Skills needed to setup
Networking skills: It goes beyond email and social networking; you have to make it personal. Meeting business contacts for lunch or coffee or even in seminars and workshops has a much better impact than comparatively impersonal communications online. You also stand a good chance at broadening your circle and establishing a wider client base.
Sales and management sills: Effecting persuasive proposals and employing feasible sales strategies play an important role in your success. Efficiently managing your time and resources ensures more productivity at work.
Where to setup?
While it is easy to setup a food delivery business anywhere, it is most profitable to startup in metropolitan cities. You may face more competition, but you’ll also find more takers for the system, whether it is in the form of participation from more restaurant owners or clients willing to place orders with you.
Further, you can kick start your business by catering to clients with bulk order requirements for employees and visitors.
Funding and finances
To get a business off the ground you’ll need capital for professional fees for experts, payment/salaries for employees, marketing/ advertising expenses, etc. The food delivery business is one that doesn’t require much startup capital, depending on how you setup your operations. You can start out with as less as Rs 15 000. If you are looking for a more elaborate setup that requires more capital, you’ll need to look for investors. Many tend to turn to friends and family to invest in their business, while those with stronger financial positions look for aid from commercial lenders. Other startup funding sources include:
- Incubators, who look to incubate your business idea, develop a prototype business model and offer financial and knowledge inputs.
- Accelerators look to mentor businesses and work with them for a while, honing their business plans, before they decide to invest in it.
- Angel investors look to aid startup ventures gather a sound footing rather than hope to reap extensive returns from them. They can either lend one time seed money or continue to monitor the business and inject cash flow where necessary. Angel investors are more focused on investing in a person rather than the business, and consequently offer better terms than other lenders.
- Venture capitalists are professional investors. They usually manage a fund and look for profitable ventures to invest a part of the fund. They are also likely to look for higher rates of return than other lenders.
A basic list of things you’ll need to start a food delivery business includes a business permit, conveyance (bicycles, two wheelers or vans), list of restaurant businesses willing to be listed with you, computers and telephones. You can decide your working quarters based on your operational setup: whether you have a small operation that doesn’t need an office space to meet food suppliers and other business associates, or one without parking spaces if you are not taking up deliveries yourself and are organizing it through the respective businesses instead. You should also plan the following:
- Zero in on the location: Depending on your target audience, decide on your location. For instance, you can opt to setup near an area which houses smaller private offices that don’t have a cafeteria and where employees step out for meals. Remain strategically placed with your restaurant suppliers as well. If you are renting a commercial space for your operations, look for economical renting spaces as you don’t need a storage centre and neither do you have to meet with business contacts in your premises; rather, you’ll have to meet them in their offices.
- Decide on your operations: There are important questions to ask yourself to understand and plan your operational needs. Do you intend to deliver only one meal a day, say dinner, or are you equipped to handle breakfast, lunch and dinner? Are you promoting homemade food prepared by home cooks, food from various eateries in the neighborhood or specially prepared meals by gourmet chefs? Can you offer your services throughout the week? Do you intend to pick up the meals from your suppliers and deliver them to customers personally or do you simply intend to interface between the two and claim a percentage?
- Delivering food or organizing their supply: If you undertake the latter, you don’t have to invest in vehicles and delivery employees. But you will have to invest in creating a website and maintaining it efficiently, complete with payment options and menus from various eateries. For your efforts, for every order placed through your website, you will receive a commission from the respective restaurant, say up to 12% but these rates are to be negotiated with the restaurant when you approach them to be a part of your service. You can also allow customers to make reservations through your website or telephonic service. For reservations, commissions are usually charged based on the average meal cost per person. But avoid focusing extensively on reservations as they are not profitable if they do not materialize.
- Get in touch with eateries and agree on terms for delivery: Within a set radius, contact restaurants and other food services and ask them if you can take orders on their behalf. Request outlet managers to place menus or price lists with you for distribution or to list in your website. If you intend to organize the pickup and delivery of food yourself, you will have to stipulate delivery charges for customers. If you take up bulk deliveries alone, you can hire a private carrier and his vehicle instead of investing in vehicles yourself.
- Follow the registration process for your business according to your city and state laws.
- Discuss your tax registration process with an accountant or legal expert and file for a PAN card.
- Types of business setup: You can setup as a sole proprietor if you are willing to take up personal liability for any losses. Alternatively, you can also be a sole proprietor with limited liability. You can also register yourself as a private limited setup or as a partnership enterprise. In the former, your liabilities do not extend to your personal assets, while in the latter the terms and conditions of your partnership dictate the contribution of your capital and the division of profits and losses. An accountant or a company secretary can help you decide on the best type of business setup for you.
- Depending on your investment, consider an appropriate insurance cover for your business as well.
Challenges and advantages of the food delivery business
The biggest advantage of running a food delivery business is the flexibility it offers – you can take it up either part time or full time, and you can keep it traditional by supplying healthy, home cooked food, or cater to a wider circle and offer more variety by networking with various eateries. If executed well, you get to show more profits than the restaurants you list. You don’t have to prepare the food either, so that leaves you with the responsibility of only planning and coordinating the deliveries well.
The delivery business also allows you to cut corners when it comes to infrastructure and start out on a small scale. The variety in the menu guide and your website rankings does the selling for you, so your investment in promotional / marketing strategies is comparatively less.
The downside to it is that most restaurants and fast food chains offer deliveries of their own and customers prefer to call them directly. They need a good reason to call you instead of the food chain directly, which means you have to offer additional services to impress.
How to promote the business and attract clients?
Promoting your business on the right platform to get visibility is important. While you can get away with low cost promotional tools like flyers and brochures distributed along with newspaper deliveries (food menus are better retained than other flyers), you can also opt for effective strategies like advertising in websites of businesses that you undertake delivery for. Expand the delivery radius compared to the ones offered by the food chains so more customers can reach them through you.
Online discount codes are quite popular. So negotiate with restaurants for good discounts or complimentary beverages to pass onto your customers.
Further, you can also offer other innovative solutions like personal chefs and catering references for clients. Place more than just menus and price lists on your website – share reviews and encourage restaurateurs to post the day’s specials too. Your website can also contain tips and other informative articles on food and lifestyle that will get readers’ to visit you otherwise as well.
The food delivery business is an ideal startup venture. Considering the low investment, you can break even quite soon in the food delivery business, in fact in as less as two to three months. Your profits will also go up from an initial gross profit of around 20%.
Managing your business effectively with a small business software
The most critical factor in succeeding with your business in the beginning is to focus on spending as much time as possible on revenue generating activities and as little as possible on admin activities. This will help you grow cash flow and give life to your dream.
Software designed specifically for micro or small businesses can make the whole admin process much simpler and easier. This is why Zoostr was created. Zoostr helps you reduce the amount of time you spend on admin. Quickly & easily create price quotations, invoices, purchase orders, sms marketng campaigns, schedule lessons, track payments etc. And the best bit? Its free to use.
Sign up for your free account here.