What do you think about this mobile business plan? Constructive Criticism Required.

[francisco.landrau]

TheGreenJoe,
First, I wish you all the wealth and success that this idea has to offer. Now comes the hard part. Accepting the idea that some components of your plan are flawed and adjusting fire to align yourself with the fact that your request for help is being answered by us members that genuinely want you to succeed.

As a consumer in a very busy market:

I would not buy from a food truck/camper that pulled chilled items from a cheap cooler.
I would not wait more than 2 minutes for service while you pour 5 guys in front of me a Good cup of "Pour Over Coffee". That takes time and you haven't mentioned any employees other than yourself.
I would question the quality of your coffee vs. say McD's at that price.

Your ideas are great but seek the truth on paper. A cheap budget is always first priority but in this business, Quality has to outweigh cheap. Cheap coffee is everywhere. What makes yours the best? Make this your goal and you will succeed. Good luck on your future endeavor.

R/
Frank


Sent from my iPad using Tapatalk

 

[TheGreenJoe]

Hey Group,
Sorry for being out for so long. Busy, busy, busy week. But so much feedback! Thanks everyone! Now to get down to business...

 

[TheGreenJoe]

Hey Frank,
I'll all about accepting flaws. Lord knows I have enough of them!

The bit about the cooler is still up in the air. I'm waiting on feedback from the city. If need be I can always get a fridge that runs off of propane. I've started digging into this research to see what comes up.

Not sure if I miscommunicated, but I won't be serving pour over coffee but using a Bunn Pourover Brewer. It makes 3L of coffee via drip and drops it right into an Airpot. I figure 4 of those should start the morning off pretty well. So, the coffee would come straight from the airpot.

Hope that clears up any confusion. I think your on point on the cooler. We'll see how that pans out.

 

[TheGreenJoe]

FWIW - I built financial models and plans for startups, started and ran two businesses and worked in an investment bank doing management cosulting for several years. What you have is a technical plan for a coffee cart, not a business plan to understand if the business is viable, how much cash is needed and what you project to earn.

There are many aspects of a business plan that are missing here - the most important parts - sales, marketing and finance. How are you selecting the location for the cart? What is the strategy - low cost low quality to high cost high quality. Competitors in the area, number of people you plan to serve/day, how are you going to market to them, how are you going to keep them as customers, promotions, advertising, what is the likely competitive reaction, how many people will you serve if you lower/raise prices, what is the optimum price to maximize earnings, payment terms for your supplies, are you taking credit cards, who is the merchant bank and their costs. You need financial projections to determine how much cash you need to run this business until it turns profitable otherwise your risk of running out of cash and closing is huge. Get yourself a spreadsheet and start developing an optimistic, a best guess and pesimistic plans so you know what you are getting into and once you start, measure against plan and adjust the plant to reflect reality so you know how the business is doing.

Hope this helps.

Hey thanks for chiming in!!! There's a few of these answers in the previous post about how I intend to brand and where I will be locating. And I have a few other cards up my sleeve for marketing. Marketing is what I currently do for a living, so I'm excited to put some of my techniques that I use into my own endeavors.

I have cost analysis that I use to see what my cash flow will be like one the darn thing is up and running. Its built on a worse case scenerio that each cup would cost 0.80. But, its a rough estimate at best and its been hard for me to ascertain this information from owners. I completely understand. In the land of business, those cards are held close.

Finance comes from out of pocket. Nothing borrowed. And I plan on moonlighting. So, I won't be quitting my day job...just yet...

 

[TheGreenJoe]

cool trailer!! Can not wait to see it finished

Thanks Slurp!

 

[TheGreenJoe]

Follow up comments:

Water sizing: It really depends on the business model your going after and what beverages your focusing on... espresso based products require less water / more storage for milk. Brewed coffee requires more water. Also - how long are you going to be in one spot? I was looking at doing festivals/craft shows that I may be vending for 3-4 days...some events/spots you won't be mobile. And think of how that ties to your business model... if your really going after the $1.50 beverage spot - why even deal with the costs of the espresso machine/grinders/refer/etc. ... more on that.

What's your thoughts on just carrying the 5 gallon water jugs on days that you expect more business. The big issue I'm running into is sizing. I'm finding I don't have much space...

Grinder: Don't skimp on this... hopefully you already know the importance of a good grinder. You could probably pickup a used Mazzer for $400ish and plan on dropping new burrs $75ish. You need something beefy and the Vario ain't it. Keep in mind your equipment is going to get a good jolt down the road... even if you have super cushy air rides on your trailer. (And plan on repairs due to this)

COGS: Your COGS are about right... you don't show a cup cost in there but .75 is fair

Good point here. I'll start looking for Mazzer. If you have any other ideas on the grinder (or anyone else!) please let me know. In the meantime, anyone know where to get a refirb at a decent price?

"Half the cash, twice as fast": You really need to reconsider this strategy... I know it sounds great but unless you are the volume leader your limiting your success. Once you account for labor cost (you are paying yourself - right? - or is this a hobby?), overhead, gas, permits, the money just doesn't work. For example, our farmers market is roughly $55ish a day.. they require you to operate for 7 hours x $10 hr/labor = $70. + any fuel cost to/from the market, commisary, etc = roughly $140 day.. to break even you have to sell 280 cups of coffee. If your doing any type of event / craft fair often the entry fees are even much higher.

Yeah, you're probably right. I'll have to go back to the drawing board for this. It would also make it hard to increase my prices later on...

Thanks and NP.. I think there are more lurkers interested in the business than anything... no harm.. no foul... we all learn from each other

Thanks again for all your help. Very valuable. I have some things I need to think about.

 

[TheGreenJoe]

To add to what Musicphan has noted.

Hey John! I was hoping you'd chime in!

l1) Get a refrigerator. You are required to maintain the same standards as a brick and mortar when it comes to public health. You could not open a store with coolers and ice for your milk cooling. Do it right and avoid any sideways looks from Health. You have to put the public's health ABOVE your wanting to keep things inexpensive. Running a business costs what it costs.

Good point. And well taken. I'm re-adjusting.

2) The grinder is the most important piece of equipment in your coffee brewing arsenal. $400-$500, including new burrs for a commercial espresso grinder is a great deal. You really can't do it for much less.

Okay. Sounds good.

3) In the end, you will likely save more than most because you are doing a lot of work yourself. But your budget is not realistic. The numbers are not there.

I hear ya, but I'd like to keep the cost down as much as humanly possible. I realize there is going to be expense, but the goal is to get it running and then re-invest its profits into upgrades. I'm not saying I won't end up with 20k in this thing, but I would love for it to pay for part of itself.

4) Being "cheap and fast" is a poor marketing strategy in today's market. Trying to cater to that crowd will create more headaches, and revenue loss, than you can imagine.

Point taken.

5) Keep moving forward. Be patient and save more money. Understand the reality of creating and running a successful business, and adjust your plan accordingly. Keep asking questions, but pay attention to the advice others are giving you and benefit from it.

Best to you.

Thanks again for the advice. I have a few things I have to go back and reconsider, but the progress forward is moving well.

 

[John P]

TheGreenJoe,

I have to commend you for actually thinking about what the members of the forum have said to help you. Most newcomers think their idea is fantastic and just want you to agree with it without any criticism. It's refreshing.

Just make sure you know your sh!t before you open.

 

[DaltonsBusiness]

... I’m still having a difficult time assessing profit margins for a mobile coffee shop.

Hi TheGreenJoe, congratulations on your new venture! Hopefully all of your preparations are going well.

I thought I'd share with you some of the stats that we see on our site (the UK's largest business for sale marketplace) for mobile coffee vending businesses...

Typical annual turnover: £72,000
Typical annual net profit: £27,000
Typical profit margin: 36%

You'll notice that these stats are in pounds sterling and not dollars; we are a UK site, so please bear this in mind when considering these figures.The 'typical' figure I'm giving you is the 'median' rather than the 'average'. Also, these are margins for the 'whole business' - we don't see margins on individual products (lattes, sandwiches etc.). In spite of these caveats, hopefully this still gives you a useful benchmark. The businesses I've based these stats on are operating in the same way that you're proposing (mobile vans attending one-off events, regular office block rounds etc.).

Hope this helps

 

[jayroast]

Hello Group,
I've finally decided to post my plans in hopes of gaining some powerful insight from the members here.

Joe:

Consider naming your business after the fact that the "scamp" was stolen and recovered. If I had to use that thing, I'd build a story around why. Perhaps it belonged to some beloved family member you're paying homage to. I'm from the San Francisco, CA area - the scamp would be a pretty small, dated & possibly sketchy venue around here. Make a story around it and people might say... oh he operates out of that little trailer because of such n such.

You might also think about making friends with someone that does vehicle wraps in your area. Allow them a small spot on the trailer to advertise their printing/vehicle wrapping business in exchange for a full full color laminated wrap on your trailer. Depending on your negotiation skills, you might need to put some cash forth in that deal -- but I wouldn't put a penny more than $1k. Materials/ink cost for a full wrap of your trailer might be about $300-400 depending on if they use 3M or cheap stuff. Consider that when negotiating.

Marketing? Market free coffee 20 ways until you have steady clientele to support your business. When I was a kid I remember some public service announcement think about drugs. The drug dealer was telling the kid to give the drugs away to all his friends - "first hits free". Sorry, but coffee is highly..uh.. habit forming . Next in line might be the psychological effect of familiarity. If people are familiar with your product/service (and are OK with it) then they'll likely return if it's agreeable to their budget and time. Build your base by targeting the right people for rounds of free coffee. Sell treats and baked goods and turn a profit from all that "free" in the meantime.

 

[TheGreenJoe]

Hey Group, Just wanted to update this post. The Green Joe Coffee Truck is up and running. This was my first week in business and it blew my estimates away!!! I was able to keep the cost near 10k. Many, many, many mistakes along the way. I'm beginning a blog to show everyone how to NOT screw up like I did!

 

[TheGreenJoe]

My 2 cents..

Water - the tanks seem a bit small. If your going to serve 200 cups of drip/pourover coffee the product alone will be 25 gallons without espresso / handwashing / etc. Tanks are cheap..

Just a follow on this, one of the things that I wasn't thinking of at the time was axle weight. Being a scamp, my axles are only tested to 3k lbs. Having the smaller tanks definitely helps this. Right now, a great day for me is 100 drinks sold (I'm only open for 5 hours), however 1/2 of my drinks come from the espresso machine, which means it's milk filling the cups. I'm currently going through about 17 gallons of water a day for 100 cups sold.

Tankless Water heaters are the way to go... they do make a smaller electric water heater.. doesn't do a great job but may pass health code (it doesn't get super hot)

I ordered a LP tankless and it works great! Get's super hot. Only mistake, I wish I would have put it before the espresso machine so that my machine would heat faster...

Pumps.. the truck I was looking to build had one for espresso / one for hand/dish washing

I used a shurflo 12v, works great. But, I had a short in my 12v system that drained my battery. Didn't know until I tried to use the water for work one day. Needless to say, its good to have a back up battery...

Generator - seems a bit small as well. You most likely will have an espresso grinder + drip grinder ... and maybe a 2nd decaf espresso grinder. Your missing the electricity to run any type of lights / sound / pos / refrigeration / pumps.

Lights run off 12v, pump 12v. Sound, POS (ipad) and another set of light is 110v and Espresso is 220v. Total wattage is 6.5kw (give or take).

Brewer & Grinder budget seem really low.... even picking up a used Mazzer for espresso is probably double your budget... and that's just for espresso.
POS - take a look at options like Square / Shopify... you can get a full setup for $1000... it will at least give your ability to capture emails etc for social media/marketing... otherwise good old $100 bucks for a plain jane register. Whatever you go with needs to be accounted in your electrical draw.
Profit Margin... if your COGS are .8 and your making .5 per cup... are you only charging 1.30 per cup? Something seems wrong here...

Refrigeration - I don't see you address this anywhere... you will have milk and something to store sandwiches

Budget - $9K is unreasonable... sorry. Start a list of everything you need to make drinks... Walk through the process of espresso drinks.. You will need a grinder, tamp mat, tamper, coffee, milk, cup , lid... and document all of your costs. I think that will help you look at your numbers and help you with your profit margin concerns.

This was low. If you take the mistakes that I made and removed them from my budget, my total cost would have been 12k. I made 4k in mistakes, making my total cost 16k. I have blog post that break down my cost here: Green Joe Coffee Truck, Albuquerque New Mexico

Have you also accounted in your equation permits, insurance, gas, and entry fees into farmers markets,etc ?

Permits cost me $200, insurance comes from Geico. Gas is $4-6 a day depending...

 

[AdventureCopan]

Wow this is cool and I for one greatly appreciate your transparency on everything so everyone can learn! We've considered something like this when we move to HND because good storefronts in downtown Copán are ridiculously expensive. Still open to an idea like this if we can't find a suitable location. Thank you for sharing and keep up the hard work! -Daniel Kent

 

[TheGreenJoe]

Wow this is cool and I for one greatly appreciate your transparency on everything so everyone can learn! We've considered something like this when we move to HND because good storefronts in downtown Copán are ridiculously expensive. Still open to an idea like this if we can't find a suitable location. Thank you for sharing and keep up the hard work! -Daniel Kent

Hey Daniel! You certainly welcome!!! I would love to have a brick and mortar someday, but I'm going to let the coffee truck finance it. Who know's maybe I'll just open up franchises and try to knock down Starbucks

 

[AdventureCopan]

Go for it! I for one love seeing people run after there dream with reckless abandonment.