One of the biggest concerns for food truck owners (and other small business owners) revolves around cash flow. If cash flow problems persist they will play a major role in your mobile food businesses success.
Here are some tips for solving the biggest business cash flow problems facing food truck owners:
Organize Changes in Payroll
Payroll fluctuations have always been one of the biggest issues for food service business owners. Turnover, new employees, layoffs and other things can all make payroll handling a challenge. The only thing you can really count on in business is change and while it’s impossible to perfectly project how things will be it’s wise to maintain a budget. Successful food trucks generally keep a tight budget and create budgeting processes for payroll organization.
Each year it’s good to set a budget. If you’re fiscal year starts in January and ends in December, start working on your budget for next year around July to September. Use your historic numbers to put together the budget.
Analyze how your payroll has changed over the years to see if you notice any trends. You probably have an idea already, but placing the numbers in front of yourself will help you see any trends that exist.
Forecast out the growth of your food truck empire and budget for new hires. Also analyze your typical turnover. This will give you a better understanding of raises and wage changes throughout the year.
This exercise of looking forward will help you prepare for how your payroll will change. You won’t come out perfect, but you should come close and that will make dealing with payroll less stressful.
Forecast Cash Flow
No cash means no business, so it’s important to understand the flow of your money throughout the year. Life as a food truck owner will quickly teach you that things can change quickly. Food and fuel prices can go up, employees come and go and seasonality can affect the number of customers walking up to your service window.
All those factors make it difficult to manage cash flow.
We touched on how forecasting can help you with payroll. Dealing with cash flow is the exact same process only now you’re looking at your entire mobile food business.
Three to four months ahead of your next fiscal year, create a budget with your forecast for revenue each month or if you have the time, every week. Use history to guide you with your plans for growth. Factor in all the existing costs and costs that are changing as a result of the industry, economy and changes you plan on making.
Seeing the changes from week to week or month to month will give you a forecast of how much cash you’ll need on hand throughout the coming year. Your numbers won’t be exact because you can’t plan for everything, but this process will help you prepare.
Unique Solutions to Rising Food Prices
Last year was really tough on many industries. Drought struck across much of the US and that has had a huge effect on food prices in 2013. Food trucks are dealing with rising food prices and consumers are dealing with their own money issues which mean they want lower prices.
If you make the customer feel like they are getting a good value then price doesn’t matter quite as much. This means that you can still charge what you need to as long as the customer feels they are getting value.
This doesn’t mean you can charge the same price for less food or lower quality food. Customers will notice and they’ll feel cheated. What it does mean is you have to find ways to give the customer more without having it add much or any cost to your business.
One creative way some mobile food vendors are dealing with food prices is to grow their own or source locally. This process can have similar costs to other sources and customers might be willing to spend more to support the community.
Another way is to find higher margin side dishes or other add-on items to add to the men to offset increases in main menu items.
For example, if you have to raise the cost of a steak is it possible to add on a free soda with purchase? It’s a tough economy and that means getting creative with the menu to combat rising food prices.
Stick With a Unique Focus When Dealing with New Competition
Even with all the issues facing the mobile food industry it seems like there are more trucks on the street every week.
While most food truck owners do not look at other trucks as competition, an influx of new trucks in your area can bring some stress on revenue, which obviously has an effect on cash flow. When a new truck first shows up there is an initial curiosity. Customers will try it out and that can dip into your revenue in the short-term.
The best way to approach this issue is to keep the focus of your food truck narrow.
Figure out who your single most important customer group is and do everything you can to serve them. Find your niche and be the best at it.
This is where you have an opportunity to focus on a niche. Do all you can to be the best there is. You’ll earn a loyal following and should only suffer very short dips in revenue if your menu or service becomes stale.
This will even out your revenue and cash flow situation making things much more manageable.
You can also do things like use modern payment methods like Square Mobile Payments to add more convenience for your customers by allowing them to pay with credit or debit cards.
There will always be issues that you’ll face. It’s part of the territory that comes with being a food truck owner. Use the tips above to help you with some common food truck cash flow problems.
If there are additional cash flow issues you’re facing please feel free to share them in the comment section below.