Chapter 3
Start up Considerations
First read this manual all the way through so you’ll know what you’re talking about.
Next, talk to an inspector from your local health department before you do anything else! Now go back and read that sentence again – it could save you a lot of time, money, and aggravation. Health codes and regulations vary from city to city and it is your inspector’s job not only to enforce the rules, but also to educate people who are starting new food businesses.
You’re going to want to talk to the inspector two times. On the first visit, tell him that you are planning to vend non-hazardous food from a mobile unit. Ask him what general rules you will need to comply with, and what equipment is required on the cart. Some cities require a three compartment sink, for example.
It is important to find out this information before you purchase or build a hot dog cart. This way you can get a cart with all the right features and you will pass the inspection on the first try, guaranteed.
Now that you know what is required by your health department, you can decide on a cart. After you do, you will need to meet with the inspector a second time with a copy of the cart plans. Even if the cart is a brand new professionally built unit, the health department usually requires that you submit the plans for their approval. If the cart manufacturer is reputable, they will supply you with these plans before you buy the cart. It’s in their best interest to help you get the cart approved (for obvious reasons).
The inspector will be able to tell you at this point whether the cart will pass inspection, or if it needs to be modified. Relay this information to your cart manufacturer and they will be able to add any additional equipment necessary to pass inspection. It is much easier to do it this way than to order a cart that fails the inspection, leaving you to make the modifications on your own, or worse yet, arguing with the inspector to pass your cart. By the way, if you want to make your life miserable, arguing with city officials is a good way to start. They tend to remember you and give you a lot of special attention. Contrary to what some people will tell you, most health inspectors are just regular folks. They’re not out to get you. They just want to do their job with as little hassle as possible. Be polite, ask questions, and take their suggestions.
If the inspector, or anyone else asks you where you plan to set up, just tell him that you’re going to do festivals, catering, and parties, and that you haven’t booked anything yet. This answer will satisfy the inspector without locking you into any particular site. This will prove invaluable when you do your site search in Chapter 5.
How long will it take to start making money? That depends on factors such as how motivated you are, how much time you have to spend each day, and whether you plan on buying or building a cart. A good rule of thumb is to allow two weeks to get your licenses, permits, insurance, and other paperwork once you have your cart. In the meantime, you can be scouting locations. You’ll find that once you are in this business, scouting locations becomes subconscious – it’s something you do automatically, all the time.
Speaking of time, this is a good place to mention that selling hot dogs lends itself particularly well to moonlighting. You don’t have to quit your current job (and you probably shouldn’t right away). Start selling on evenings and weekends at some of the locations you’ve been scouting. You’ll know when you’ve got a winner – then you can think about firing your boss.
How much money do you need to get started? Again, that depends on a lot of variables. If you build your own cart, you can get going for under $900. If you buy a decent used cart, add $3000 to that. Keep in mind that license and permit fees vary greatly from one city to the next so be sure to figure these costs into your startup estimates.
The second book in this series, “Carts of Cash: Business Management Made Easy”, covers several ways to get start up cash as well as everything you need to know about the business side of things. It’s written in an easy to understand, non-technical format that starts from the very beginning. You will learn how to choose, register and protect a business name. You’ll also learn how to choose a business legal structure such as sole proprietor, corporation, or LLC.
Marketing your new business is covered in detail with topics such as how to get free advertising materials, how to do a press release that gets results, and how to partner with the businesses in your community for win-win promotions.
The “biz” book also gives a complete method of bookkeeping on paper ledgers that anyone can understand, even with no prior business knowledge. You’ll learn how to read and prepare financial statements such as a P&L (Profit and Loss Statement), so you’ll be able to instantly see the financial health of your business. Of course, if you plan to use Cash Tracker you can skip this entire section.
What about taxes? Yes – covered in full, as well as how to hire employees (and comply with all the rules), and when to seek the help of professionals such as an accountant or attorney. “Carts of Cash: Business Management Made Easy” is the indispensable companion to the book you are reading right now. I highly recommend that you read it before you start selling, especially considering the investment in money and time that you will have made. Let’s decide right now to make the smart decisions that will give you the best chance to succeed.
Steve,
As I try to get my LLC started the paper work gives me a basic structure and then in small writing says you will need to consult an attorney for any additional forms or paper work for your LLC. I realize every state is probably different, however I am trying to do this slowly, getting the legal work done and start in the fall. Moneys kind of tight. I’m not trying to pin you down for answers but , when I have to I will get an attorney but generally speaking do I need any other forms to create a LLC for this business other than standard. I’ll do my own home work just seeking your thoughts.
Thank you for your Time, Herb
I did my own LLC without the aid of an attorney using the forms and instructions on my state government’s website. It’s not rocket science and any reasonably intelligent person should be able to do it.
I do need to suggest that consulting an attorney is advised because every person and situation is different. I can’t give a blanket answer. End of legal disclaimer. 😉
Steve,
Most of my family has passed away. I live in Utah and my last living family member would not be able to come to Utah if something happened to me. I am a young 50 something and worry about what happens to things when I move on the the next life. What I mean is for my situation What happens to the business if there is no one to “inherit” the business. I want to setup as a LLC to protect my business from personal debt creditors, but think a Sole proprietor might be better because when the owner dies so does the business.
I am wanting to get my bills paid off before I have to punch the clock for the last time in this life.
So what do you think is better for my situation?
Hi Berend, that is a question for an attorney and/or accountant. I am not qualified to answer that one. It is good that you are thinking long term when planning your business!
-Steve
You can get a Delaware Corporation or LLC online without an attorney very reasonably. Maybe $100 or so. You don’t have to live in Delaware or even do business there. And you won’t have to pay any state taxes if you operate your business through the corporation.
Nevada, Texas and Florida are other no state income tax states. 20 or so years ago I got a Nevada corporation using the services of Nevada Corporate Planners.
The did all the work of setting up the corporation and even got me a corporate bank account. I think I paid about $1200.
Check out legalzoom.com very simple way of getting setup! They do all the work for you, for a small fee!
That is an option indeed. I have not personally found the need to use a third party as the secretary of state websites usually walk you right through the setup of a business entity.
There are companies in Nevada that will set you up with a Nevada corporation or LLC for a fee. The advantage to this is that Nevada has no state income tax. If most of the money you make is held in the corporate account you won’t have to pay state income tax on that money. This is especially advantageous if you live in a high tax state like California or New York. Of course if you pay yourself a salary you will have to pay the state income tax of your state.
Other states with no state income tax are Texas, Florida and Delaware. I have only dealt with Nevada so I don’t know how hard or easy it may be to set up there.
Steve I just got your course yesterday and have been through the material once. Since this is the startup chapter and most of my questions as of now are concerning startup I will post the in this chapter so I can remember where it is and find your response easily.
1. Cart or mobile trailer?
The first place I want to try is in the downtown area. It is within walking distance of both state and municipal government as well as having a lot of law office nearby. There are also quite a few bars and restaurants if I want to work there at night. As of a couple of years ago that I’m aware of there have been a few food trucks that would park and feed the parking meters. I don’t think the city would allow me to put a push cart on the sidewalk. I would prefer a mobile trailer with a small air conditioner anyway because in the summer the temperature is consistently in the high 90’s with high humidity.
I have up to $5000 that I can spend on startup but I need to spend every dollar wisely and effectively toward the goal of getting in business. I’ve been doing searches for mobile food trailers and I ran across some on Alibaba that are in the low $2000’s and under range. Any I would buy would likely need some additions and modifications. I also want to sell snowballs in the summer months but it’s too late to get started on that for this year Have you ever bought anything on Alibaba? I am 6’3″ so I need for anything I buy to have enough headroom for me to stand up comfortably.
2. Condiments
If I set up where I was talking about I don’t think I could set up a table to allow customers to apply the condiments themselves. Would it be better for me to apply them to the dogs myself or have those little packets available for the customers?
3. Menu
To start I plan to keep the menu pretty basic. Hot dogs and sausage poboys. Footlongs are another possibility because I can charge more if the price per unit is feasible. When I eat a hot dog I almost always make it a chili dog so if it’s allowed I want to have chili available. Since I plan to be operating from a trailer I will need a generator for electricity. What do you think of keeping the chili in a slow cooker?
1. No, I have not bought anything through Alibaba however it could be a good way to go. Like you said though, be ready to do a lot or re-working/modifying.
2. I believe it is always better to apply the condiments yourself if possible. Makes for a better customer experience and increases the perceived value of your product.
3. Slow cookers work great for chili.
I live in Greenville, Texas, and they require condiments, if applied by customer, to be single serve packets.
Hi Michael, in my training, I always advise to dress the hot dog yourself. It gives your product more perceived value and lets you charge more.