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Start Up

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10 commandments of starting a food truck business

From my years of covering the mobile food industry and speaking with some of the most successful food truck vendors, I have created this list of 10 factors that most often contribute to the ultimate success or failure of any new food truck.

  1. Thou Shall Work In Foodservice Industry First. Cook, clean and manage some personnel. Hands-on experience working with staff and serving the public will tell you if you are a fit for the mobile food industry. If this isn’t a possibility, speak with folks who can explain the hours and tasks a food truck owner needs to be able to deal with to succeed.
  2. Thou Shall Define Your Concept. Don’t try to do too much. You can add and modify a little as you go to stay fresh, but don’t confuse the customer with too much at your grand opening.
  3. Thou Shall Research Local Food Truck Legislation. Not understanding how your local municipality regulates the mobile food industry can quickly lead to improper food truck builds, wasted time and money. This research will also inform you what it will take and how much it will cost to get fully permitted and licensed.
  4. Thou Shall Plan Ahead. Building a successful food truck business requires a lot of planning. This must include creating a fully executed business plan. This tool will help you (and possible investors) understand your concept and what you will need in order to operate and thrive.
  5. Thou Shall Lead & Supervise. Be involved in everything from the layout and construction of your food truck kitchen to the hiring of employees. Opening a food truck requires an owner who is present and leads their mobile food business.
  6. Thou Shall Preform Site Selection. You don’t have to be an expert in market analysis, but before you start, select a few local spots where your truck will operate. Once again, speak with food truck owners in your area, almost all of them will tell you their experiences with certain parking locations.
  7. Thou Shall Develop A Budget. Don’t forget the little things when budgeting for your first year of business. Build in contingency and operating capital for at least your first six months of operation.
  8. Thou Shall Select Your Suppliers. Visit and compare your bakery, produce, meat and grocery suppliers. Team up with businesses based on service and quality, not just price.
  9. Thou Shall Conduct Training. You only get one chance to open. Allow employees enough time to learn your systems and hold two or three dry -run tests before your grand opening.
  10. Thou Shall Never Fear Failure. In order for you to succeed you need to face risks. Believe in what you are doing.

What say you? While there are plenty of other issues new food truck owners will face, I felt that these 10 commandments are the top factors someone planning to start a food truck business needs to understand.

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While scanning through our vast Twitter feed daily, we are able to monitor the food truck industry for trends. One of the most recent finding we have stumbled across is that food truck owners tend to stay in start-up mode way too long.

foot on brake food truck

Keeping your mobile food business in start-up mode is like driving your truck with the brakes applied. If you keep telling people you are new to the industry or still figuring things out,  you’ll never be able to take actions for real growth.

After reading this article we hope you’ll realize that it’s time to move your food truck from start-up to growth mode and from planning to actually doing. In two or three years, you want to be able to look back at your start-up phase as an important part of your thriving mobile food business’ history. You want to say something like, “I remember when I was the only one working in my kitchen prepping for my daily shifts. Now I employ 6 people and am on my way to owning a restaurant.”

This is the mindset we want you to move towards and here are five ways to do it:

Delegate

When you’re first starting your food truck business, in most cases you are handling everything. To begin growing you have to start investing in people to do tasks you can no longer do. We have found that nearly three quarters of all food trucks start with zero employees, which underscores the resistance some vendors have to delegating. You have to grow your business. Stop thinking that people cost money; your lack of production and failure to grow your food truck business will ultimately cost far more.

Pick Your Battles

Don’t get wrapped up for a week deciding on a logo when it ultimately doesn’t matter. Your food truck brand will evolve as your business evolves, so your logo is likely to change. There are far more important things to obsess over such as building a great menu, gaining customers and making money.

Get Attention

One of the most common problems start-up food trucks have is becoming known. Your most important task early on will be to spread the word about yourself and your mobile food business. Ultimately it’s the way to new and returning faces to your service window. In recent news, Candy Yoder of San Antonio had some issues with a venue banning her truck because of the name she selected “CockAsian”. She got national media attention (including a mention during last week’s Saturday Night Live), and offended some people. While she may have ruffled some feathers, her menu is turning criticism into loyal customers. Get out there and get attention, get critics and then get customers.

Throw A Change-up

Instead of saying “I own a small food truck company,” say “I own a food truck company that serves high quality <insert your food here>. It’s like nothing you’ve ever tasted.” Notice the difference? The first makes you seem small and insignificant. It makes no claim. The second makes you seem unique, confident and capable of being a huge success. Know how to pitch yourself and your food truck. Be ready to explain what your mobile food business does that is better, faster and of value to your local marketplace.

Create Urgency

If you start a food truck without setting specific timelines for action and achievements, you will be stuck in park forever. Pressuring yourself to perform should not lead to inferior products leaving your truck; it will end up with projects getting finished. Urgency is key to getting things done.

Your vision is not improved by staying in start-up mode. It’s time to stomp on the accelerator and become a food truck that is grabbing market share from the other more established players in your area.

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During the research for our list of the Top 20 US Cities to Open a Food Truck we looked at a number of variables that helped define those cities that a new food truck vendor would be able to build their brand with the best chances of success. To follow up that article we thought it would be fun to develop what we call Food Truck Utopia.

food truck utopia

We understand that a Food Truck Utopia will probably never exist, but can certainly be looked at as a model for cities to strive for.

The City

Politicians: FTU is governed by a group of individuals that are open and accepting to all small business. They refuse to protect one industry over another, and provide the local population with the ability to make their own choices when it comes to how they spend their money.

They will also have great communication with the food truck vendors at all times, not just when problems arise.

Legislation: The laws and ordinances that are developed to oversee the city’s food truck vendors will only be in place to protect the health and safety of the public. The fees to operate will be fair and consistent with all small businesses.

Also, food trucks will be able to park where there is space as long as they do not cause traffic or public safety problems. There will be no buffer zones, mandatory gps tracking, limited number of permits or time limits for parking.

Business: The business community within our city limits will not look at food trucks as competition and will not petition our politicians with requests to create a “level playing field.” They will understand that food trucks only provide the consumer with multiple dining choices.

The business owners will have the ability and desire to keep regular communication with the food truck organization to resolve problems they may have with it’s members.

Weather: Our city will have moderate temps throughout the year, but at the same time there are seasonal changes that require food trucks to consider menu changes that reflect the change in temperatures. The weather cannot cause the consumer base to want to stay indoors (ie heavy rain, extreme hot or cold temps).

The People

The vast majority of the residents will be foodies or people who appreciate creative culinary techniques. The FTU population will be employed middle to upper-middle class citizens of all ages, gender, creeds and races. They will be tech savvy and highly involved with social media. There will be consistent growth in the population, as well as continual growth in their disposable income.

The general public will spend a lot of their time outside of the home in our downtown areas and public spaces. Our citizens will also do a lot of catering for personal events or for the businesses they work for. As a final point, the people will go out of their way to attend the many food truck events that take place year round.

The Organization

There will be a strong food truck organization with direct communication to its members, local business leaders and politicians. The organization make sure its members follow the legislation put in place, keep their disagreements in house and provide a single voice to the community. The FTUMVA will make sure trucks do not squat on their favorite parking locations, stay mobile (read change locations daily) and keep them from parking in front of direct competing brick and mortar businesses.

The organization will also work with local businesses and charities to provide the members business and partnership opportunities. The will be educational classes (culinary technique and business management) provided to new and existing vendors and mediation work between members and other businesses that may have issues arise.

Additional Factors

  • Large number of commissaries or commercial kitchens to select from.
  • Public spaces where food truck events can take place.
  • An abundance of street parking.
  • Pedestrian friendly streets with a high foot traffic count at most times of the day.
  • Bars and businesses willing to partner with food truck organization members to fill their needs for catering for their own customers.
  • A fully staffed and trained health department to oversea the trucks and the kitchens they work from.
  • Surrounding communities that accept our food trucks within their city limits.
  • A large population of people within driving distance of our community full of people who want to visit our food trucks.

Please note that the city a food truck operates in is only a small piece of the puzzle of what makes for a successful food truck business. Yes it’s important, but the primary factors that build strong mobile food businesses are:

  • Concept
  • Quality of food
  • Quality of service
  • Ability of staff
  • Management of the business side of the operation (keeping food and overhead costs down, managing suppliers, marketing, networking)

Without a firm grasp and execution all of these principles it doesn’t matter where your truck parks or how open your community is to the mobile food industry, success will be nearly impossible to achieve.

We’d love to hear your thoughts on what a food truck utopia would look like. Please feel free to add your thoughts or suggestions in the comment section below.

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Before you run out and quit your day job to jump into the mobile food industry, take a moment to think about this major decision. While becoming a mobile food vendor is an exciting endeavor, it’s just not for everyone.

food truck question mark

Remember that this culinary adventure should be looked at as a long-term lifestyle change and commitment. You will pour blood, sweat, tears, and money into your food truck business, and if it doesn’t work out, you won’t be able to recoup that investment.

Here are a few reasons why starting a food truck may not be right for you:

Passion Without a Plan. While passion is requirement for a successful food truck business, it’s simply not enough. You also need to determine how you’ll make money and grow your business. If the idea of developing a business plan bores you or stresses you out, it might not be a good fit.

Not Enough Passion. Looking back at our first point; you have to be passionate and excited about starting a food truck business. You should be able to see yourself building your mobile food business for years to come. You need to be willing to do whatever it takes (work 80 hours a week, see your family less) to realize your dreams of food truck ownership. If you’re not, then it’s just not worth the pain of starting a food truck business to find that out.

Short on Money. Starting a food truck is not going to get you rich quick. It can take months before you turn a profit, and in the meantime, you’ll need enough cash to pay your daily personal and business expenses.

Big Changes. Maybe you just got married, or had a baby. If you’re in a transitional stage in your life, starting a mobile food business will add to the already high levels of stress you’re experiencing. Starting your food truck should probably be put on hold until things slow down.

You Just Want to be the Boss. If the appeal of not having an overbearing boss to answer to is your driver for starting a food truck business, consider this: your customers will be your new bosses. They’ll dictate much to what you do and how you do it. If they don’t like your menu, they won’t buy it.

You’re the Breadwinner. Shifting from one salary to support your family to an erratic, mobile food vendor’s paycheck is one many families can’t handle. If your family finances will suffer if you quit your current job, wait until you have six to twelve months of living expenses in the bank.

No Experience. Although you’ve worked in a white collar job for years, you’ve dreamed of opening a cupcake truck. If you’ve got mad baking skills, that might help you survive, but if you have no experience in, finding locations to park a truck, buying baking supplies, and managing staff, you may find yourself struggling.

You Want to do What you Love. Why would this be a reason to not start a food truck? Unfortunately, few people do that thing they love 40 hours a week. In the previous example, you may find that, while you really enjoy the baking portion of the work, you’re actually doing very little of that in between the administrative tasks a food truck owner is responsible for. You’ll be busy creating employee schedules, making deposits at the bank, keeping up on social media and dealing with your suppliers. Someone else may have to handle the baking.

Knowledge of the Business Side of Things. While you don’t need an MBA to be a food truck operator, it helps to have a basic understanding of marketing, accounting, management and finance. You can take continuing education courses at your local community college, read books and websites (hint: mobile-cuisine.com), or simply teach yourself

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In our efforts to assist the mobile food industry, Mobile Cuisine Magazine has consistently provided business information for food truck and food cart owners. With the rapid expansion of the industry many cities in the country have more than a dozen food trucks patrolling their streets now. Because of this trending growth, there have been numerous requests submitted to us to provide information on organizing food truck groups to give these areas a single focused voice to discuss their local issues.

Have you been thinking about starting a new, nonprofit, tax-exempt organization specifically centered on the mobile food vendors in your city or region? Have you tried to decide whether you should organize as a 501 c3 or c6? Do you even know the difference between them?

The c3 and c6 are similar in terms of exemption from income taxes, their qualifying characteristics, the application process (IRS Form 1023 vs. 1024), and the various rules governing their ongoing activities can be quite different.

It is helpful to first understand the distinction between a “nonprofit” and a “tax-exempt” entity. “Nonprofit” refers to an entity’s incorporation/organizational status as governed by state law, whereas “tax-exempt” refers to federal income tax exemption governed by the Internal Revenue Code. The c3 and c6 are two of the most common IRS tax-exempt statuses for nonprofits.

To qualify for either exempt status, a nonprofit must meet specific tests which are outlined in IRS Publication 557, Chapters 3 and 4, available at www.IRS.gov. One common requirement of a tax-exempt entity is that your net earnings may not benefit private shareholders or individuals. Once organized, c3 and c6 organizations are both required to file annual IRS Form 990, 990-EZ, or 990-N depending on their size. They may also be required to file 990-T and pay taxes if they have “unrelated business income.” While the applicable IRS schedules and required disclosures of the c3 and c6 vary, all tax exempt entities are expected to have strong governance policies and practices in place and the new 990 wants to know a great deal about them.

Which exempt classification is right for you? Here are some common differences:

501(c)(3)

  • Operated exclusively for charitable, educational, religious, literary, or scientific purposes
  • Includes membership associations (e.g., professional society), if the purpose is to advance the profession with respect to “educational” activities
  • Lobbying and political activities are significantly restricted. A c3 will lose tax-exempt status if the IRS determines that it has engaged in “substantial” lobbying activities

Special Advantages of the c3 include:

  • Enhanced fundraising advantages, such as eligibility to receive tax-deductible “charitable contributions” and gifts of property and eligibility to receive many grants
  • Eligibility to receive other state and local tax exemptions (e.g., sales tax)

Example of nonprofit 501(c)(3): Urban Justice Center – Street Vendor Project

501(c)(6)

  • Operated to promote a common business interest, and to improve business conditions in the industry
  • A membership organization (e.g., business league, industry trade association), advancing a common business interest
  • Allowed a wide-range of lobbying. Yet, the main stipulation is that a c6 is required to disclose to membership the % of their annual dues that is lobbying (i.e., non-deductible to members for tax purposes)
  • Dues or other payments to a c6 are only deductible to the extent that they serve an “ordinary and necessary” business purpose of the payer

Examples of nonprofit 501(c)(6): DCMFVA: DC Mobile Food Vendors Association, SoCal Mobile Food Vendors’ Association

As you can see, there are several similarities and distinct differences within the world of the 501(c); and c3/c6 represents only two of several types. When creating a new nonprofit organization for the mobile food vendors in your city or region, it is always recommended to consult with legal, tax, and association management professionals with the background and experience to help you make an informed decision and to protect your ongoing tax-exempt status.

If you have any additional tips for those interested in forming a new nonprofit, please drop us a message or leave it here in the comments section.

 

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So you’ve decided you want to start a food truck but you don’t have the start up capital to do it on your own. A business plan for your mobile food business is going to be an important first step, but if you’ve never written one, you may wonder what you have to do to complete this task.

how to start your food truck business plan

How does one get started on a business plan? There is no absolute route to follow, it depends on who you are, what you do well and how you think. The people who own food trucks (or those who want to) are all different.

An easy way to look at business plans is to see it as a collection of components or modules, that can be started wherever you feel most comfortable.

Here are five areas of a business plan you can start with depending on which one is best for you?

SWOT Analysis

This is a collection of thoughts organized into four categories: strengths, weaknesses, opportunities and threats. Ideally you gather a small group of people together for just an hour or two, you have somewhere to write out thoughts into bullet points. The SWOT almost always leads to simple, practical strategy.

It’s really hard to do a SWOT without thinking about how to focus on strengths, work around weaknesses, seize opportunities and avoid threats.

More information on creating a SWOT Analysis

Simple Sales Forecast

Your sales forecast is a snapshot of what you think your food truck revenues will be for a few months at the very least, ideally 12 months by month and two more years just annually. Break your forecast into tickets, average revenue per ticket, number of sales, average cost per ticket. From here, the math is simple. Sales is the number of tickets times revenue. Costs are tickets times average cost per ticket.

What happens to most people is that thinking through the details of the sales forecast gets you into business planning. You can’t help thinking about prices, costs, target markets, strategy and focus.

Mission Statement, Vision Statement and Mantra

The mission statement is about what your food truck business does for the customer, the employee, and the owner. The vision statement is a view of what you want your mobile food  business to be three years from now. And a mantra is a simple sentence summary.

Try to avoid simple hype. Test it yourself by asking these questions:

  • Does this describe my food truck in a way that it differentiates it from my competitors?
  • Would a customer read this and identify my business with it?
  • Is this what one customer would tell another about your food truck?

Develop your core market story.

Invent an ideal customer and tell yourself the story of how they identify a problem, or something he or she wants, searches for it, and finds your food truck. Make the story an explanation of what the problem was and how your mobile food business solved it.

Talk to 10 Prospective Customers

I’m always amazed at how much business thinking comes out of the simple process of talking to real people about your real business. Do it right: Find people willing to talk to you and take some time with them. Start by making sure they don’t think they are supposed to tell you what you want to hear, but rather, the truth.

Any one of these five first steps might be right for you. All of them can help you get going, and they are all good steps to take regardless of what follows.

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Running a food truck can be a sexy dream for many people. The popularity of food trucks and mobile food has never been higher nor has it ever been as well publicized.

Is Opening a Food Truck Right For You?

Whether it’s seeing a food truck parked near your office at lunch or seeing a television program or commercial that includes food trucks, the mobile food industry is booming. More and more people asking themselves if opening a food truck is the route they want their professional career to head.

If you are one of these interested parties, you must to do some soul-searching before you run out and purchase a food truck. Explore your thoughts surrounding the possibility of becoming a food truck owner. The more you question your personal motives and figure out what’s holding you back the easier the final answer will come.

Answers these questions to help you determine if a owning a food truck is really right for you:

  • When did I first come up the idea that I would like to own my own food truck?
  • What was happening in my life at that time that may give me clues about why this thought came about?
  • Am I willing to work on most holidays?
  • Am I willing to work long hours?
  • When I picture myself working in my food truck does it seem realistic, and am I happy even when I envision the chaos or problems that will happen?
  • Have I had dreams of myself owning a food truck?
  • When I visit food trucks do I find myself mentally running the place, or do I have ideas about how to make improvements?
  • Do I truly envision myself enjoying working with the public, and people that would be my employees, even when conflicts arise?
  • Would I be happy if I had to multitask as well as delegate jobs to others?
  • Would my spouse, significant other, or family be accepting of this career change?
  • Is there a part of me that wants to do this to please someone else? If I take away that person and or the feeling of importance would I still want to proceed?
  • Who may be holding me back in my own mind? Make a list of all the people in your life and how they would react? If the reaction is negative or unsupportive what are the reasons? Is it really theirr own fear, or is it a concern the person legitimately has for you? If valid explore that thought and whether or not you believe it.

Starting a new mobile food business venture can be scary. The best way to move past this fear is to gain knowledge about industry. In exploring the idea you may learn that food truck ownership is not really for you, but rather it was the idea of independence that really appealed to you.If this turns out to be the case then by running through this exercise nothing was lost.

If you do find becoming a mobile food vendor is what you feel you were meant to do, then the next step will be to explore the ways to make it a reality.

To Existing Food Truck Owners: Do you have a story about when you began your food truck? Let us know what you went through to make it happen in the comment section below.

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Startup food truck owners often worry that someone else will steal their best ideas before they get on the road. That’s understandable, but it’s the wrong thing to be afraid of.

Questions and Answers signpost

The bigger danger is that these culinary entrepreneurs won’t share what they’re doing behind the scenes with enough people, especially early on in their food truck menu development.

You’ll likely need to examine many promising menu ideas before you find one that you will be able to covert into a successful new food truck business. So your goal should be to examine and discard the bad ideas quickly in favor of the good.

So how do you obtain the information you need to make these decisions? Here are five strategies to pursue:

Interview your market

Find potential customers and ask them about the local food truck industry. Find out what they think is missing from your area and how important it is that this void is in need of filling. And please remember; I said, customers, not just friends or family who might answer your questions in a way that will make you feel great about your concept.

Find experts

Find people who have or are working in the industry, or who have tried similar ideas in the past. Unless you’re going to be their direct competitors (which most food truck owners won’t see), you’ll be surprised at how many knowledgeable people are willing to give you their time.

Conduct focus groups

These don’t need to be formal events with everyone seated around a table and you behind a one-way mirror, although there’s nothing wrong with that except for the potential expense. By asking several potential customers or others and getting them to interact with one another, you can often learn more than just by asking directly.

Private tastings

If you really want to find out if your recipes are spot on, or fall on their faces…find out. Look for local foodies who will sit down for an informal tasting party. Roll out your menu ideas and watch for the reactions of your guests. At the very least, you can gauge people’s interest in your menu and find out where you may want to tweak things. In a best-case scenario, you might wind up with customers offering you catering gigs before you’ve even invested in your food truck. This is some of the best information you can possibly get.

Ask for investors

Even if you aren’t ready or even planning to take other people’s money to build your food truck empire, people who may invest their money in your concept are almost always going to ask hard questions. Better to force yourself to examine the answers early, before you get started.

Remember, you’re looking for feedback but more than that, you’re looking for feedback that demonstrates that customers in your target market will be excited for your launch.

If they aren’t it is a pretty good indication your best ideas will need to be found elsewhere. This can be discouraging but isn’t better to learn this very early and very cheaply?

 

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When opening a new food truck, you are going to have to make assumptions about all your expenses and your head counts regardless of whether or not you price by gross profit.

gross profitSince you will already have those assumptions, it only makes sense that you set prices so that you will collect enough markup (gross profit) from each of those assumed customers to cover all the expenses you are assuming.

Since you won’t have “real numbers” to work with in your culinary start up, it will be important that you create your budgets conservatively. Set realistic expectations for traffic and for expenses, based on your own or your advisor’s experience and averages in your area. You’ll need to be doing all this regardless of whether or not you price by gross profit. Pricing by gross profit simply guarantees that if you bring in the customers you assumed, and you keep your expenses down to where you assumed, that you will at least make the profit you budgeted for.

Without pricing by gross profit, you are simply guessing at whether or not there will be enough markup to cover your expenses. Pricing by a budgeted cost percentage doesn’t take into account the other expenses of the mobile food business.

In short, budget conservatively and use your assumptions on customer counts and expenses, along with accurate recipe costs to price by gross profit in your food truck  start up.

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You are thinking about opening your food truck but you are not sure if you should. The very fact that most people today are willing to experiment and try food outside their homes is reason enough for you to venture into the mobile food industry. Here are some useful steps to open a food truck.

food truck startup tips

The first and most important thing you need to do before you even think about investing money in a truck, is to research in-depth about the type of cuisine that you are interested in serving in your rolling restaurant. Apart from researching for your own truck, you need to research about the restaurants and  other food truck vendors in your area too. This will give you a good idea about the kind of competition you are likely to face in the future.

From being a menu planner to an efficient accountant, a responsible manager to a culinary expert, you need to play myriad roles. There is a lot of hard work and dedicated efforts that you need to put in before you see your food truck set up and earning enough to sustain and then making profits over a long time to come.

You must look at the following steps to open a food truck if you are aiming to turn your mobile food service business into a profit making enterprise within a few years of being set up.

A good business plan is a must to start a business. This plan must include everything from use of funds, estimates of expenditure, the truck’s unique selling points, and the profits that you expect to make out of the business and why you think this business plan reiterates the fact that you are a good businessman.

The next thing to do is to find the right location for your truck to park. Everything about these locations must be right to get your truck rolling. The wrong locations or irregularities in the legal documents of the truck could lead to problems that will keep you busy for years to come. On the other hand, good locations can ensure a steady flow of customers and a good reputation as well.

You must also plan the concept of the food truck after you identify the target market. A great deal of thinking is necessary in planning the menu and type of cuisine for your customers. All the efforts that you put into your food truck will go a long way in bringing customers to your service window for a long time to come.

The next important thing in the steps to open a food truck is to maintain perfect accounts. Maintaining accurate bookkeeping will help you understand how much you are spending and how much you need to monitor your funds. A good accounting system with the use of computers and professional accountants will ensure you are always in control of your finances and know exactly your financial position at any point of time.

Here is a basic breakdown of the steps to open a food truck you will need to cover:

  • identify a market to target
  • research market
  • create a concept to address the market that is unique and appealing
  • plan your menu
  • write your business plan
  • create your financial projections
  • recruit experienced food truck advisers
  • raise the capital (money) required to open
  • secure locations to operate
  • install a truck wrap
  • install necessary equipment
  • get required permits
  • secure a commissary, commercial or shared use kitchen
  • sign up with vendors
  • get your food truck website
  • begin pre-opening marketing
  • get business insurance
  • set up business bank account
  • set up credit card account
  • install point of sale equipment
  • hire and begin training food truck staff
  • buy initial inventory
  • have a soft opening
  • have grand opening
  • become the next food truck success story!

For a complete rundown on what it takes to start your own mobile food business and the order to do things, check out Running a Food Truck for Dummies where I give you the nitty gritty details you will need to cover to open your own food truck.

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