People who have entrepreneurial hankering but lack the funds to open a traditional restaurant might find success with a Food Truck.

Simply put, a food Truck is a huge truck outfitted with a kitchen and serving as a mobile restaurant. They are mushrooming all over the US, and their popularity is only growing. Because opening a restaurant is so costly, many would-be business owners choose to operate out of a food truck instead.

Learn the ins and outs of getting started with a Food Truck Business, including the initial investment needed, potential sources of financing, and where to locate a food truck.

Food Truck Startup Costs

The initial investment needed to launch a food truck business is contingent on a wide variety of circumstances. There may also be certain one-time or location-specific expenses.

A food truck's initial investment includes things like the purchase of the vehicle itself, a cash register or point-of-sale (POS) system, a truck wrap, website development, office supplies, marketing, public relations, and any professional, legal, or consulting fees. This is by no means an all-inclusive list, but it should provide prospective food truck owners with a good sense of what they may expect to pay at the outset.

Rachel Angulo, the owner of the La Cocinita food truck, said, "While we purchased the food truck itself for just $15,000, we didn't realize that we'd spent more than double that to have it modified to fit the local fire and health regulations, which vary quite significantly depending on the municipality."

There are also ongoing expenses to consider, such as salaries, equipment rentals, credit card processing fees, and gas. Depending on where you plan to set up shop, you'll need a certain set of licenses and permits to operate your food truck legally.

Depending on the details of your circumstance, the initial investment needed to launch a food truck business can be anywhere from $28,000 to $114,000.

The following are some of the additional initial costs associated with opening a food truck business, as reported by Food Truck Empire.

• Insurance: $2,000 to $4,000 per year
• Initial product inventory: $1,000 to $2,000
• Payment processing: $200 to $1,000
• Commissary fees: $400 to $1,200
• Permits and licenses: $100 to $500

Food Truck Funding Options

The most difficult part of beginning a food truck business could be raising capital.

Making a thorough business plan should be your top priority. You should also have good personal and business credit, as this will boost your chances of securing a business loan.

You can fund your new food truck business through a variety of novel methods.

Consider the following options for getting your firm off the ground with little or no initial investment:

Get in touch with a food truck owner already in the business and discuss the terms of a leasing or rental agreement.

• Start with a low-cost, old cart or trailer.
• Get a booth at a local festival or farmer's market going, or set up a temporary storefront elsewhere.
• If you want to start a food truck business, it's a good idea to speak with established restaurateurs.
• Seek out sponsors if your truck concept involves offering a public service or benefit to the community.
• If you already work with a payment processor, you may be able to get a loan advance.

Create a Food Truck Business Plan

A business strategy is essential for the success of any food truck. In fact, it should be the first tangible move you take when you decide you want to establish a food truck business. This document is necessary to attract investors, acquire finance and get your firm up and operating.

The following are some of the key components of a successful business plan, as recommended by WebstaurantStore:

1. An Executive Summary - In this area, you should talk about your company's background and mission. Describe what niche you are serving and why your clients will choose you above the competitors.
2. Company Description - In this area, you should talk about your company's background and mission. Describe what niche you are serving and why your clients will choose you above the competitors.
3. Market Analysis - In this section, you'll describe your ideal clientele, outlining who they are, what they want, where they live, and how you plan to reach them. This component also needs to show that you have researched and understand the local food industry where your business will operate.
4. Organization and Management - Next, explain how your company is formally structured (e.g., sole proprietor, LLC, partnership). The company's owners and their combined ownership percentages should be listed. You should also include a list of your key personnel, including your management team, along with information about their education, pay, and work history.
5. Service or Product Line - The food you sell is your mainstay in the mobile eatery industry. In this area, discuss your menu and how you expect to attract new clients. It's also important to think about how your company might grow to meet changing consumer demands.
6. Marketing and Sales - Here is where you may provide more detail on how you intend to go about promoting your business. Explain how you plan to spread the word about your firm, list all marketing platforms (such as social media, a website, paid commercials, etc.) you plan to employ, and how you will gain an edge over your competition. Your sales plan, including menu prices, required minimum sales to be in operation, and seasonal trends that may affect sales, should be detailed here as well.
7. Funding Request - If you're a food truck entrepreneur looking for investors or other sources of capital, you must include this section in your business plan. Specify how much money you are asking for and define, in exquisite detail, how every dollar will be spent to build the firm.
8. Financial Projections - Calculate how much money your business will make over the next three to five years, which can be tough to do for new enterprises with no financial history.
9. Appendix - The appendix is optional, but it's a great place to put any other materials you think could be useful to lenders or investors who are reading your business plan. Reference letters and images taken in a professional setting are also acceptable.

The Benefits of the Food Truck Business

• Business Ownership - Numerous tax advantages come with business ownership, and while it is challenging to own and run a firm, at least there is a little bit of relief on the tax front.
• Freedom - As the owner of a food truck business, you get to decide on everything from the fare to be served to the suppliers and staff you'll use and the events at which you'll set up shop. You are in command of all promotional activities, scheduling, and social media accounts.
• Mobility - It's a great benefit, according to Angulo, to be able to move your business around to different areas based on demand at different times of the day, week, etc.

Problems Inherited with Food Truck Business

• Time - Working hours for a food truck company are typically very long. Running a catering business is a full-time job in and of itself, with all the planning, preparation, marketing, event booking, cleaning, truck maintenance, bookkeeping, tax duties, etc.
• Competition and Market - There will undoubtedly be competition from other food trucks, so you should do your homework to enhance your chances of success.
• Ordinances and Zoning - Where and for how long a food truck can be parked vary greatly from one community to the next. If you want to avoid getting citations or fines, it's important to familiarize yourself with the regulations in effect in each area where you intend to conduct business.

Food Truck Permits and Regulations

Research the various places you are thinking about locating your business and think about the permissions and rules there.

Some of the most crucial aspects to keep in mind are as follows:

• Food safety - You, like every other eatery in the area, must follow the rules for keeping food safe. Contact the local health department to find out further information, such as if you need to prepare all your meals in a professional kitchen or if you can use your own facilities.
• Seller’s permit - A seller's permit, which is necessary for some jurisdictions for food truck proprietors, permits you to avoid paying sales tax on wholesale food and equipment purchases.
• Zoning and Parking - It's important to find out whether there are any regulations about truck parking before settling down. Depending on the zoning, your business may be prohibited from parking overnight or be required to maintain a certain distance from nearby buildings. For assistance, contact your city's motor vehicle office.
• Vehicle License - Because your company relies on its vehicles for transportation, all of your drivers must possess valid licenses and undergo extensive training. Legally operating a food truck may necessitate a commercial driver's license, depending on state law and the truck's size.
• Fire Certificates - A fire inspection may be required if you plan on using cooking equipment on the vehicle. Obtaining a fire certificate may necessitate meeting varying criteria depending on where you live.
• Employee Identification Number (EIN) - An EIN is a tax identification number provided by the IRS that is used to identify a specific business organization, and it is required if you intend to hire staff. When you have an EIN, you can get a business bank account and begin building a credit history for your company.
• Business Permits and Licenses - A DBA and a state sales tax permit are relatively cheap and simple to obtain, but you will still need both in order to legally run your food truck as a business. Learn the laws of your state regarding business formation. You can take the easy route and use a service like Legal Zoom, which is a web-based legal help provider.

Additional Resources

Take a look at these resources for information on opening a food truck business:

• National Food Truck Association
• The Food Truck Empire
• Restaurant and Hospitality
• Mobile Cuisine
• FoodTruckr