Start a Food Truck with No Money
Start a Food Truck with No Money
Start a Food Truck with No Money
Is there a way to start a food truck with no money? Just like it’s impossible to buy a metro ticket for the ride across town without money, you will need money to start a food truck.
But what if you don’t have any money to start with? Does that mean you should throw away the idea of starting your food truck?
Nope.
Fortunately, you still have various options to set up a food truck – everything from stripping down your concept to financing your food truck. In this post, we will focus on starting a food truck with no money and what this means for you.
Starting a Food Truck with No Money (Tips)
It’s essential to be clear, money is needed to start any business, including a food truck.
Staring a food truck for free is not possible. However, starting a food truck with someone else’s money is possible.
In fact, this is how many food businesses get started. As a food truck owner, your primary goal is to secure the funds you need to get your food truck rolling.
Average Costs for Starting a Food Truck Business
Small Truck: $25,000 to $75,000
Small Trailer: $25,000 to $65,000
Large Coffee Truck: $45,000 to $120,000
For an in-depth look at food truck startups costs, please read, How Much Does a Food Truck Cost?
Even if you had the funds to start a food truck, you could launch a food truck without dipping into the majority of your personal funds with a whole lot of planning and diligent research.
But we don’t want to perpetuate a myth here. Every business startup does require funds to get up and running. Starting a food truck is not the exception here.
Cash is king when it comes to starting a food truck and keeping a business alive. Therefore, your primary focus as a food truck owner will be to ensure that your food truck has the appropriate funds to sustain itself until it becomes profitable. This is important because many new food truck owners forget to budget enough capital to make sure they can reach their break-even point.
So, let’s be clear: It takes money to start a food truck.
And yet, the million-dollar question remains:
How do you open a food truck without any money?
If you are short on cash but remain passionate about your food, concept, and ability to start a successful food truck business, then you are going to have to compensate for the lack of money.
What you lack in money, you will need to make up with creativity, research, planning, and grit. Again, I recommend doing this by thinking outside the traditional box.
There is no room for weak stomachs when trying to start a food truck business with no money. Your job is to secure enough cash to set up and keep your food truck operational until it becomes sustainable.
For starters, you have to know precisely how much money you will need to open your food truck and then figure out where you will get it from.
This requires you to write a thorough food truck business plan that will outline your entire concept, startup and operational budgets, and marketing.
Is it possible to
Start a Food Truck with No Money?
There are possible ways to open a food truck with no money. But the lack of personal funds will require you to put on the gas in other ways.
For example, you need to:
- Research and plan
- Learn about the food truck industry
- Turn up the creativity
- Develop your menu
- Start cooking up the funding mix plan
In addition, you’re going to need to network, have excellent communication skills, and have the ability to lead.
The lack of funds makes successful food truck owners rely on their creativity. This will help them think out of the box and incorporate different low-cost business plans.
Further Reading: Requirements to Open a Food Truck
Look Beyond Traditional Methods of Starting a Food Truck
If you lack the money to start a food truck, you may have to consider moving beyond the traditional food truck template and get a little creative.
You may want to consider more reasonable solutions to bridge your budget with your vision. From there, you can start small and grow your food truck business.
When you decide to move forward, you will need to develop your food truck concept, pick a location to serve your food, and develop a sensible operational budget.
A Food Truck Budget Requires You To:
- Laser focus on your business concept
- Develop your menu
- Create a thorough business plan
- Improve financial projects and costs
So, where do we go from here?
My strong recommendation is to act as if you already had enough money to set up your food truck.
Don’t let the lack of money stop you from doing the initial stages of planning. In this regard, you will need to overcompensate – and research and plan even more.
Finally, articulate your research and planning in a comprehensive business plan.
Then, when you are ready, you can go after the money needed to get your food truck on the road. This all requires hustling, effort, and determination – but mainly, it involves research and follow-through.
What’s Next?
Begin Writing Your Food Truck Business Plan
Before spending a significant amount of other people’s money, we recommend that you start writing a food truck business plan. Your business plan will detail:
- Food Truck Concept
- Menu
- Management and Operation
- Budget & Costs
- Financial Forecasts
- Branding and Marketing
Essential elements like your food truck break-even point will need to be determined. And to know your break-even point, you’ll need to have a pretty good idea of what’s going to be on your menu, what type of equipment you’re going to need, what kind of power supply is required, and other elements. Other elements include daily sales projects and costs.
Bringing these all together will determine your food truck startup’s cost.
Open a Food Truck With No Money?
Funding Options for Your Food Truck
Now that you have determined your concept, budget, and total food truck startup costs, you’ll be able to focus on getting the money together.
The various pools of startup funds, together, are called a funding mix. Therefore, your food truck funding mix will have a variety of sources to raise the necessary capital.
Typically, your food truck funding mix will include:
- Personal savings
- Borrowing from family and friends
- Getting a business loan
- Various investors
- Partners
- Home equity line of credit
- Credit cards
- Crowdfunding
Let’s do a deep dive and outline each of these funding options.
Personal savings
Contributing to your funding mix through your personal savings is essential. First, it’s a practical solution to pay some upfront costs with a little bit of your personal money. Things like research, planning, and legal and administrative expenses and fees can be covered with your initial investment.
Second, it allows others to see that you also have “skin in the game.” This means that you are sending a powerful signal to others that you are willing to invest some of your personal money because you believe in what you are doing and are willing to risk personal loss.
I recommend that you, at minimum, invest 10% to 15% of the total costs of your food truck.
Borrowing from family & friends
Borrowing from friends or family is an age-old method used by many to get started. The same is true for many food truck owners.
There are a lot of apparent benefits from borrowing from friends and family. For the most part, you can skip over the formalities of applying for a business loan.
Nevertheless, I do recommend that you have some form of a written contract signed by all parties to avoid any headaches in the future. If the family loan is negotiated to have an interest payment, the benefit is keeping the wealth generated within the family.
Yet, borrowing from friends and family can have a lot of emotional strain, especially if all the details are agreed upon first. To avoid any family disaster or friendship breakups, you should:
- Have a written contract signed by all parties
- Establish an amount of money to be borrowed
- Agree on interest payments
- Decide on the dates of payment
- Detail what happens if there is a missed payment
Your friends and family will often be your biggest cheerleaders, and they look forward to helping you (and getting a little in return for their efforts too).
I can assume that your friends and family are among the most important people in your life. This means that you will plan, research, and work even harder to make sure that you fulfill your obligations to pay them back!
Getting a business loan
Securing a business loan from a bank or lending institution is a common way to get money to start a business. This includes food truck businesses!
The great thing about choosing to get a bank loan is that you don’t have to depend on friends and family to help launch your food truck.
However, there will be a little more paperwork and hoops to jump through to get the loan (of which there is no guarantee you will). Be aware that banks or lending institutions may want some type of collateral or guarantee. Additionally, they will probably want you to write a thoroughly written business plan.
They also want to see how you intend to spend the money they give you and know some basics about your business, including when your anticipated opening date and time you start paying them back.
Investors
There are a variety of potential investors that you can work with to get the funds to start your food truck.
While you will hear various names for each type of investor, they are out to do one thing: they loan money and hope to get their money back plus interest.
Their return may include interest payments, a portion of your profits, and possibly management decision-making.
Whether they are silent, angels, or any other investor, they will be looking to see if you have a well-written food truck business plan. With investors, there are a variety of different agreements that you can enter into.
Therefore, I recommend that you fully understand the agreements, obligations, and duties required of everyone before you sign any agreement.
Partners
It’s common to start a food truck business with partners. With one or more partners, you can leverage your combined skill sets and money to get your food truck rolling.
Partnerships add a little more complexity to the management and organization of the business. Still, if there is excellent communication between all partners and clearly written duties, this type of business structure can work.
My recommendation is to ensure – through writing – that all partners know what is expected of them, their duties, and how they will be repaid.
Home equity line of credit
Using money from your home equity may also be an option to get the funds to start your coffee shop. By utilizing an equity line of credit, you essentially borrow against the equity you have established in your house.
Getting a line of credit for home repairs, repaying debts, or other purchases are common. However, I recommend that you carefully review this option before signing any documents. Ensure that you have all your business planning, research, and first steps ironed out before moving forward.
Credit cards
I am not a fan of using credit cards for financing your food truck business or any big purchase. The high-interest rates are the big reason for my dislike of this option. Still, in some circumstances using your credit card can be a convenient method to pay for things. While it can play a part in your funding mix, consider using consumer credit sparingly.
Crowdfunding
Crowdfunding can be an effective way to start a food truck with no money. However, crowdfunding your food truck can be a huge challenge that may not achieve your desired results.
While it’s very possible to raise significant money with crowdfunding, it’s not as easy as you might think, especially if you aren’t sure how you will garner enough attention.
Crowdfunding takes a full-fledged marketing and promotional effort for it to be successful. If you opt for this remember that you can’t cover all our food truck startup costs with crowdfunding. Consider it as a fun way to get 5% to 10% of your overall budget.
Your Food Truck Funding Mix
Starting a food truck with no money may require various “pools” of funding. That is, you may need to get your money from different sources.
First, understand how much money you will need – and by when. Next, determine the available sources of funding available as a percentage of your overall costs. Then, finally, reach out to those pools and secure as much as you can from those sources.
Each pooling source might require different strategies and effort. Let’s take a look at a sample coffee shop funding mix below.
Sample Coffee Shop Funding Mix:
| Personal savings | 15% |
| Borrowing from family and friends | 40% |
| Getting a business loan | 25% |
| Various investors | 0% |
| Partners | 10% |
| Home equity line of credit | 10% |
| Credit cards | 0% |
| Crowdfunding | 0% |
The above list represents a sample funding mix that I might have for my food truck startup money. What would your funding mix look like?
You will want to come up with a strategy for each of these funding mix options. For example, for a bank loan, you will have to provide a business plan. Borrowing from friends and family may require a written contract. Additionally, a contract detailing money, assets, and obligations should be drafted, agreed upon and signed by partners .
If you don’t have any money to contribute, your funding mix contribution is zero percent, then you will have to get the money from other funding pools.
Conclusion
If you don’t have any money, you can see that you can still start a food truck. You will have to determine the most feasible pools by which you will pay for your food truck. The first step is to understand what type of food truck you want, what you will serve, and how much it will cost. You will have to determine the most feasible pools by which you will pay for your food truck. From there you can develop a variety of action plans to obtain funds from each finance pool.
Further Reading: Start a Food Truck With No Experience
How to Open a Food Truck with No Money
Additional Questions:
I don’t know how to get my food truck started. Where do I begin?
If you aren’t sure how to start your food truck, I recommend that you begin by exploring what type of food you would like to serve. Second, go out and be a food truck customer. Enjoy the process of discovering other food truck businesses. Don’t be a stranger to the food truck community.
Next, start developing your concept and menu. This is the fun part! Finally, start detailing your plan in your food truck business plan. For more information on how to write your business plan, please read our article, How to Write a Food Truck Business Plan.
Should I partner with someone to start a food truck?
Food truck partnerships can be advantageous for many reasons. You can combine your skillsets, assets, money, and time to launch your food truck. But partnerships can also lead to a lot of friction if the partners disagree on the vision, management, and company culture. So, in partnerships, it will be essential that you pre-determine what each partner is responsible for.
Is starting a food truck profitable?
Food trucks can be very profitable. Ultimately, however, your food truck revenue will depend on a variety of essential factors. The obvious factor is how many sales are you making. Additionally, you will need to factor in all of the costs associated with doing business. From there, you can create some initial projections on how profitable your food truck can be. If you are concerned about the cost of a food truck and are looking for an alternative business, you might consider starting a coffee truck or coffee trailer. Starting a coffee trailer has many benefits and can be lower than a food truck. If you are interested in starting a coffee truck, visit CoffeeShopStartups.com.
