Starting your dream food truck business is not an easy task, and one of the most challenging parts is raising the startup capital, which is crucial to implementing any business idea.
The first step is to determine how much you need to kick start the business. Business expenses vary depending on the type of business you are getting into and food truck requirements are different. To be on the safer side, you need to calculate the total cost that you may incur for up to six months. However, it is crucial for you have an extra fund which may be necessary to boost the business as the growth may be slower than expected. In addition to this, there may be other unplanned expenses in the process of running the business.
When a person is calculating the startup capital, it is vital to include all the basic expenses and allocate adequate funds are for each expense. In case of starting a food truck business, one should include some of the following expenses: the truck is a key requirement that one should budget for as well as all expenses that come with the truck. As most people are on a tight budget when starting this business, you can consider purchasing a second-hand truck, but quite often the expense to improve that truck so it’s an efficient money maker costs more than if they would have purchased a custom built truck specific to the concept of the business.
A business plan is vital before getting started as it dictates the road map that the business would follow as acts as a yardstick in determining if the business is in the right track. One aspect of a business plan is determining future business income. A good plan should project the expected profit for five years and the ways of attaining the income. Since five years may be a long time, the prediction could be scaled down to annually, quarterly or even monthly. A business plan should as well include the expansion plans, marketing strategies, and how to keep the business above competitors by introducing new products.
Source Of Business Funding
One challenge in securing funds for starting a business is convincing investors and lenders to put a little (or a lot) of money in your business. Since the business is new lenders may fear the risk of investing their money on the business; however, some of the following sources may be of great help.
Personal Savings – Personal savings may be an essential source of funds for starting a business as these funds are readily available. You should accumulate some savings to start a business which may be from different sources like employment, previous business or even gifts. You could evaluate the savings you intend to use and determine if they are enough to start a business before rolling with this plan.
Borrowing From Family and Friends – Family and friends may play a significant role in assisting you to raise the needed business startup capital. Most cases, family and friends may be supportive, and you may have an easier time raising the capital; however, it may result in a business partnership. In a case where the relative may become partners in business, one needs to draft legal documents setting clear terms of engagement. You would need a lawyer for legal advice and ensure all aspects of the arrangement are defined properly. A legal document is necessary to avoid future conflicts which may destroy relationships with family and friends.
Banks or Credits Unions – Banks and credits unions are the common sources of funding among small businesses; however, you may need good credit rating to acquire the funds. Getting your credit report before applying for a loan, and ensuring that all errors are corrected. You can apply for credit report online from the main agencies like Experian.com, Transunion.com and Equifax.com.
Crowdsourcing – Crowdsourcing is where you generate capital from with the masses, where each person contributes a small amount and at the end becomes large capital. A popular website is kickstarter.com, which works similar to a social media platform. You would present your business plan in text, video or social media form and explain the amount you need and why that money is necessary. You would set a specific deadline for achieving the financial goal, and once you hit the target, you are ready to get started.
There are many options for raising the startup capital, what you need is to determine the ideal source of funds for you. When you secure the capital needed you are in a better position to start a food truck business and you are positioned to take the business to great levels.
If you would like our assistance in the planning and budgeting for the food truck you need to create your dream business visit our free food truck quote page.