Every entrepreneur who wants to start a business would usually want to know the time it will take for the business to start making a profit. So also, any entrepreneur that wants to start a food truck business would want to know how long it will take for them to start making profits from the business.
Unfortunately, there is no fixed time for a food truck or any other business to start making profits. This is so because before a business can start making profits, some key factors must be met. In this article, we will discuss the factors that must be met before a food truck business can start making profits.
Factors That Determine the Time Frame a Food Truck Can Become Profitable
The Level of Investment
One of the major factors that will determine the time frame a food truck will start making profits is the level of investment that would have gone into setting up the food truck business. The truth is that most entrepreneurs usually get loans to start their businesses hence a large chunk of the revenues they generate from the business will go into servicing their debts.
Until they are done with paying up the debts, they may not be able to declare profit. It usually takes between 12 to 24 months to be able to pay up business debt, and until then, it will be difficult for a food truck business to start declaring profit.
The Location of the Food Truck Business
Another major factor that will determine the time frame it will take a food truck to start making a profit is the location where the food truck is operating. Trust me, location is key when it comes to business and it is usually a major factor that determines sales.
For example, a food truck that operates in a city or state where the culture of food trucks is popular will generate regular sales when compared to a food truck business that operates in a city where residents are indifferent about food trucks.
As a matter of fact, there are locations where you will only spend a minimal amount to advertise the food truck and there are places where you are required to have a robust budget for promotion. Of course, you know that the amount you spend from your business’ revenue will impact negatively on the profits you are expected to make.
The Menu Options
Food trucks sell different foods or drinks, so the amount a food truck is expected to generate and the time it will take the food truck to break even will vary. For example, a food truck that sells snacks (hamburgers, sandwiches, donuts and chicken and chips et al,) will be in a better position to generate more income than a food truck that only sells popcorn, ice cream, snow cone, or popsicles.
Trust me, if both food trucks loaned money from the bank to start the business, the likelihood of the food truck that sells snacks and drinks paying up the loan within a shorter time frame will be more when compared to the food truck that sells only ice cream.
The Management Style of the Food Truck
Another major factor that will determine the time frame a food truck can start making a profit is the management style of the food truck business.
As expected, a food truck business that is managed by well-experienced managers will start making profits within the shortest time frame when compared to a food truck business that is being managed by people who are just learning on the job.
In essence, if you want your food truck business to start making a profit as fast as possible, then you must hire experienced managers with good track records. They will help you with a management style that will help you minimize unnecessary expenditures that can negatively affect the profitability of the business.
The Marketing and Sales Strategies of the Food Truck Business
Another factor that will determine the time frame it will take a food truck business to start making profits is the marketing and sales strategies of the food truck business. It is normal for a food truck business that invests in rigorous marketing to make more sales when compared to a food truck business that is laid back when it comes to its sales and marketing strategies.
Interestingly, the more sales a business makes, the more profits the business will make. In essence, if you are always hitting and surpassing your sales target, you are going to start running a profitable food truck business without debt within the shortest period of time.
The Business Model of the Food Truck
Lastly, another factor that will determine the time frame it will take a food truck business to start making a profit is the business model of the food truck business.
There are several business models that a food truck business can choose and each of these business models has a way to shorten the time frame a business can start making profits. For example, a food truck business can adopt the subscription business model, the franchising business model, or operate only from a single location.
The bottom line is that, if you want your food truck business to start making profits as fast as possible, then you must work with a business model that will help you achieve your business mission, vision, and goals.
If you are able to follow through on all the factors listed above, then you can rest assured that your food truck business will start making profits in three years or less of fully operating the business. This is so because results from several research conclude that it usually takes a business three years to break even.