When I had the idea of starting this business, the most daunting piece seemed to be getting started. I read a ton of books, talked to a ton of people, did a ton of online research, but there didn’t seem to be much concrete information out there. I also get a ton of questions around this topic, so I thought it would be useful to write about how I approached this, some of my lessons learned and what I would do differently for my next business ;)! You already have the background of why, so I’ll focus on the how in this post.
The legal stuff. This part was a little scary for me because I am super rule follower and I didn’t want to mess anything up. For any business, you need to decide how to structure your business. I would suggest talking to a lawyer or accountant because this piece will greatly depend on the type of business/the risk of litigation, whether you have partners or not, and what your finances look like. I learned about all this about a year too late, during my MBA program, but thankfully, I didn’t mess anything up too badly. I decided to structure as an LLC because I serve food (so there is a risk of litigation), I wanted to be able to file a single tax return, and I am the sole owner for now. If it wasn’t a food business, but let’s say a consulting business, I would have chosen a sole proprietorship. After you decide on this, you file for an EIN with the federal government and also file with the state. Now you are officially in business! Once you have all these numbers, you can open accounts, credit cards, and accept payments via square or whatever you choose. Another important thing to consider is obtaining liability insurance.
The next step in the food world is to determine if you fall under the department of agriculture or health department. For us, since we don’t use “high risk” food products like meat or fresh vegetables, we fell under the department of agriculture, which is MUCH simpler than the health department. But because we make ice cream, we did have to apply for a special frozen dairy license that requires an annual inspection and a commissary kitchen, which wouldn’t have been required otherwise. A commissary kitchen is a shared kitchen space where you can dispose of gray water, wash dishes, prepare food, and a lot of other stuff. There are a couple around the triangle area that you can google or ask me about. I can’t speak to health department requirements (YET), but once I can, I will be sure to post about it. I contacted the department, they came out and inspected me and I was ready to bake!
During all this, I needed to come up with a logo, a name and some marketing collateral. I tried going the cheap way and bought a few logos off Fivver, but wasn’t super happy with them. I guess this is where I can talk about a lesson. Changing your logo and all your marketing material is VERY annoying and expensive. So- if you splurge in one area of the business in the beginning, this is where you should do it. But fortunately, since we started as a small, proof of concept business, I didn’t have too many things to change when we rebranded in 2019. All we really had was a tent, some tablecloths, business cards, and social media images. Luckily no vehicle wraps, shirts, or anything expensive had been done at that point. Speaking of social media images – having someone who knows image types and how to order depending on what you are doing (as in a logo on a shirt versus a logo on a trailer wrap) is EXTREMELY important. Who knew?! And working with someone who has connections in the industry you will be working in is also a plus. Since I don’t know much about this stuff, it would have been difficult for me to use the images I got via email to design let’s say, a trailer wrap. Luckily James @ Bennett Creative Group has tons of experience with this and walked me through all of this (aka did it for me). I got all my social media up and running, started posting regularly and with the help of a few key friends, pretty quickly went from 300 to 1000 followers in a few months!
But wait- I didn’t have any events to bake for. I started via google, applied to a few local events, paid, and waited. Since we started so small, we only did 2 events a year the first two years we were MagDough. We did this tent and table style, but as I mentioned in previous posts, it got me confident enough in the product and concept to take the next step. I would recommend anyone who is starting a business to start small before making any large investments. For example, if you want to start a dessert shop, start at a commissary kitchen and sell your product at some farmers markets, then if you still love it and it’s successful, maybe branch to some larger events, a food trailer or start wholesaling. THEN think about making an investment in something like a brick and mortar or food TRUCK. (I will go into the differences between the trailer and truck later). In my short 3 years as a business owner, I have seen MANY businesses start HUGE without thinking through things, testing the concept, or doing any market research. Don’t quit your day job, don’t assume a small business will pay your bills (EVER, let alone the first few years) and except to spend every spare moment you have to go toward building the business. If I were to do it all over, I would get a part time weekend job working on a food truck to learn and experience what the day to day operation is like. This should be easy, we are always looking for good help in this industry. I would recommend anyone starting a business to do this for 6 months to a year before diving in. It will save you a lot of heartache, I promise. Or help a friend who owns one. Someone real smart that I know is doing just that with me right now.
Once I decided to take the leap from tiny to small business, I had to decide how I wanted to sell. Out of a food truck or a food trailer. I was back and forth a lot during this process, but ultimately decided on a trailer for a few reasons. Cost was the first reason – not only is a trailer much more economical from an initial investment perspective, but the insurance on a truck is astronomically higher than on a trailer. I didn’t want to be paying $500 a month for commercial truck insurance when I was planning to only do 1-2 special events a month. The second reason was the maintenance. I am not handy and can barely even change a tire so if this truck broke down, wouldn’t even know where to begin. So trailer it was! Obviously, this was before I knew my handy business partner. But even still, I think we would have made the same decision together. But it was a little scary thinking about pulling it and parking it (it still is since I am lucky enough to have an amazing partner who does it for me). There are also some limitations, like we cannot participate in some events because they don’t allow trailers, only trucks. But for our purposes and business model, it made sense and still does. While we are on the topic of trailers, one interesting fact I learned is that trailers cannot be insured since they don’t have an engine. They are always insured by the vehicle pulling it. I called about 25 insurance companies before I believed this. I assumed anything driving on the road could be/had to be insured. Also - don’t forget to title any vehicles you purchase in the business name for tax and liability purposes. This was another lesson I learned – thankfully not in a hard way, but in an expensive way. I titled the trailer with lifetime plates (which are not transferable, duh) in my name and had to change and pay all over again. D’oh!
Next – building out the trailer. All I really needed to do was come up with an efficient layout and mount all my equipment. The hardest part was the electrical needs in a mobile kitchen. Generators are something I became very familiar with and I am on my second, almost 3rd , one in 2 years. Not because they break, but because I made decisions based on the now instead of on the future. But now I know all about electricity and power requirements, so that’s a plus!
By the time I got all this situated and the trailer wrapped, it was APRIL. I thought this whole process would take like a month. Another lesson, always double the time you think it will take if you haven’t ever done it before. Granted I was only working on this project on weekends, I knew nothing about anything, and this was “pre business partner” who knows what to do/can talk me through literally anything and everything, (a time period in the business which I shorten to “PM” for pre-Matt), so it took me way longer than it should have.
I started applying for events in April, but I had missed the deadlines for most of the big, summer events. So, we spent much of the year searching for events and just trying things out, but it was actually a good thing, because we had a ton of practice, worked through a lot of issues, nailed down a process and most importantly learned a lot about each other and the industry. Our first couple events were insane, and things came up that I never would have thought of. Of course always during our busiest times when we had people waiting. But what are you gonna do?! I am super excited for 2020 and hope to see a lot of you out eating chimney cakes!!
Feel free to email me if you have any questions or want more information on any piece of this. I love to “talk shop” and help people!