{"id":371,"date":"2023-04-17T15:07:06","date_gmt":"2023-04-17T15:07:06","guid":{"rendered":"https:\/\/www.smallbizgenius.net\/?p=371"},"modified":"2023-06-19T05:44:42","modified_gmt":"2023-06-19T05:44:42","slug":"starting-a-food-truck","status":"publish","type":"post","link":"https:\/\/www.smallbizgenius.net\/knowledge-base\/starting-a-food-truck\/","title":{"rendered":"The Keys to Starting Your Food Truck Business"},"content":{"rendered":"\n

Business opportunities that allow a significant amount of freedom are few, and those that literally let you go where you want are even fewer. Luckily, starting a food truck business is the magic combination of these things. You can be creative, and still become a part of a billion-dollar industry growing further with every passing year. Between 2015 and 2020, the food truck industry grew by 7.5%<\/a> every year! Of course, creating a successful business is not as straightforward as just purchasing a truck and getting cooking. There is a lot of planning and preparation needed; we\u2019ll show you how to get started:<\/p>\n\n\n\n

The Essential Preliminary Research<\/h2>\n\n\n\n

The process of getting a food truck set up can take between three months and a year, and requires several key steps:<\/p>\n\n\n\n

Understanding Your Competitors<\/h3>\n\n\n\n

When starting any company in the food industry, it’s important to remember that your goal is to fill a gap in the market and create demand. When you look at the food truck scene, this seems impossible, since the diversity in offerings is already enormous. Still, your best bet is to look into the trucks in your area and get a feel for what works, as well as what\u2019s missing. When sizing up your potential competition, make a note of the following:<\/p>\n\n\n\n

Food Choice<\/h4>\n\n\n\n

Choosing a type of food that’s not been done by other trucks in your local area is a great way to differentiate yourself. But at the same time, you need to pick a style of food that has almost universal appeal. For example, while pizza will always be popular<\/a>, a pizza truck would not only have to face competition from other trucks, it also has thousands of restaurants and kiosks with already established customers to contend with. On the other hand, a more niche food truck has a better chance of profiting from scarcity.<\/p>\n\n\n\n

The Cost<\/h4>\n\n\n\n

Staying competitive in this area is essential: Most food trucks serve food within a specific price range, so charging more would not benefit you. Additionally, you have to make sure you don’t undercharge too much, as this could cause issues with your monthly turnover later.<\/p>\n\n\n\n

Location<\/h4>\n\n\n\n

If you look at where food trucks tend to park, that will give you an idea of the more truck-friendly neighborhoods. Squares and public spaces are usually a better bet than regular streets and back alleys.<\/p>\n\n\n\n

Service Hours<\/h4>\n\n\n\n

Identifying the peak times is essential. For example, if you live in a location where people commute to work via public transportation, serving a breakfast or lunch option would benefit you more. Having a comprehensive idea of your competition will give you pointers on how to differentiate yourself, but also learn the lessons of setting up a successful business.<\/p>\n\n\n\n

Researching Food Truck Laws<\/h3>\n\n\n\n

Starting a food truck and working with food, in general, comes with stringent regulations. Typically, food truck regulations fall under three key categories:<\/p>\n\n\n\n

Health<\/h4>\n\n\n\n

Health standards for food trucks cover what equipment the truck needs to have, the permits you need. Staying up to code can be pretty expensive, but since this is a no-compromise area, you might even have to find a commissary kitchen to prep food in.<\/p>\n\n\n\n

Vehicle Requirements<\/h4>\n\n\n\n

These regulations concern the type of vehicle you can use, where you need to register it, the emissions regulations, and if you need to have a commercial driver’s license.<\/p>\n\n\n\n

Zoning<\/h4>\n\n\n\n

As the name suggests, zoning regulations for your area determine where you can park the vehicle, the permitted neighborhoods to sell your goods in, and where you can store your vehicle overnight.<\/p>\n\n\n\n

You\u2019ll need to undertake specific research to address the regulations on street vending and food trucks. As mentioned, most cities require food trucks to have a contract with a commissary kitchen and not actually prepare the food inside the vehicle, so you need to look into those at your disposal in the area of your choice.<\/p>\n\n\n\n

Name and Concept<\/h2>\n\n\n\n

Once you have an understanding of your competition and the regulations, you can narrow down a concept and name that work with what you are trying to achieve.<\/p>\n\n\n\n

A food truck business is usually a passion project, so it\u2019s important to ground your brand in personal experiences, rather than looking for something that caters to the masses. You may want to look to your heritage, in combination with your interests. For example, if you have a burning passion for health foods, you can find the healthy recipes your family makes and incorporate them into your menu. The same goes for any other type of food.<\/p>\n\n\n\n

Once you’ve settled on a concept, it\u2019s time to choose a name. The name will be pivotal to your brand, since your logo, social media handle, and general memorability will depend on it. Some general pieces of naming advice are worth bearing in mind:<\/p>\n\n\n\n

Make it Unique<\/h4>\n\n\n\n

A unique name is not just memorable: If there\u2019s already a food truck or restaurant with the same name, you could accidentally violate a trademark. The best thing to do is to search any name you come up with with the United States Patent and Trademark Office (USPTO) online search tool<\/a> to check if it’s not in use already.<\/p>\n\n\n\n

Make it Easy to Pronounce<\/h4>\n\n\n\n

As food trucks rely on word-of-mouth, it’s important to avoid lengthy names that are hard to spell or pronounce. The shorter, the better – just make it memorable.<\/p>\n\n\n\n

Make it Descriptive<\/h4>\n\n\n\n

The name should describe the cuisine concept, so your customers know what to expect. Additionally, avoid words tied to a specific location; if your business suddenly booms, the name needs to stay intact.<\/p>\n\n\n\n

The Finer Points of the Business<\/h2>\n\n\n\n

Your Business Plan<\/h3>\n\n\n\n

While you may want to get your business up and running as soon as possible, starting a food truck means having a detailed and well-thought-out business plan. This provides a solid structure for your company and becomes a guide you can refer to if you\u2019re ever tempted to veer off course.<\/p>\n\n\n\n

A proper business plan leaves no stone unturned. It should encompass methods to acquire funding, while also laying out rigid details on promoting your shop. It should also identify market trends in the industry using what\u2019s called competitive analysis. Of course, it should outline how you intend to run your business, detail the ingredients and menu, highlight the relevant financial requirements, and make projections based on the info you have.<\/p>\n\n\n\n

Choosing Your Legal Structure<\/h3>\n\n\n\n

You will need to choose a way to operate: For example, you may become a sole proprietorship, one-person LLC, or, if you are looking to start trading with someone else, a partnership may work better.<\/p>\n\n\n\n

Choosing a structure impacts your business in a number of ways: For the vast majority of food trucks, an LLC is the most sensible option, as it will protect your personal assets if there is a lawsuit or the business goes bankrupt. An LLC structure also shows external entities such as vendors and insurers that you are a legitimate company. To help you set everything up, you can find an LLC formation service<\/a> to arrange all the paperwork you need.<\/p>\n\n\n\n

Register the Company<\/h3>\n\n\n\n

You will need to register your chosen name, file your state or federal taxes, and acquire an Employer Identification Number from the IRS. If you opt for an LLC structure, the cost of forming one can range between $40 and $500. The process of registering a company can be complicated, but if you need additional resources, legal websites can give you insight into each step of the process.<\/p>\n\n\n\n

Get a Business Bank Account<\/h3>\n\n\n\n

A business bank account is absolutely essential because anybody starting a company in any format needs to separate their personal funds from their business ones. This doesn’t just help you organize your finances; it limits the temptation to dip into your personal finances to pay vendors and licensing fees, or use business funds to cover personal expenses. Many small business checking accounts<\/a> have plenty of incentives for fledgling businesses, so choose the one with the best options.<\/p>\n\n\n\n

Getting Funding for Your Food Truck <\/h3>\n\n\n\n

Funding a business is usually one of the biggest hurdles, as most people don’t have immediate access to a significant sum of money required to start a food truck. What\u2019s more, most lenders require a solid business plan, so you need to make sure that you have one in place. Of course, don\u2019t borrow over the amount you need, and keep your credit history as clean as possible.<\/p>\n\n\n\n

Another way to get money is to find investors, or go the crowdfunding route. You\u2019ll need to create a compelling pitch, and get an understanding of how many people would be willing to pay for your service. Some mainstream financial options you could try include:<\/p>\n\n\n\n

ROBS (Rollover for Business Startups)<\/h4>\n\n\n\n

This option is available to those with retirement savings. Through this program, you can use that money to fund your business without paying any early withdrawal penalties, interest, or taxes on it. You would essentially be buying your own stock, and you\u2019ll have to set your company up as a C-corporation.<\/p>\n\n\n\n

Personal Loan<\/h4>\n\n\n\n

Personal loans to fund businesses are tricky at best, but might be viable if you have a good credit score and need less than $50,000 to get started.<\/p>\n\n\n\n

Equipment Loan Financing Program<\/h4>\n\n\n\n

You may be able to acquire finances to purchase the truck via equipment financiers. Again, a good credit score and not overreaching with the borrowing amount would serve you well here.<\/p>\n\n\n\n

Business Credit Cards<\/h4>\n\n\n\n

Business credit cards<\/a> might be a good option if you can realistically pay off the debt quickly. You might even make use of cards with a 0% introductory APR period to finance your setup needs and pay things back before any interest accumulates.<\/p>\n\n\n\n

Investors<\/h4>\n\n\n\n

Finding investors requires a significant amount of preparation, including crafting a solid business plan, compelling story, and comprehensive financial forecast.<\/p>\n\n\n\n

Small Business Administration (SBA) Microloans<\/h4>\n\n\n\n

The SBA offers microloans for less than $50,000, which could be enough to cover the costs of your food truck startup. However, SBA loans are notoriously difficult to get a hold of, due to their incomparably favorable terms.<\/p>\n\n\n\n

Acquiring Licenses, Permits, and Insurance <\/h3>\n\n\n\n

As stated, starting a food truck involves getting a slew of licenses, permits, and insurance. The coverage you need will depend on your location, but you\u2019ll always need a general business license, food service license, and vehicle license. The cost for each permit ranges between $100 and $500.<\/p>\n\n\n\n

General Business Requirements<\/h3>\n\n\n\n