Advice for somone looking to start up?

Hello all. I have enjoyed browsing this forum for the last couple of days. Lots of good info has been offered up.

I got into the pizza business when I was 18 fresh out of high school as a delivery driver. Six and half years later I have a college degree in Biology and and am the store manager (for the last two years). I have gone back and forth between going back to school for one more year to get a teaching credential and teach at the high school level or open up my own shop. It has been a tough decision for me. After investing five years of my life and over $10,000 towards school it should probably seem common sense to do something with my degree. Deep down though I know I should go the pizza route. It just feels right. I enjoy doing what I do.

Anyways, that is just a little background information. The type of shop I would be looking to open would be a Del/CO with the option for dine in. But focusing mainly on Del/CO because that is the kind of shop I currently manage. We have seating for about 24 but dine in is a small percentage of our overall sales.

I should mention that I am looking to open a shop in 2-3 years, not anytime sooner. This is because 1) i have no money. and 2) my girlfriend is starting graduate school in the fall so she will be tied down with that for the next two years.

I am open for any and all advice on how I should go about the next two years. Specifically though, I think I need financial advice. How do I get myself in a good situation financially in the next two years? Don’t know what my credit score is but I am pretty sure it is poor. I basically have like $500 to my name right now. Owe $1500 on a credit card and $9,000 in student loans. At my current pay and hours I think I can save up a $1000 a month if I am more conscience of my spending. So 24 months from now that would be $24000. But maybe like six or seven thousand of that would have to go towards paying off my current debts. So that would leave me at like 17 or 18 thousand saved up after 24 months.


I don’t like to rain on a persons parade, but the reality in today’s economy is you will not get your dream on 18k to 24k and no other assets. Financial institutions shy away from the hospitality industry because of the extreamly high failure rate. The only way I see you getting a place with the kind of investment you have is to find someone who wants out and is willing to carry the financing.

I hope that you are able to prove me wrong. Best of luck with your dream.

Gbomb Do you know on where you plan on opening a place?

No problem. I understand. But how much money are you thinking one needs in this economy? 30, 40, 50 thousand?

Currently I am in California but I have been thinking of moving out of state, possibly back east, or anywhere really. Since my girlfriend will have the nice degree I think I will follow her wherever she ends up landing a job. She wants to teach at a junior college.

my experience, and as seen in some recent posts on this subject, is access to $100k

its not so much opening the shop, but you’ll need the cash to cover ongoing expenses when your sales aren’t up high enough to cover them. $100k will go quick if you need to cover a few months of rent, or food purchases, or taxes, or utilities, or payroll.

Seems to me you work for a few more years, move to your new town when the girfriend gets her job, and teach there for a few years while you size up the new community, market opportunities, and develop a business plan. I would offer this advice though, don’t let your vision overshadow what opportunity the new market may have. For example, if your new market has 5 delco’s and only 1 eat-in, maybe you should adjust your plan, etc.

And finally, ask yourself one more question when you have the money saved up. Is this my best option for return on my $100k investment?

Good luck to you sir…sounds like you have a great future of wonderful options and grand dreams! Enjoy them all…

Very sound advice NP. Some of us get lucky and have a good return on the investment others struggle to stay in the black and yet others lose it all.

I’d wait for the right opportunity. Could be well over 2 years, but in the mean time you should always save your money lol. You could spend the next couple years planning out your concept as well. You would be very nicely prepared for it.

Thank you.

I’ve heard the $100k number too. Unless I inherit a house, which I don’t see happening, I will need to get some kind of loan. What do you have to have to get a loan like that?

I hope so. I day dream often of my own shop and what I would have/do during the down hours of the business.

Not trying to be smart here but $100 equity in something like a house is about the only way I know of. Something that if you default on your loan the bank can get their money back.

No doubt some of our membership will chime in with stories about how they got open for 20-30K. It has happened. It is the exception.

The 100K number is a common benchmark. It can also cost substantially more. In particular, states with a lot of controls on business (like California) tend to be more expensive. Even a number like 100-150K typically assumes that you will work for a couple of years for little or no income to get launched.

An alternative for funding is to buy an existing store from an owner you have worked for. An owner that knows you will have more confidence in your ability to run the place and to make the payments and thus may be willing to carry the note. This is a different scenario from a desperate seller who can only sell if they carry the paper.

In the mean time, focus on learning about the business. Running a store from day to day is a good start but there are of aspects of business ownership that the manager has little involvement with. If you have a good relationship with your store owner, tell him or her about your ambition. Explain that what you want out of the job you currently have (in addition to a paycheck) is a learning opportunity.

Is the bank where you currently have your personal accounts one that is known for banking local small business? If not, change to one that is. Introduce yourself to a bank officer. Tell them you want to be a business owner in the future. Keep your banking relationship in perfect order. Stop in and chat with them a couple of times a year.

Pay off your credit card(s) and keep it paid off.

Start saving money.

Buy a house or condo as soon as possible… not so much as a place to build equity to borrow later but because home ownership makes you a MUCH stronger candidate for other lending.

You can listen to his radio show on the internet. Sure your gonna probably blow him off because he tells the truth…not what you want to hear.

If I could give you any advice it would be don’t have ANY debt going into this and have plenty of money to open and survive for at least a year.

Sounds impossible but 3 out of 5 pizza places go under in the first five years. I know we would never ever have survived when we opened our first place had we been in debt. We started small and built it up as we could afford to.

Many people have great ideas, great concepts, awesome food but really never have a chance to survive because they are in debt overload.


Thanks Kris.

Whatever you do DO NOT look to your new business as a source of income for at least two years. I counted myself lucky in that I bought an exisiting business for $40,000, had other interests that I looked to for income, and left any and all income in the bank for approx two years. ( Yes, even all that tempting cash lol…) So, if you take $40,000 and $30,000 a year to just survive, times two years, looks like you need $100,000 and no debts to me!
you can work seven days a week, 12 hours a day replacing a minimum wage employee, take the odd paycheck and odds are go broke after a year.
Hmmmm.I suppose that might be my theory, if you have to put yourself on the schedule instead of that $8-$10 an hour employee to break even/make money, DO NOT DO IT!!! Go to work for minimum wage elsewhere. It’ll have a happier ending.

Hi Gbomb:

One thing about the pizza business ,or any other, is that your earnings will to a great extent depend on how much you invest.

As an example: If you go into the hole digging business and you equipment consists of a shovel you will be lucky to earn more then a low wage. If your buy a back hoe your potential increases many fold and if you invest in a drag line you begin to have the potential to earn a substantial income.

The pizza business is evolving. Shops are getting more automated ergo greater investments are required. Operators who are putting $250,000.00 and more into their business are doing very well.

George Mills

*No Money
*No Collateral
*No Business Experience (delivery doesn’t count)
*Poor Credit
= No way loan

Stick to Biology Dude !

I know this thread is old but it’s worth saying that there are those out there who have gone the mobile/catering route and worked that to generate needed income then open a brick and mortar shop. Could be a good avenue for those with out the needed capital.

Obviously everyone answering this start up question is thinking “first class”; Here is a ‘barebones’ start-up: Oven (used, deck) $1200, refridgeration (used, biggest and cheapest you can find) $1000, Counters, work and customer type: build 'em yourself, $300. Cash register, $200. One table and four chairs, $150 times how many you need. That’s about $3000. Obviously there will be additional things, like hoods,and rent, that are part of the building and are dependant on where you are trying to locate. And depending on what kind of dough you want to use, you may need a mixer, sheeter? etc. It is possible to simply buy pizza dough from people like Sysco, not the best option, but you don’t need the equipment to make your own, then. The secrets are: buy used, and buy when you find the right stuff, even years ahead of time. I set up a shop with less than $3000 out of pocket, and not that long ago. I also see people talking about employees, and not having any biz to start with…If you have no customers, to speak of, why do you need employees? Money to buy supplies/food? Obviously you will need some, but, again, if you have little biz, you need little supplies. Bottom line: there are two ways to open a biz. One, lots of money. And two, lots of work, BY YOU. If you don’t have the money, plan on working hard for quite awhile. And hope your wife can put food on your home table for a while. Except for monthly bills, mainly rent, even a ‘baby’ biz should pay it’s own way from the day you open your doors, as most costs are dependant on how many customers you have. No customers, no bills.

Mr smeagol8 is correct. What he says is possible but the probability of success is very remote.
I have been in the food service equipment business since 1953.

I have seen so many heart breaking cases of under funded ill equipped food service business struggle, owners work themselves to the limit of their endurance and eventually fail that I cannot encourage anyone to take that route.

George Mills