How to Start a Food Concession Business: An Entrepreneur's Checklist - Part 1
by Caron_Beesley, Community Moderator
- Created: July 7, 2009, 8:18 am
- Updated: December 5, 2011, 11:18 am
As summer heats up, that great American tradition - the concession stand - comes into its element. From roadside lots to sporting events, national parks to beaches, festivals to fairs, we simply can’t get enough lemonade, hot dogs, ice cream and more.
And this is good news for entrepreneurs.
Starting and operating a food concession business offers many entrepreneurs a relatively low cost entry way into business ownership. It also offers a great deal of flexibility; concession owners are afforded the independence to work where and when they want, while growing their business at a pace that suits their needs.
However, it is still business ownership, and like all entrepreneurial projects it takes work and perseverance to turn a profit. As a concession owner you face an ever changing competitive landscape, fluctuating customer traffic (think about the influence of the weather), and the need to observe the laws and regulations that cover the food service business - just like a full-service restaurant owner.
Something else that you might quickly come to realize is that the concession business is a relatively closed knit community. This is evidenced by a real lack of publically available resources and information to help budding concession business owners get started.
All these considerations aside, operating a concession business is a great way to ease into the food services business and unlike traditional restaurant owners, you can easily up and relocate to a more lucrative area when times get tough.
Here are some businesses and regulatory fundamentals that will help get you started and on your way to successful and responsible concession stand ownership.
1. Have a Business Plan
If you are truly serious, a business plan is essential - and an absolute necessity if you want to secure any start-up or growth funds from investors or lenders. SBA.gov, the government’s official Web site for small businesses, offers many tools, templates and guides that can help you craft a business plan. Check out their 'Write a Business Plan' Web resources.
2. Determine Your Business Structure - Do you want to go it alone or in partnership?
It’s worth thinking about. If you don’t have family or friends who can help out with the day-to-day logistics such as manning the concession stand or trailer, setting up each day, catering, etc. a business partner can help. They can also help share the risk. Check out this earlier blog post: 'Is Business Partnership Right for You?'
For more information about business partnerships, as well as other alternative business entities such as incorporation, LLCs, etc. and how to go about setting them up, refer to this Business Incorporation Guide from Business.gov.
The entry costs for starting a concession stand are possibly the lowest that any entrepreneur will encounter. However, there is a good chance you will still need access to loaned capital to cover the costs of purchasing or leasing a trailer, equipment, and other start-up costs.
If you don’t qualify for traditional bank loans, you might want to look to a government-backed loan. What this means is that the government - through the Small Business Administration (SBA) - provides a guaranty to banks and lenders for money lent to small businesses, rather than lending the businesses money directly. Don’t even think about a federal government grant as an option -- the government doesn’t offer grants to for-profit businesses; there is no such thing as free money.
The SBA Microloan program is an option worth considering if your financing needs are not significant. With a microloan you can borrow up to $35,000. The average loan, however, is a lot lower and can sometimes be in the hundreds of dollars, making this loan ideal for start-up concession-stand business owners.
In my next entry, I’ll provide guidance on other critical concession business information, from licenses and permits to the best places to set up shop.
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