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EXECUTION Advices for a 21 year old wannabe Entrepreneur

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ameszaross

New Contributor
Oct 11, 2021
5
1
11
Hey Everyone,

This is my first thread, and I would like to ask for advices from experienced entrepreneurs.

I'm about to start my own LLC in Hungary, and the company's main profile is going to be vending biodegradable food boxes, straws and cutlery, for local restaurants.
I did a lot of research, and according to the results, this niche would be very promising and would allow me to work with around 40%-50% profit margins, and due to the new EU regulations, that recently banned one-time usable plastic, it is in our favor.
I already have the warehouse location, where the goods will be stored, but there are unexpected obstacles -as it happens to anyone-, for example recently I just received an information, that these products need to be inspected and registered, because they make contact with food & beverages.

What advices do you have, so that these unexpected obstacles can be "expected" (if this sentence even makes sense), so that I could be more aware of the legal things?
Of course I am continously doing research about the process, but I feel like I can do anything, but later in the company's life I could face difficuilties about the legal part of the project.

Thank you very much for your responses in advance!

MB
 

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RazorCut

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Welcome MB.

First off due diligence is vital in any business activity. Obviously a lesson learnt. The best solution is to contact the applicable authority in your country and ask them what their requirements are. For example in the UK my first port of call might be the Food Standards Agency and the Government web site concerning import of goods. Even if those don't give you exactly what you need they will provide details of other departments or phone numbers to point you in the right direction.


Of course to start with you could always import your products from a distributor in another EU country as there would be no import hoops to jump through and your minimal order quantity would be much lower so you have less financial exposure. Once you have proof of concept (restaurants are happy to convert over to them) you can then organise your own imports.

From what I have experienced the main issue you will have in selling 'eco' products is price differential and durability. Everyone is more than happy to use eco/biodegradable products as long as there is no, or very minimal, downside. i.e. they work as well as the non eco products and the cost is not prohibitive.

If it hadn't been made law no one would be using carboard straws. I'm guessing they are more expensive to purchase, but the main issue being the public hate them, as they are dreadful to use compared with what they replaced. A major step backwards in convenience.

And saying well the new cartons are only 20 cents when the restaurant are currently paying 12 cents, so the cost difference is minimal is not an answer. It might sound like pennies but profits are made on pennies. 12 cents to 20 cents almost doubles their packaging costs overnight. And that is from someone with personal experience of buying pizza boxes for over a decade. If it isn't broke we won't fix it. We won't change for changes sake unless we have to or there is a strong advantage to make such a change. Cost saving, increase in durability/usability, better image.

In the UK hot takeaway food such as Chinese and Indian meals mainly comes in foil containers with cardboard lids. Fairly cheap to purchase, recyclable and easy to store as they take up minimal space. I take it those will still be viable as they contain no plastic?
 

ameszaross

New Contributor
Oct 11, 2021
5
1
11
Welcome MB.

First off due diligence is vital in any business activity. Obviously a lesson learnt. The best solution is to contact the applicable authority in your country and ask them what their requirements are. For example in the UK my first port of call might be the Food Standards Agency and the Government web site concerning import of goods. Even if those don't give you exactly what you need they will provide details of other departments or phone numbers to point you in the right direction.


Of course to start with you could always import your products from a distributor in another EU country as there would be no import hoops to jump through and your minimal order quantity would be much lower so you have less financial exposure. Once you have proof of concept (restaurants are happy to convert over to them) you can then organise your own imports.

From what I have experienced the main issue you will have in selling 'eco' products is price differential and durability. Everyone is more than happy to use eco/biodegradable products as long as there is no, or very minimal, downside. i.e. they work as well as the non eco products and the cost is not prohibitive.

If it hadn't been made law no one would be using carboard straws. I'm guessing they are more expensive to purchase, but the main issue being the public hate them, as they are dreadful to use compared with what they replaced. A major step backwards in convenience.

And saying well the new cartons are only 20 cents when the restaurant are currently paying 12 cents, so the cost difference is minimal is not an answer. It might sound like pennies but profits are made on pennies. 12 cents to 20 cents almost doubles their packaging costs overnight. And that is from someone with personal experience of buying pizza boxes for over a decade. If it isn't broke we won't fix it. We won't change for changes sake unless we have to or there is a strong advantage to make such a change. Cost saving, increase in durability/usability, better image.

In the UK hot takeaway food such as Chinese and Indian meals mainly comes in foil containers with cardboard lids. Fairly cheap to purchase, recyclable and easy to store as they take up minimal space. I take it those will still be viable as they contain no plastic?
Welcome MB.

First off due diligence is vital in any business activity. Obviously a lesson learnt. The best solution is to contact the applicable authority in your country and ask them what their requirements are. For example in the UK my first port of call might be the Food Standards Agency and the Government web site concerning import of goods. Even if those don't give you exactly what you need they will provide details of other departments or phone numbers to point you in the right direction.


Of course to start with you could always import your products from a distributor in another EU country as there would be no import hoops to jump through and your minimal order quantity would be much lower so you have less financial exposure. Once you have proof of concept (restaurants are happy to convert over to them) you can then organise your own imports.

From what I have experienced the main issue you will have in selling 'eco' products is price differential and durability. Everyone is more than happy to use eco/biodegradable products as long as there is no, or very minimal, downside. i.e. they work as well as the non eco products and the cost is not prohibitive.

If it hadn't been made law no one would be using carboard straws. I'm guessing they are more expensive to purchase, but the main issue being the public hate them, as they are dreadful to use compared with what they replaced. A major step backwards in convenience.

And saying well the new cartons are only 20 cents when the restaurant are currently paying 12 cents, so the cost difference is minimal is not an answer. It might sound like pennies but profits are made on pennies. 12 cents to 20 cents almost doubles their packaging costs overnight. And that is from someone with personal experience of buying pizza boxes for over a decade. If it isn't broke we won't fix it. We won't change for changes sake unless we have to or there is a strong advantage to make such a change. Cost saving, increase in durability/usability, better image.

In the UK hot takeaway food such as Chinese and Indian meals mainly comes in foil containers with cardboard lids. Fairly cheap to purchase, recyclable and easy to store as they take up minimal space. I take it those will still be viable as they contain no plastic?
Thank you very much for your detailed answer!

Yes, I contacted the local Food Standards Agency, aswell as an other company that does these types of registrations for such products, and I am currently waiting for their reply.

Unfortunately in this case the only way to go is by importing them from China, even with the high shipping costs and new EU regulations on tax elevation, I can still provide better prices for my customers.

As for the difficuilties of the price and durability, for example vegan restaurants have already started using these types of products. Of course, when I got into the execution of this idea, I knew that paper straws are normally made out of pure materials, but I ended up finding suppliers, who's quality shocked me. They don't start molding even after 2 hours of being in the water, yeah it becomes a little bit loose after an hour, but it is more than enough, since people normally tend to spend about an hour and a half in a restaurant.
As far as I have realized, people don't like them, but they understand the change, and are more than happy to use them instead of the plastic ones.
But still, the main profile of the company would be the distribution of food boxes made of bagasse material, but I feel like paper straws, wooden cutlery are a must in this situation, I feel like they wouldn't even take me seriously without them, since they had become such obvious products.

I think the problem with foil containers is going to be that they can not be recycled, since they become dirty during the process, and they can only be recycled once they are cleaned totally, so normally they go to landfills.
Obviously the only REAL solution if we could find a way to only provide people totally reusable food boxes, in a common system where they would be able to take the boxes back to the restaurants - hopefully cleaned already, or the restaurants could clean them too - and use them like that.
But that would take a huge effort and global "alliance".
 

17thgreem

New Contributor
Oct 3, 2021
4
4
1
Hey Everyone,

This is my first thread, and I would like to ask for advices from experienced entrepreneurs.

I'm about to start my own LLC in Hungary, and the company's main profile is going to be vending biodegradable food boxes, straws and cutlery, for local restaurants.
I did a lot of research, and according to the results, this niche would be very promising and would allow me to work with around 40%-50% profit margins, and due to the new EU regulations, that recently banned one-time usable plastic, it is in our favor.
I already have the warehouse location, where the goods will be stored, but there are unexpected obstacles -as it happens to anyone-, for example recently I just received an information, that these products need to be inspected and registered, because they make contact with food & beverages.

What advices do you have, so that these unexpected obstacles can be "expected" (if this sentence even makes sense), so that I could be more aware of the legal things?
Of course I am continously doing research about the process, but I feel like I can do anything, but later in the company's life I could face difficuilties about the legal part of the project.

Thank you very much for your responses in advance!

MB
I am currently 28 (as of September), so I have recently ran the exact same gauntlet you are about to embark on regarding entrepreneurship in many different capacities. That being said I believe I may be able to provide some valuable advice, but keep in mind, the is just the tip of the iceberg as far as advice I would give to you, but I don’t have the time to put togeht what would be one hell of a wall of text so I’ll try and keep it high level, and prioritize via importance.

Oh and I just happen to be A commercial real estate broker and land developer that specializes in Industrial (warehouse) so that may be relevant as well. As an entrepreneur, you must be able to take constructive criticism, and actively seek out smart individuals that will poke holes in your vision. You’ll know its right when you have an answer to every hole that someone attempts to poke. (Only ask seasoned business owners, particularly in the distribution side of things.

1. What is the resilience factor in relation to this very niche type good. During times of recessions individuals and businesses dramatically cut back on anything deemed non-neccessary. Where Does your product fall on this spectrum in the event of global downturn (IMO highly likely at some point in next two years)

2.) Global supply chains are shot, on a level perhaps never seen before. Dealing with China at the moment doesn’t give me a warm and fuzzy feeling. Have you planned for a potential disruption, and the have you planned for a plan for a plan. Get my drift? Don’t ever expose a company you own to the potential scenario of their being a single kink in the hose, and your entire operation goes under.

3. I’m a firm believer in not reinventing the wheel, but rather finding something highly lucrative ran by dumbasses, and then improving upon every inefficiency you can’t find. Now do I like something focused around distribution? Ahhhhh tbh, I’m not too keen on this in the current economy we’re in unless you provide components that are necessary to keep society up and running, Think something along the lines of traffic cones, silt fences, hand signs for workers - tools for traffic control operations. Aka government funded project so the tap wont be turned off. Just an example.

4.) As I mentioned in my header, I broker deals on the sale, lease, and development of the raw land for the industrial commercial real estate market. Do you have the financial chops to pull off a lease? Smallest unit I’d guess you could find would be +/-1,250 SF, and odds are good they’ll require a 3 year lease, but this is pending the state of the market over there as I sure as hell don‘t know. I probabuy wouldn’t lease to you if I repped the landlord bc I would assume chances are high you would default and there are no shortage of tenants right now.

5.) Anything food grade brings in elements from a governmental level I believe, do some googling along these line, starting local and working up to a state level And make some calls “(insert your location government) - warehousing food grade equipment”

Good luck and don’t be discouraged if this isn’t the particular winner. You’ll underwrite 10’s if not hundred’s of ideas if you do this properly.

Best,
Logan

Regarding anything such as food storage
 

RazorCut

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Unfortunately in this case the only way to go is by importing them from China, even with the high shipping costs and new EU regulations on tax elevation, I can still provide better prices for my customers.

Yes, to make money long term you need to buy direct from the manufacture (bearing in mind that in the current age China might not always be your best option). I've imported from China, the Caribbean, Europe, and India. China was usually my last choice. I'd take India over China any day.

But we are getting ahead of ourselves. What customers? Do you have customers?

I mean people who have seen your products and have placed advanced orders? Before I order shipping containers of stock from China I'd want to know, without any shadow of a doubt, they will sell, and have customers lined up to take them. If you don't have that then you are taking a big gamble.

You need to vet your business model before laying out loads of capital on stock you might end up stuck with.

Look at this recent thread. One company has $15m of hand sanitiser they can't sell? Probably seemed a slam dunk when they ordered them.

And you will need a lot of stock because you cannot afford to run out. Restaurants and takeaways not only want good products at great prices, they NEED a consistent supply line.

They usually don't have masses of spare space so they often need a weekly or fortnightly delivery and the last thing they want it to be let down. Knowing how often the supply chain from China can screw up you will need a LOT of stock to ensure you don't let your customers down (because if you do they will most likely go elsewhere and never come back). Plus your shiny new reputation will be in tatters (and people in the same trade do talk to each other).

Sorry if I seem to be dwelling on the negative but better to run through this stuff now.

What is your background? Experience to date?
 

ameszaross

New Contributor
Oct 11, 2021
5
1
11
I am currently 28 (as of September), so I have recently ran the exact same gauntlet you are about to embark on regarding entrepreneurship in many different capacities. That being said I believe I may be able to provide some valuable advice, but keep in mind, the is just the tip of the iceberg as far as advice I would give to you, but I don’t have the time to put togeht what would be one hell of a wall of text so I’ll try and keep it high level, and prioritize via importance.

Oh and I just happen to be A commercial real estate broker and land developer that specializes in Industrial (warehouse) so that may be relevant as well. As an entrepreneur, you must be able to take constructive criticism, and actively seek out smart individuals that will poke holes in your vision. You’ll know its right when you have an answer to every hole that someone attempts to poke. (Only ask seasoned business owners, particularly in the distribution side of things.

1. What is the resilience factor in relation to this very niche type good. During times of recessions individuals and businesses dramatically cut back on anything deemed non-neccessary. Where Does your product fall on this spectrum in the event of global downturn (IMO highly likely at some point in next two years)

2.) Global supply chains are shot, on a level perhaps never seen before. Dealing with China at the moment doesn’t give me a warm and fuzzy feeling. Have you planned for a potential disruption, and the have you planned for a plan for a plan. Get my drift? Don’t ever expose a company you own to the potential scenario of their being a single kink in the hose, and your entire operation goes under.

3. I’m a firm believer in not reinventing the wheel, but rather finding something highly lucrative ran by dumbasses, and then improving upon every inefficiency you can’t find. Now do I like something focused around distribution? Ahhhhh tbh, I’m not too keen on this in the current economy we’re in unless you provide components that are necessary to keep society up and running, Think something along the lines of traffic cones, silt fences, hand signs for workers - tools for traffic control operations. Aka government funded project so the tap wont be turned off. Just an example.

4.) As I mentioned in my header, I broker deals on the sale, lease, and development of the raw land for the industrial commercial real estate market. Do you have the financial chops to pull off a lease? Smallest unit I’d guess you could find would be +/-1,250 SF, and odds are good they’ll require a 3 year lease, but this is pending the state of the market over there as I sure as hell don‘t know. I probabuy wouldn’t lease to you if I repped the landlord bc I would assume chances are high you would default and there are no shortage of tenants right now.

5.) Anything food grade brings in elements from a governmental level I believe, do some googling along these line, starting local and working up to a state level And make some calls “(insert your location government) - warehousing food grade equipment”

Good luck and don’t be discouraged if this isn’t the particular winner. You’ll underwrite 10’s if not hundred’s of ideas if you do this properly.

Best,
Logan

Regarding anything such as food storage
Thank you Logan!

I tried my best to understand everything correctly, and I believe I was able to do it.
Great ideas, and more importantly, great questions!
Here in Hungary, it is not that hard to find a cheap warehouse for your items, and the China related part got me to find solutions in the holes that I have encountered, so I guess I am already a steap ahead as I was before.

I think I will re-read your answer multiple times in the upcoming days, so that it sinks more and more into my brain and gets me to stay focused on unevitable things.
Thank you once again!
 

MJ DeMarco

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Hey Everyone,

This is my first thread, and I would like to ask for advices from experienced entrepreneurs.

I'm about to start my own LLC in Hungary, and the company's main profile is going to be vending biodegradable food boxes, straws and cutlery, for local restaurants.
I did a lot of research, and according to the results, this niche would be very promising and would allow me to work with around 40%-50% profit margins, and due to the new EU regulations, that recently banned one-time usable plastic, it is in our favor.
I already have the warehouse location, where the goods will be stored, but there are unexpected obstacles -as it happens to anyone-, for example recently I just received an information, that these products need to be inspected and registered, because they make contact with food & beverages.

What advices do you have, so that these unexpected obstacles can be "expected" (if this sentence even makes sense), so that I could be more aware of the legal things?
Of course I am continously doing research about the process, but I feel like I can do anything, but later in the company's life I could face difficuilties about the legal part of the project.

Thank you very much for your responses in advance!

MB

Love the idea and the industry. Not sure I understand your question though -- compliance with laws and regulations is part of business. This is not an obstacle, it is part of the process. Call the agency responsible for inspection/registration, do what must be done and get to work.
 

ameszaross

New Contributor
Oct 11, 2021
5
1
11
Love the idea and the industry. Not sure I understand your question though -- compliance with laws and regulations is part of business. This is not an obstacle, it is part of the process. Call the agency responsible for inspection/registration, do what must be done and get to work.
The question if we simplify it would be: How to prepare yourself for the unexpecatble, along the journey of entrepreneurship.
But yes, I agree with the "part of the process" part.
I called the local agency that does these types of inspections, and they told me that I don't even have to do the registration process, if the factory itself has any types of so-called "food contact" certificates, which is accepted in the EU - and it is pretty logical to be honest, why would I need to do it again if they already have it.

So I am waiting for the factory's answer ATM, let's see if I can save some of the budget to use it for wiser things in the company.

(ps: the books are awesome)
 

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