Food trucks have become all the rage, with celebrity chefs and home cooks alike making the leap. But food trucks can be a potential minefield of health department regulations, food service permits, parking legalities, and other challenges. Some food truck owners also try to do too much at once, expanding their menus and adding new trucks to their roster at an unsustainable rate. A written business plan is your key to overcoming obstacles and building lasting success. In addition, food trucks are not cheap to purchase and outfit. Your business plan is your ticket to securing funding from lenders or outside investors.
Why You Need a Business Plan
Your business plan combines a snapshot of your food truck as it exists today with a guided growth plan for the next three to five years. It articulates your goals, identifies hurdles, and explains your strategies for overcoming adversity and reaching your goals. You will update and refine this living document as your food truck business grows and evolves.
The executive summary is an overview of your entire business plan, and is usually the last section to be written. Investors and lenders use its first page to decide whether to read the full plan, so put your most important information right up front. Include a concise description of your food truck business, a market analysis summary that clearly identifies a need, and a brief explanation of why your food truck is uniquely qualified to fulfill that need.
The company analysis explores your food truck business as it exist right now, as well as its history. Sum up its founding, current stage of business, and legal structure. Talk about goals you have already met, such as an ongoing partnership with a successful bar or employing a well-known chef. Provide further details about your food truck’s unique qualifications, such as its placement as the only Jewish food truck in a heavily Jewish part of town.
The industry analysis focuses on your relative market, which is the segment of the food truck market into which your truck falls. To find your niche, think about your cuisine, your price points, your operating hours, and your proposed locations. Research trends and projections that affect the food truck market as a whole, and those that specifically affect your niche. Create a written plan to overcome any hurdles that you discover.
For the customer analysis, you need to identify the customers that you most want to target. Do you want to sell to the late night bar crowd or the after church rush? Is your truck part of the upscale lifestyle movement, or do you see it as a neighborhood staple? Is your menu child-friendly or haute cuisine? Are you hoping for passersby or a loyal following who will use social media to find and share your location for the day? Nail down your proposed demographics as precisely as possible, and then identify those customers’ unique needs. Develop your plan for meeting those specific needs.
The competitive analysis can be confusing for food truck operators, who could theoretically be in competition not only with other food trucks, but also restaurants and cafes. Simplify this section by dividing your competitors into direct and indirect. Direct competitors are other food trucks who fulfill the same need for the same market. Indirect competitors are food trucks that fulfill the same need for a different market, and businesses that fulfill different needs for the same market. Describe your direct competitors, stressing how your food truck differs from theirs. Group your indirect competitors into a single category and talk about them as a group.
Your marketing plan hinges on the four P’s: Product, Price, Promotion, and Place. Product is every item your food truck sells. Price is the amount you charge for each item. Promotion is how you will convince customers to buy your food, and Place includes all the different spots where you will park. Customer retention is another category that describes how you will build loyalty.
Your operations plan describes how your food truck will meet your goals. Everyday short-term processes are the daily tasks of running your truck, from purchasing product through cooking and serving meals. Long-term processes are the ways you will meet your business goals, such as buying a new truck or expanding your menu.
The management team section can be tough for food trucks, which generally have a very limited crew. If you have someone on board with a business background, such as an MBA or experience opening a restaurant, highlight those skills. Otherwise, try to find an advisor or mentor to help you with the business operations, and explain that person’s role in this section.
Financial planning is extremely difficult for food trucks, which require a great deal of initial capital outlay and are highly affected by such factors as weather and foot traffic. Yet investors and lenders pay close attention to this section of any business plan. This section breaks down your revenue streams according to their projected implementation timeline and relative importance, and discloses projected sources for outside funding. It also summarizes both past and future Cash Flow Statements, Balance Sheets, and Income Statements based on reasonable and verifiable key assumptions. Financiers also like to see a strong exit strategy that shows an understanding of the market.
Your full financial projections are attached in the appendix, along with any other documentation that helps prove the claims you made in the business plan.
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