While not as expensive as restaurants, food trucks are some of the most capital-intensive businesses to start. Build-out and equipment costs, starting inventory, licenses, fees and working capital can easily add up to over a hundred thousands of dollars. To make matters worse, banks don’t usually lend to new businesses and not everyone has a huge inheritance sitting in the bank. So where do some new culinary entrepreneurs turn to for the capital to get their food trucks on the road? Crowdfunding!
Crowdfunding is a financing mechanism popularized by websites such as Kickstarter, where a prospective food truck vendor can pitch their concept online and receives pledges from backers in exchange for rewards and gifts. One of the most successful Kickstarter food truck projects The DUB Pies Food Truck of NYC, raised over $36,000 to get their business on the road.
With that said, crowdfunding isn’t easy. The love comes from the labor you put into to it. Here are six crucial steps to crowdfunding a food truck project.
6 Steps To Crowdfunding Your Food Truck
Building The Foundation
Much like a successful lunch rush, preparing your crowdfunding project is the most critical work. Once you launch your campaign it will be a sprint. Prep work will prevent your campaign from stalling. From discussing this topic with vendors, we’ve found that successful campaigns can take at least three months to plan.
Crowdfunding isn’t a one-person show, so consider building a team for your project even if they won’t be part of your food truck staff. The first position you need to fill is that of the project manager. This role will keep track of all of the steps of your campaign. You need to tell your story and showcase your brand. You will need a good photographer and videographer to make sure your story gets told well. Finally, you’ll need someone who can help you build your brand messaging, including your tagline, social media posts and press releases.
Setting Your Goals
Just because you want a half a million dollars does not mean you should set your goal at half a million dollars. The proper way to establish your goal is by first establishing what you need the money for.
Do you need the money for a new wrap, a deep fryer or your entire startup budget? Whatever the case, set that amount for your goal. Don’t be modest. However, please remember that Kickstarter projects are all or nothing. This means if you don’t hit your goal you don’t get to keep the money you did raise.
The second step is to analyze previous food truck crowdfunding campaigns in your area. This will give you a realistic look compare your goals to. For example, you shouldn’t set your goal to $100,000 when you find that 99% of food truck campaigns have only raised $50,000. Past performance is not indicator of future success, but if you are trying to reach past your peers the quality of your product and your social capital should reflect the length of your reach.
The third step is to calculate the cost of your rewards and factor that into your goal. Nobody wants to raise $10,000 only to find out that after all is said and done, you’ve only got $1,000 left to complete your project.
Getting people to back you means giving back. Think of rewards as your menu offerings. You want to maximize your average check by appealing to a host of tastes, from sweet to savory. In food truck crowdfunding, this means you want to have a selection of rewards that appeal to different price points. For example, you want offer rewards at the $20, $50, $100 range.
Spend some time researching similar crowdfunding projects. This will give you an idea about crowdfunding reward tiers. Typically, reward tiers for a food truck will be dinner for two or tickets to the opening party.
Project Launch Party
Momentum is essential in crowdfunding. If you reach 20% of your goal in the first few days, you are 80% more likely to hit your goal. A successful project launch party can help create evangelists from your attendees.
Let people experience the awesomeness of your menu and use it as an opportunity to build excitement around your campaign. Invite friends and family, and people that you know will have your back.
Just because you build a crowdfunding page doesn’t mean supporters will come flocking to fund your project. All successful crowdfunding projects have a thorough promotional strategy in place before launching.
Pleading for money is a turn-off; captivating images are a turn-on. Tell your story using alluring imagery of your new food truck and menu and then publish it over social media. Do this every day of the campaign for maximum reach.
Consider producing a series of social media-friendly images that visually tell your story. Don’t go cheap, professional photography will help reinforce your attention to detail and craftsmanship. If you don’t care how you’re represented, how can people believe you care about your food?
Press and local food bloggers should also be part of promoting your campaign. Engaging bloggers and press isn’t an email-and-hope tactic. Identify writers that would speak to your target audience. After doing that, craft several press angles tailored specifically to them.
Watch & Adjust
As with any recipe, you’ll need to adjust your food truck campaign along the way. No amount of planning will be ready for what actually happens once you launch. Track key metrics to know if your campaign is performing as planned.
If you have a 10% conversion rate and you average 100 visitors to your campaign every day, you should be getting 10 backers a day. To double the number of backers, you can increase your conversion rate by making your page more appealing or double the amount of traffic that comes to your crowdfunding page. Understanding these metrics is similar to adjusting a recipe based on the temperature outside.
The Bottom Line
Although crowdfunding takes time and effort, it can provide more than just financial rewards. For one, it frees you from having to take investor money.
Building a base of advocates before you hit the road, is another unseen result of crowdfunding. A successful campaign can create a base of early supporters for your food truck since they have invested in your project. Remember, nobody eats alone. One backer will bring anywhere from three to six people with them to your food truck grand opening to show off that they helped make your project come to life.