationship with a key supplier.
- Trim your numbers. When you’re done with your plan, go back and reduce the revenues by 10%. And the increase the costs by 10%. Food truck owners are always going to be hit with surprises along the way. A 10% cushion on both sides of the budget equation will help you past them.
- Create a financial framework. Create a balance sheet, an income statement and a cash-flow statement. These key statements will help provide a full picture of your assets and liabilities, your financial operations and of the flow of cash in and out of your food truck. Some vendors make the mistake of skipping this step, assuming they’re too small to bother. Plugging your assumptions for the coming year into a financial framework will help you validate them.
- Tell a story with your business plan. After countless interviews with lenders, one thing that continually comes up is that they want to know the food truck owner’s story. What drove them to start a food truck. Why are they launching now? They want to know information like this because when things go wrong they need to know that the vendor is the right person to weather the storm. Understanding someone’s passion and thought process can help lenders get past any fears they may have in backing your food truck business.
- Avoid technical jargon. You might be developing a cutting-edge menu, but your strategic plan will be reviewed by non-culinary people. It may be necessary to use unfamiliar terms and concepts, but explain them in clear and simple language whenever possible. If you can’t explain it simply, you don’t understand it well enough.
- Have a professional look at your plan. Review your assessments with your accountant and your trusted mentors in the foodservice industry. Pretty simple…most of you do not have an accounting background, so make sure someone who does reviews each of your assessments.