Starting Your Food Trailer Business with Financing
1. Self-assessment and Goal Setting
- Vision: Begin by identifying the vision and goals for your food trailer business. What type of food will you serve? Where do you see your business in the next 3-5 years?
- Budget: Determine your budget, factoring in the trailer cost, initial supplies, permits, licenses, and other startup expenses.
2. Understand Different Financing Options
There are multiple ways to finance your food trailer:
- Bank Loans: Traditional loans offered by local or national banks.
- SBA Loans: Loans guaranteed by the Small Business Administration.
- Equipment Financing: A loan specifically for purchasing business equipment, like kitchen appliances.
- Personal Loans: Borrowing based on personal credit, separate from business credit.
- Crowdfunding: Raise small amounts of money from a large number of people, often via platforms like Kickstarter or Indiegogo.
3. Preparing for Financing
- Business Plan: Draft a comprehensive business plan, detailing your business model, target market, marketing strategy, and financial projections.
- Credit Score Check: Lenders will often review your personal and/or business credit score. Aim for a healthy score to improve loan terms.
- Financial Statements: Prepare or gather financial statements like income statements, balance sheets, and cash flow statements.
4. Budget Calculation
One-time Initial Costs:
- Trailer Purchase: Estimated cost: $35,000 to $100,000.
- Equipment: Estimated cost: $5,000 to $25,000.
- Interior Setup: Estimated cost: $2,000 to $10,000.
- Branding and Design: Estimated cost: $1,000 to $5,000.
- Licenses and Permits: Estimated cost: $500 to $2,500.
- Initial Inventory: Estimated cost: $1,000 to $5,000.
Recurring Monthly Costs:
- Loan Repayment: Varies based on loan amount and terms.
- Inventory Restocking: Estimated cost: $2,000 to $6,000.
- Fuel and Maintenance: Estimated cost: $200 to $1,000.
- Employee Wages: Varies based on number of employees and local wage rates.
- Insurance: Estimated cost: $100 to $500.
- Marketing and Advertising: Estimated cost: $200 to $2,000.
- Utilities: Estimated cost: $50 to $300.
- Emergency Fund: Suggested amount: At least three months’ worth of operating expenses.
5. Applying for Financing
- Choose the Right Lender: Based on your needs and financial health, decide on the best financing option.
- Documentation: Compile necessary documents.
- Application: Submit your loan application.
6. Using the Financing Wisely
- Allocate Funds: Allocate the loan amount to various costs.
- Monitor Cash Flow: Ensure loan repayments are made timely.
- Reinvestment: Reinvest initial profits for growth and stability.
7. Repaying the Loan
- Understand Terms: Familiarize yourself with the loan’s details.
- Timely Payments: Ensure consistent, on-time payments.
- Refinancing Options: Consider refinancing if beneficial in the future.
Final Thoughts: Starting a food trailer business through financing is a calculated risk. Prudent financial management is essential for success. Always consider seeking advice from financial advisors or mentors before taking the leap.
North Star Leasing offers a lease to own financing option with a $1 buy out at the end of the term so you will own the equipment out right. We can offer you 24 to 60-month terms.
Apply For Financing (online application) today, and I will reach out to discuss next steps.
Your Benefits to Financing Equipment
- Less Cash Down – Save your limited cash for other areas of your business; like expansion, improvements, or marketing
- Accelerate ROI – Rather than paying one lump sum for your equipment, make smaller payments while the equipment generates revenue
- Customize Your Terms – Set customized payments to match your cash flow and even seasonal income fluctuations
Fast and easy process to get the equipment you need!