BUSINESS PLAN

FOR
FOOD TRUCK BUSINESS

Submitted to: MS. MARIA LYKA MANIALUNG

Submitted by: VASQUEZ, JERICO
BORO, BEA
MERCADO, SAM
 Resto ON WHEELS
People have always been connected with food, but it's an especially popular
passion nowadays. Whether its recipes their grandmother cooked for them,
meals they've come up with on their own, or recipes adapted from their favorite
celebrity chef, food is everywhere.

A RESTO ON WHEELS is a large vehicle equipped to cook and sell food. Some,
including ice cream trucks, sell frozen or prepackaged food; others have on-
board kitchens and prepare food from scratch. Sandwiches, hamburgers,
french fries, and other regional fast food fare is common. In recent years,
associated with the pop-up restaurant phenomenon, food trucks offering
gourmet cuisine and a variety of specialties and ethnic menus have become
particularly popular. RESTO ON WHEELS, along with portable food
booths and food carts, are on the front line of the street food industry that serves
an estimated thousand people every day.
 ALLOCATION OF FUNDS
TRUCKS AND EQUIPMENTS

INITIAL PRODUCT INVENTORY

PERMITS & LICENSES

PAPER PRODUCTS
(Plates/Napkins, etc.)
UNIFORMS

MISC. EXPENSES (Like Chalk

Menu)
SMALLWARES: Pots, Pans, etc.

START UP COST ESTIMATED COST NOTES

Trucks and Equipment ₱ 5, 000, 000.00 Specifically Food truck and
Equipment
Initial Product Inventory ₱ 100, 000.00 Total inventory (Startup)
Permits and Licenses ₱ 5, 000.00 Varies a lot depending on
where you operate.
Paper Products ₱ 5, 000.00
Uniforms ₱ 3, 000.00
Miscellaneous Expense ₱ 3, 000.00 Plan for some unexpected
expenses here and put it into
budget
Small wares ₱ 5, 000.00
TOTAL ₱ 5, 121, 000.00 Estimated

MONTHLY EXPENSES MONTHLY NOTES

ESTIMATED COST
Labor ₱ 800.00 (400 per day per worker)
2 workers
Fuel ₱ 10, 000.00
Phone/Internet ₱ 1, 500.00
Repairs ₱ 50, 000.00 Better to budget for it.
Food/Beverages Restock ₱ 10, 000.00 Depends on food cost and
frequency of operation.
Paper Product Restock ₱ 3, 000.00
TOTAL ₱ 75, 300.00 Estimated
PROCUREMENT PROCESS

1. Determine quantities needed

2. Reconcile needs and funds
3. Choose procurement method
4. Locate and select suppliers
5. Specify contract terms
6. Monitor order status
7. Received and check products
8. Make payment
9. Distribute products
10. Collect consumption information
11. Review product selections

EFFICIENT MANAGEMENT OF CAPITAL FOR PROFIT MAXIMIZATION

1. Manage procurement and inventory

Prudent inventory management is an important factor in making the most of your
working capital. Excessive stocks can place a heavy burden on the cash resources
of any business. On the other hand, insufficient stock can result in lost sales and
damage to customer relations. When looking at inventory, it’s important to monitor
what you buy, just as much as what you sell. The key challenge for companies is to
establish optimum stock levels: promoting better communication between
departments and forecasting demand are steps to take in order to prevent your
company from holding unnecessary levels of stock. As well as driving up costs for
physical storage and insurance, the stock may be wasted if it is time-sensitive.

If stock levels are unknown, then it is difficult to manage the optimum level and the
company risks experiencing a loss in sales as a result of a shortfall in materials.
Periodic inventory checks are useful in monitoring levels of different types of stock
and alerting finance to any recurring overstock or understock issues.

It’s extremely important to control what’s purchased. Investing in procurement

automation solutions can greatly boost working capital. Streamlining and
centralizing the purchasing process enables a rigorous authorization process. This
helps to prevent maverick spend by ensuring that procurement officers are only
permitted to order approved products/services from preferred vendors.

2. Pay vendors on time

Enforcing payment discipline should be a key part of your payables
process. Analysis of working capital levels shows that the biggest improvement
comes from improved payables performance and reduced days payable
outstanding (DPO). Companies that pay on time develop better relationships with
their suppliers and are in a stronger position to negotiate better deals, payment
terms and discounts. It seems like a counter-intuitive way of maintaining a steady
working capital, but if you keep your suppliers happy, it could save you money in
the long run when it comes to getting larger discounts for bulk buying, recurring
orders and maximizing the credit period.
3. Improve the receivables process
In order to shorten the receivables period, the company needs to have a good
collections system in place. One important aspect of working capital is to send out
invoices as soon as possible. Companies should reassess invoicing processes to
eliminate inefficiencies that may be causing delays in sending invoices to your
debtors (manual processing, lost invoices, high volume of invoices to manage etc.).
Professional services firm, Deloitte recommends using technology to deliver invoices
electronically in order to speed up billing and collection, and ultimately shorten the
cash conversion cycle. It’s also vital to ensure that invoices are accurate before
they are sent to your debtors to avoid delays in getting paid. Maintaining an
accurate debtors ledger ensures that you are on top of debtor collection dates
and can send timely reminders to your customers regarding payment.

4. Manage debtors effectively

The best way to ensure you have working capital is to make sure money is coming
in on time. Reassessing your contracts and credit terms with debtors may be
necessary to make sure you are not giving debtors too big a window to pay for
goods and services – as this may be impacting negatively on your own company’s
cash flow. CFOs should review credit terms with company management to ensure
that the level of credit being offered to debtors is appropriate for your company’s
cash flow needs. To reduce bad debts, you should implement more rigorous credit
checks and ensure that effective credit control procedures are in place to chase
late-paying customers.

5. Make informed financing decisions

Working capital is interest free with no conditions, making it the cheapest and
fastest source of cash for a company. A recent survey finds that 65% of
organizations have no immediate need to finance (Fig. 1). Prioritizing working
capital allows companies to make strategic investment decision, which drives
operational performance and efficiencies. Conversely, not having enough
operating liquidity because assets are tied up in inventory or unpaid invoices can
have a huge effect on cash flow.

The way to make sure that working capital is managed is to use key performance
indicators (KPIs) all the way down the business to operational level. As you map out
receivables and payables over time, include inventory metrics and KPIs such as
days sales outstanding, days payables outstanding, and days inventory
outstanding. Continuous monitoring of the metrics is crucial to maintaining a sound
working capital management strategy.
SHORT EXPLOITATION
Sales Assumptions for a Food Truck

1. # of people within walking distance of my location during lunch – 1,000

2. % of people who buy lunch – 50%
3. Equals number of potential customers each day – 1,000 x 50% = 500
people
4. % of market that will choose your food truck each day – 5% or 75
people
5. Average sale from your menu – ₱ 200
6. Average daily sales on week day ₱ 200 x 75 = ₱15, 000
7. Then let’s assume you do some catering or events and you make
₱ 50, 000 per event 2 times per week = ₱ 100,000 in catering/events per
week.
8. Total monthly sales = (₱15, 000per day x 5 work days) + ₱ 100,000 in
events) x 4 weeks per month = ₱700, 000 per month

MANAGING WORKING CAPITAL

1. Maintaining working capital is everybody’s responsibility.

Many businesses rather short-sightedly imagine that working capital is solely the
remit of the finance team. Far from it. To succeed, a company should
implement KPIs on working capital that are understood by everyone in the
management team. Where necessary, specialist training should be delivered so
that everyone shares the same outlook on financial management.

2. Pay suppliers on time.

At first glance, this suggestion may appear strange: surely paying as late as
possible will improve a company’s working capital? However, suppliers who are
paid quickly and who do not have to waste time chasing invoices are likely to
be more flexible when it comes to prices and terms of business.

Effective negotiating is central to every business, and it makes good sense to

assign each supplier a named contact who can build a close and mutually
respectful working relationship.

3. Control expenses carefully.

In a large company, it can be tempting to ignore small expenses. This is

extremely unwise, as they can mount up significantly and substantially affect the
business’s working capital. Setting clearly understood rules for travel and
entertainment can make all the difference, while the introduction of a
corporate card program will allow management to view expenses in depth and
quickly take remedial action where employees are bending the rules.

4. Watch your stock.

Excessive stock holdings can tie up huge amounts of capital. Overbuying
frequently results from poor communication between departments and can be
mitigated by monthly or quarterly stock checks, provided they are quickly
followed up with remedial action. At the same time, it is crucial to avoid stock
shortages, so this is something of a balancing act, requiring careful attention to
each product line.

5. Consider introducing e-procurement.

E-procurement can reduce costs substantially: one survey indicated savings of

18 percent when businesses used e-auctions and carefully compared different
suppliers’ terms. Choosing suppliers with longer payment terms can represent a
huge boost to your working capital, so it is worth carefully examining the small
print and negotiating wherever possible. E-procurement also involves a rigorous
authorisation process, which can assist in reducing unexpected expenditures
and protecting your working capital.

6. Talk to alternative lenders.

Bank overdrafts can be a good way to manage shortfalls in your working

capital. However, they traditionally represent a moderately high risk for the bank
and hence attract substantial interest rates. Your company may be able to
negotiate far more advantageous terms with an alternative lender, who can
offer you a choice of emergency loans, asset-based finance, and invoice
factoring and discounting.

7. Emergency loans can be a short-term solution.

Emergency loans are an excellent way to address sudden shortfalls in working

capital. As the name suggests, speed is of the essence and a lender can give
you the financing you need in less than 24 hours.

8. Asset-based financing can be an asset.

With asset-based financing, you can borrow against the value of your premises,
plant, and equipment. This is a longer-term method of financing, with
competitive interest rates as the loan is secured on an asset.

In many cases, alternative lenders will use a panel of providers for asset-based
loans, enabling you to negotiate the most competitive rate and the most
appropriate repayment period–whether you want to make a quick repayment
to reduce the total interest or spread the loan over a number of years to reduce
your monthly outgoings.

9. Invoice factoring and discounting releases the cash tied up in your sales
ledger.

Invoice factoring or discounting enables you to borrow up to around 85 percent

of the value of your invoices as soon as you raise them. You then repay the loan,
as well as interest and charges, once your client has paid you. Choose factoring
and the finance company takes ownership of your debtor ledger and deals with
all aspects of credit control. Their expertise will probably mean faster payments
and hence lower interest charges.

However, you may wish to keep control of your own debtors so that your clients
do not find themselves dealing with a third party. In this case you should choose
invoice discounting, which simply provides the financing against invoices.

MANAGING CASH

1. Train Your Staff

Staff who are unaware of the duties, tasks, and responsibilities that are expected
of them will not be able to do their job effectively. It is extremely valuable to
devote time to making sure that all new staff members are properly trained for
their roles. Keeping current staff informed of any changes and providing
opportunities for professional development and additional learning are
important. When staff are aware of the best practices for cash management,
they can implement the process efficiently and accurately.

2. Establish Policies and Procedures

Having clear and well-planned policies and procedures provides your staff with
guidelines to follow when they are handling cash. These guidelines can be
tailored to the specific needs of your business so that you can establish policies
and procedures that will allow you to maximize the efficiency of your business.
These policies should address how your staff should conduct cash transactions
as well as cash management best practices.

3. Avoid Manual Cash Counting

Manual cash handling places a large time burden on your business. The process
of counting, recounting, tallying, and balancing by hand takes up a large
portion of time each and every day. Manual cash handling can also be an
unreliable process as you never know when mistakes will occur and how long it
will take to sort them out. Your business will benefit by automating cash
counting.

4. Find Room for Improvement

Along with updating policies and procedures it is useful to evaluate your cash
management process and learn how much money your business spends on
cash management each month. You might be surprised by the totals! The good
news is that there are always ways that cash management can be made more
efficient for your business. Taking time to determine where you are going wrong
is the first step to implementing positive changes within your business.

5. Increase Organization

Sloppy cash management is not likely going to be efficient. Organizing your

cash management and maintaining that organization may seem like a
daunting task but it is well worth the effort. Organization cuts down on
 avoidable errors and increases efficiency. Organization can happen in your
business from keeping cash drawers tidy and not overflowing to keeping all of
your cash management supplies stocked and in a consistent place.

6. Monitor Cash Flow

Cash flow can be tricky to maintain in retail businesses because cash is

continuously flowing in and out. It can be difficult to determine when deposits
should be made or when you need more change before it runs out. Making use
of automated cash management technology can help you maintain cash flow
by processing cash automatically so that it can be recycled back into your
business.

7. Invest in Automated Cash Management

Investing in automated cash management is one of the easiest cash

management tips to follow. Cash management technology automates cash
management tasks that would normally be completed by your staff. This
improves the accuracy and efficiency of your cash management and allows
your staff to focus on developing your business.

MANAGING RECEIVABLES

1. Establish a “Days Sales Outstanding” (DSO) Goal

How long does the company want to wait in order to get paid from their clients?
The number should be as low as possible, but it’s typically between 15 and 45
days. This number will have an important impact on cash flow, so it should be set
carefully.

If a company can’t get the expected cash from its accounts receivable, it may
need to find it by other means, such as delaying accounts payable, reducing
inventory or borrowing from a bank. The DSO goal is important because a
bigger number means the cash flow requirements of the business increases. For
example, if a company achieves $90,000 of revenue per month and waits five
extra days for a customer to pay (for example, the DSO goes from 40 to 45
days), it may need to find another $15,000 of cash to run the business. (The math
is $3,000 per day multiplied by 5 days.)

2. Establish a Credit Policy

This should be a planned company process and not one that is decided by the
accounts receivable clerk. It should keep the risk as low as possible and clarify:

1. Who gets credit: This should be determined by customer track record and
checking a database like Dun & Bradstreet to measure credit worthiness.
2. How much credit is issued: This should be a low number to start. It should be less
than the average historical transaction done by the company. Large first-time
orders should never be given credit.
3. How long will the terms be: Having clearly stated payment terms in your service
agreement is one of the most important steps in managing accounts
receivable. Start with 15 days if possible, and extend them if asked by the
 customer over time. State a specific date that the payment is due, not “upon
receipt” because the customer then has the tendency to set their own date.
4. Follow the credit policy: Make sure that both the policy and process are
followed. There will always be pressure from commissioned sales reps to extend
credit.
3. Track Payments Carefully
Most clients want to pay their bills on time. They just need a little help to pay
within terms.

To encourage timely payments, proactively call soon after the invoice is sent out
to make sure they received it and to ask when it will be paid. Follow up early
and often to make sure the due date does not slip. Remember that every
business has the right to be paid within terms, so don’t be afraid to ask for the
money. If the payment is not received on time, immediately call to see why it
was not sent and when it will be.

4. Charge Interest on Overdue Payments

While the company may never collect this interest, it sends a signal to the client
that the company is serious about getting paid. It can also be forgiven as a
concession to the client once the invoice is paid.

5. Cut Off Credit to Overdue Clients

Information about overdue clients can be found on an accounts-aging report
from QuickBooks. Too many small business owners continue to extend credit to
customers who are late on paying their bills. This only reinforces their delinquent
behavior and increases the cash risk in the company.
Cash flow is the lifeblood of every business, and an effective accounts
receivable policy is the heart of it. By keeping track of your accounts receivable,
you can ensure you get paid for your services, maintain a steady stream of cash
flow and keep your business afloat. One of the most important steps in
managing accounts receivable is creating professional invoices and
establishing reliable invoicing techniques; check out our tutorial on invoices to
make sure yours get paid on time and in full.

MANAGING INVENTORY
Step 1 – Getting Started

 Start by having at least one person responsible for inventory. This will
ensure you that someone has a clear overview of your stock and can give
quick answers about the inventory. You might end up with a big mess if
there is no one responsible and several people are performing separate
tasks.
 Implement an inventory management software. This will help you ease
your work. Don’t choose the first software you see because the different
software is perfect for different companies. Compare them and choose
the one most suitable for your business. It’s even better if modifications are
available for specific needs.
 Have a backup system ready for all the data if something happens to
your computer. It’s important to have access to up-to-date inventory
data from somewhere else.
  Install POS programs to track automatically sales of finished goods. It will
simplify your inventory management from the beginning.

Step 2 – Ordering Goods

 The first rule – don’t spend too much on inventory. It’s not efficient, erodes
profit, it’s expensive to store, it can get damaged and it’s subject to
depreciation. You need to have a plan for supply and later it can be
drawn on the basis of the previous month’s sales.
 You shouldn’t hesitate to bargain with the suppliers. Don’t be afraid. There
are suppliers who are up for negotiation and willing to meet the terms
suitable for both parties.
 Always consider whether it is cheaper to order a large quantity and how
fast the supplier can fulfill your order.
 Implement a FIFO system for inventory management – first-in, first out. It’s
even more important if you deal with perishable goods.

Step 3 – Tracking Inventory

 Once you have the inventory you should put in place a suitable method
for tracking it. It might be a simple visual control on a regular basis or a
sophisticated program. It also depends on the size of the stock and on the
speed the goods are moving in and out. If you have implemented an
inventory management software you don’t need to worry so much about
this step.
 Accurate track of your inventory is a must. You can always be sure how
much items you have. Electronic data interchange and barcode
scanning can eliminate data entry errors and regular checkup is also
necessary.
 A tracking system will provide a control over the inventory and also
monitor turnaround times.
 Whether you are using a spreadsheet or a program to keep track of your
inventory, a central database is necessary to ensure that all the changes
are visible to everybody and that no data will be lost.

Step 4 – Stock Optimization

 Determine the number of products you need to keep on hand and also
the minimum stock level. This way you won’t run out of inventory.
 Put in place a list of priority products that you always have to have in the
warehouse.
 You shouldn’t forget to keep track of those items that are about to be
sold or taken into use but are still recorded in the stock. Once they are
deducted you might not have anything left to fulfill other obligations.
 Don’t get used to the routine of ordering the same products. Always track
market trends and analyze which items are selling and which ones are
becoming popular.
 Also use market research to identify proper products for different markets,
study the economic forecast and keep an eye on your competitors.
 Have discounts and promotions to get rid of goods that have stayed in
the stock for too long. Special deals make your client happy and help you
freshen the inventory.
HOW TO DETECT AND PREVENT FRAUD
1. Screen applicants thoroughly before hiring them
Hiring the right employees is the best way to stop fraud before it happens. CPAs
say that it’s a good idea to perform background checks on potential
employees. You’ll want to screen the applicant’s criminal history, civil history and
drivers’ license violations, and verify his/her education, past employment and
references.
Since employees experiencing financial difficulties may be more prone to
committing fraud, think about requesting a credit check as well. Before
performing background and credit checks, be sure you understand and comply
with any legal requirements for obtaining the applicant’s consent.
2. Implement internal controls to reduce fraud risk
Many small businesses depend on one person to process payments and
invoices, make bank deposits, handle petty cash and reconcile bank
statements. This is asking for trouble. Your business should implement a system
that spreads and, if possible, rotates the financial duties of the business among
two or more employees.

Store bank checks in a secure location and carefully review your bank
statement each month, taking special care to look for checks made out to
cash, employees or suppliers you don’t know. It’s a good idea to have your
bank mail your company’s statements to your home address, so you’re sure you
receive them before anyone else.
Insist that all employees, especially those with financial responsibilities, take a
mandatory vacation of at least one week of consecutive days. Fraudulent
employees will often resist taking a vacation out of fear that whoever does the
job in their absence will uncover the fraudulent activities.
3. Be a role model and lead by example
An effective way to prevent fraud in your business is to create a positive work
culture. It is important that the business owner and senior management serve as
role models of honesty and integrity. If the individuals at the top take a careless
approach toward company policies and procedures, they are inviting their
employees to do the same — or worse.
Set clear standards from the beginning by implementing a company-wide
written code of conduct, and make it clear to employees that the company
has a zero tolerance policy for employee theft. To maintain credibility, be sure to
conduct a prompt and thorough investigation of every incident.
4. Implement an anonymous theft reporting system
Every company should establish a system that makes it easy for employees,
vendors and customers to anonymously report suspected fraudulent activities.
Be sure employees understand what constitutes fraud and that all reports are
treated confidentially and without reprisal.
5. Work with a CPA
Consider hiring a CPA to conduct both regularly scheduled and surprise audits.
Audits can serve as a deterrent because when employees are aware that there
will be checks of their areas, they are more likely to stay honest. A CPA can also
help you set up and maintain effective internal financial controls.