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Giving up on my business

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omartrs

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Jun 11, 2017
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Mexico
Hello guys, I've been lurking forums for a while now, it is until now that I've decided to post my experience seeking advice from different mindsets. About 2 years ago I quit my 9-5 job to have freedom of time and ultimately decided on a food truck business.


Since I did not have much capital to bootstrap the business I decided through a very careful analysis that the food truck business was the most likely to succeed in the short term. Turned out it was a good choice as the business has been profitable since day 15, however not everything is okay with it, while the business does report profits these are very low, but more importantly I'm having a real hard time scaling it up.


Problems I can't control like current economy, massive competition, high unemployment rate, political situation, inflation or demand fluctuation have put my business under probation. All these have been some heavy bumps in the business day to day profits, but ultimately, I've cleared them up, which led me to believe things can get only better.


I've been patient, but current trends suggest my business won't grow as quick as I want. I have reinvested any surplus of profit in the business to grow it up and the investment doesn't correspond directly to higher profits. There is room for potential, but without an important capital investment it might take me 10 years or more to grow it to a sustainable level assuming the best happens. Right now, I can't afford to live on my own (live with parents) and while I can accept that I don't think it’s good for my personal development (I'm currently 29). Getting into debt is no option (capital investment) as I was into debit card debt because of this business for a while and it made my life miserable, the day I got out of that debt I learned a lesson for life.


I currently put around 180-200 hours of work per month and since profits are so low I wonder if those hours would be better spent in some other activity that can grow to other kind of business instead. At this point and with the experience and things I learned from this business I'm willing to swallow my pride and accept a partial failure to myself and my parents and just embark in the next endeavor.

I appreciate your valuable insight, thanks.
 

Interesting Life

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What kind of food are you selling? Maybe you should offer a unique item that nobody else is offering. Surely others will copy you eventually, but it could give you a boost.
 

The EL Maven

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Food service is a tough because it's so competitive. To succeed in the long run, you'll have to build a brand that can scale. To build a brand, you have to differentiate on multiple metrics. When potential customers see your truck, they have to tell their friends, "have you tried this XXXX? You have to try it! We're going there!"

I'm sure I haven't said anything here that you have already thought of. It's easy to think of, but hard to do. Only you can be the judge of where you're at. I wish you the best luck. It sounds like you have the work ethic to make it rain.
 

buildingbetter

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Aug 20, 2017
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Does the income from the food truck match/exceed the job you quit?

Are you paying anything for bills, etc or are you rent free at your parents' house?

You've got past the paralysis that stops many people from starting a business at all so the experience will serve you well, regardless of whether this is the business.

I'm not really familiar with food businesses but I wonder if 'Instagram friendly' food would attract more people? It'd be a double whammy because it might persuade people to buy but also gives you free advertising.
 

jlwilliams

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Maybe selling the business and moving on would be better. You have learned a lot from it I'm sure. It's profitable, there for marketable. It might be just right for someone else. Maybe someone who doesn't want something that can scale up. Maybe a retiree who wants a side hustle would see this as perfect.

What seems clear is that you don't want to do it forever. That right there implies that it's time to bounce.
 

LoneWolf21

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Mar 15, 2017
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I had a similar situation Building homes. I started with 1 employee and no funds by the 6th month mark i had 3 employees and $6800 circulating for my operating expenses. (Semi-monthly) Labor,material,gas etc. already working 6-7 days a week. I was afraid to scale up. I was paying myself what my hourly job prior was paying me. And the debt at home got worse. I cashed out. After the boys were paid and tools repaired i left with $4800 But! If i could of been in your shoes. At home, minimal bills and no kids. I would have rolled the dice and hired a managment type/foreman and focused on doubling production. Instead i payed the banks and took an hourly job with my tail between my legs.
 

omartrs

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Jun 11, 2017
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Mexico
What kind of food are you selling? Maybe you should offer a unique item that nobody else is offering. Surely others will copy you eventually, but it could give you a boost.

I sell hamburgers and fries, typical food, lots of competition, but sells well nonetheless. My prices are slightly above average, but people perceive it as a very good value, despite that I need to increase them a bit. Adding another product is something that I have been thinking of doing, but I didn't want to add unecessary complexity at this point. Switching to a completely different product is harder but I'll give it a thought, after all, that might be the breaking opportunity I'm looking for.

Food service is a tough because it's so competitive. To succeed in the long run, you'll have to build a brand that can scale. To build a brand, you have to differentiate on multiple metrics. When potential customers see your truck, they have to tell their friends, "have you tried this XXXX? You have to try it! We're going there!"

I'm sure I haven't said anything here that you have already thought of. It's easy to think of, but hard to do. Only you can be the judge of where you're at. I wish you the best luck. It sounds like you have the work ethic to make it rain.

Ever since I started this business I wanted to have a brand, I have accomplished this somewhat partially, but I'll keep working on the brand, thanks for your best wishes.

Does the income from the food truck match/exceed the job you quit?

Are you paying anything for bills, etc or are you rent free at your parents' house?

I'm not really familiar with food businesses but I wonder if 'Instagram friendly' food would attract more people? It'd be a double whammy because it might persuade people to buy but also gives you free advertising.

I had a high engineering job before so I don't make nearly that much. In the best month I probably did half of my previous salary. That month wasn't really at full capacity, I could probably be capable of selling twice that without any additional work time and with current labor assuming the demand was there.

I am living rent free at my parents, but still have to pay for my own food, insurance, automobile bills and my own expenses (clothing, entertainment, etc).

I also thought social networks were a big thing for mobile food, but most of my costumers don't even care about social media, but I don't know maybe I'm missing something in this regard.

Maybe selling the business and moving on would be better. You have learned a lot from it I'm sure. It's profitable, there for marketable. It might be just right for someone else. Maybe someone who doesn't want something that can scale up. Maybe a retiree who wants a side hustle would see this as perfect.

What seems clear is that you don't want to do it forever. That right there implies that it's time to bounce.

This is very true, in fact right now it seems like the perfect side business for someone looking for one, I'm certainly not. If it stays at is is I will move on no doubt about it, but I want to change that and grow it up to something bigger.

I had a similar situation Building homes. I started with 1 employee and no funds by the 6th month mark i had 3 employees and $6800 circulating for my operating expenses. (Semi-monthly) Labor,material,gas etc. already working 6-7 days a week. I was afraid to scale up. I was paying myself what my hourly job prior was paying me. And the debt at home got worse. I cashed out. After the boys were paid and tools repaired i left with $4800 But! If i could of been in your shoes. At home, minimal bills and no kids. I would have rolled the dice and hired a managment type/foreman and focused on doubling production. Instead i payed the banks and took an hourly job with my tail between my legs.

Yes, I would say your situation is just like mine and you have made me reflect that maybe I should be more willing to take a bigger risk and roll the dice. The last months I have been very conservative as I had little room for mistakes. I have always wonder how all these startup stars create massive growth out of thin air, perhaps I have the wrong mindset and I'm not thinking big enough.


I appreciate all your responses, it sure has given me some food for thought.


Here is a brief summary of some metrics of the business for the last 5 months in case someone else wants to understand my business better or want to point out mistakes I'm making.

  • I spent about 55cents out of every dollar for cost of food.
  • Of total net profit over the last 5 months I have reinvested 40%.
  • Fixed costs represent 47% of gross profit or 14.5% of gross revenue.
 

meridian_blue

Eternal Student
I've Read UNSCRIPTED
Jun 11, 2017
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Texas, United States
Not sure if you are still looking into this thread but I've been doing a lot of research into starting a food truck recently and one thing that caught my eye was this:

I spent about 55cents out of every dollar for cost of food.

The average food cost for successful food trucks is between 25-38%. So having a food cost of 55% basically destroys your margins. The fact that your truck is still profitable says that there must be a real demand for your product. I would really focus on trying to get those costs lower, looking at food wholesalers or buying in bulk. You could also add in high margin products (sodas, deserts, etc.) that are easy to sell or prepare that can lower those margins as well. Anyways that my 2 cents, hope it helps.
 

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