A business bought on a shoe string will IMO always be a shoe string business. If you haven’t got money behind you you will at some point more than likely fail. As ‘TheMax’ clearly illustrates there are a dearth of shops available to move in right away - why??? well because most have been bought on the same principle.
This is NOT a cheap business to get into. ALL of the most successful businesses in this market spend money every month on marketing and all the other know essentials but of course you can bet that the oven will break down, refrigeration fails, insurances are due, sign-age breaks down, a door handle, a till, a POS screen, the list is endless and we’ve all been there.
I’m not saying it can’t be done but the remains of the many many people who tried to make it work and failed are around all of us. As bodegahwy states even 10 years picking up an old (1 year old) shop @35k cost another 75k to run before he came to profit.
TheMax says ‘From doing massive door hanging, flyers gorilla marketing you can get a shop making 400-500 a day from the first week if not more’ of course this does cost money and for a new business you HAVE to make multiple impressions on most customer before they will even think of trying you and you NEED to carry on repeating this marketing to retain and increase the customer base. Getting 400-500 days to fund another ‘massive door hanging’ or similar is very hard and when your in the shop you have to pay someone to do it for you (again at a cost).
I know I’ll never get a job as a motivational speaker but the stark realities of this business are a far cry from the dreams of people with not much money behind them. To the original poster 40k is a lot of money but I’d question if it is anywhere near enough to have a solid pizza business! If I had just that kind of money I certainly think I’d look at other businesses first.
IF you are buying a low end location your not going to be spending 22k a month carry cost. Most of the independents I see are not in A locations if they are a delco only. From doing massive door hanging, flyers gorilla marketing you can get a shop making 400-500 a day from the first week if not more.
TheMAX,
I completely disagree. This is the same crap that makes ordinary joe cough up his $40K life savings to mak_e eas_y m_oney in the pizza business. *As a low-end pizza (biz) broker this is a great way to s_uck cash from ordinary people…and set them up for complete failure. Of course the higher-end brokers pan their crap on late night cable, “you too can make $10K/mo working part-time from your home.” Utter BS.
The stark reality is: making ANY business successful is going to take a lot of work, some luck, a very good plan/research, and sufficient capital.
I’m surprised nobody has mentioned the cost of getting an existing place up to code. Most likely if you buy an existing shop, you’ll have to spend extra money to get it all up to code.
Not to mention the couple grand for lawyers to do all the purchase and asset transfer agreements.
The problem with your decision process is that desire and passion dwindle after a few months with no money and not being able to concentrate on what you love to do cause you are always scheming to find money. Conversely the rent, insurance, equipment payments, gas, electric, water, insurance, phone, advertising, maintenence, etc never lose their passion or desire. They come every month rain or shine, business or no business. In another life I was a small business consultant and the #1 reason new businesses go broker is under funding. You can argue about that all day but that is the fact
Credit is so important and hasn’t been mentioned. If you have good credit you can lease equipment and get terms with vendors and all that fun stuff. You can really lower the dollar amount shelled out to begin. If you go the used equipment route you can expect to replace every single piece within a couple years. Ovens and mixer excluded. Also with used you really need to know what your looking for.
Other than that most posters on here are right. 150 k to get into an empty shell. Minimum. I would look for a failing place thats in a good location (this is the route I went, guy was doing 1k a week, within 6 years I broke a million a year). Do some remodeling, put up signs saying that and new owners. Remember a failing business is not always a bad business. I have 3 reasons a business that does good sales find themselves failing. Bad money management (bad credit included usually), drugs/gambling & women (divorce and or womanizing).
As I read your posts and other threads (about equipment choices, bread mixtures ect.) I am amazed at all the things i simply did not know. I had a 1st draft business plan done and was planning to get a loan from the bank within the next 6 months for a total of 50k (after I completed my research such as on this site). I thought that would be enough to open, but boy am I glad I found this web site. You guys really helped me out with a major decision. It scares me to know how much I didnt know before, and i feel the more I learn the less i know.
Death is in the details thats for sure, for example i haven’t even started researching marketing prices yet and had no idea you could spend another 20k-40k in marketing. I never thought it was such hit or miss to get a successful business going. I have heard the statistics that 1 out of every 5 business become successful, but in the back of my mind just kind of thought the other 4 didnt have hard working owners or didnt put in enough money. I could have easily fallen into the not enough money trap.
Where i live there are (im not joking i counted it) 7 pizza places within 4 miles of each other (and its just a suburb of chicago not the city) and their pizzas all taste like crap compared to mine. I thought to my self if they can all make it then im sure i can find a good location somewhere else with less competition and make it too but i will definitely rethink everything now.
Where i live there are (im not joking i counted it) 7 pizza places within 4 miles of each other (and its just a suburb of chicago not the city) and their pizzas all taste like crap compaird to mine. I thought to my self if they can all make it then im sure i can find a good location somewhere elss with less competition and make it too but i will definately rethink everything now. Thanks all for your info.
Nooby,I was in the same boat as you at one point. I wanted to open a delco and was on a limited budget. But I managed to skim about $35,000 off by doing most of all my own construction work which only basically including doing drywall which I learned to do by taking a class at Home Depot. I did all my painting and carpentry. Luckily I also had a friend who was licensed in electrical and plumbing work. I also had family members willing to work part time for me until I got on my feet. I was able to do this all at $48,000. Six months in we are doing great business.
Nooby. You already learned one of the most important things to be a success in your business. “LISTEN”
to those who are already a success in the business. Don’t be like some of the people on here and argue with the people who not only talk the talk, but walk the walk. I will say two more things then wish you good luck. 1. Try to make all your decissions based on Facts, Options and Evils. If there is no clear answer by having all the facts and knowing all your options it will be easier to pick the least of the evils. 2. Know that no matter what in business you are going to make mistakes, the key is to make the same mistake the least amount of times as possible.
Thats it? 7? Dang, I should have moved there… Where I’m from (burbs of Chicago too), theres 35 just in our town alone. That doesnt include the surrounding towns that are pretty close and still in our market.
Unlike you, we didn’t do much research before we spent well over 250k in build out (and minimal, I mean minimal marketing). So you’re already taking the right steps for pretty much anything you wish to pursue.
Maybe I am way off here…but I am considering starting a shop, I own my own building on the second busiest street in a city of 70k. I have 1500 square feet left to work with. I have business insurance in place that will only increase 2k per year with a pizza delivery biz. I will be doing all the renos myself as well POS will done in house as I have 2 high level tech siblings and I currently handle the network for my existing business. 75 percent of the start up work will be done by myself. I have no firm opening date and can work at my own pace(aiming for 12 months). I will be spending a good amount of time looking for used equipment and buying a NEW oven and NEW POS/OLO software with hardware website assembled by myself. Small wares will be new, customer areas all new, 52 lcd tv in waiting area etc… and my marketing budget ZERO for the first year. Zero cuz I do not need to get paid and I will rely on exposure and the 6000 clients that visit my existing business in my plaza.
I believe I have an advantage over many others that start up new, in several areas and I anticipate 75k in costs. However planning on 100k…I have no idea how to effectively start up with less, and be successful at the same time. I am not expecting to be an instant hit, but at the same time I will be planning for it just in case.
Ok, so I cut your words up quite a bit but zero marketing !!! is a big big no no (IMO). Even the big 3 spend thousands of dollars in marketing when they open a new store, even those in very high profile places and even though they have nation tv etc etc. Why do they do this??
The fact you have a business plan with $0 is a big mistake IMO.
That is how I started out and in hind sight wished that I had spent some money on marketing because once I did the business soared. I could have been profitable much earlier in the game.
What is the object of marketing? To gain market share and eventually profit. This is not needed in the first year or so for me. Call it a 12 month warm up.
Its not that I will not be able to market, its a choice I am making. I have no hands on experience of day to day operations in the pizza world. I want to develop my own system, recipes etc. When I am comfortable that this has been accomplished, I will then start marketing. I am lucky in the sense that I currently have a large advertising budget with my other business. When the time comes the advertising ROI will higher due to the ad buying power of both business’. I have zero need to get paid, I expect on running a loss for the first 2 years. If that changes I will also be prepared.
My point was not everyone has that luxury and I understand that…so how one thinks they can start up with so little is beyond me. I am sure some succeed, but I am willing to bet far more fail quickly.
One problem of not marketing in the first year is that it is easier to get someone to try you when you are new that when you’ve been open a year. There are restaurants here that have been open years and I’m just not in the habit of going to them. A few restaurants that have opened recently and have pushed their grand opening marketing have gotten me in and turned me into a regular customer. These places can now get me in easier, while even when the old restaurants do their marketing now, it just falls on deaf ears in my household.
Excellent advice… I plan on kicking in my marketing in a big way when ready… lots and lots of very lucrative try us out deals(many free)… a few new wrapped delivery vehicles and probably a relentless radio and ad campaign. Marketing is my 20 plus year career so I feel pretty confident I can pull them in…I just want to make sure I can keep them after I get them here. I built my current business all on customer service that was second to none…and I plan on doing the same for this.
Considering what you are trying to do I don’t believe your way off. Like you we are located in Ontario Canada by Buffalo, NY. I have experience in other businesses as well as restaurant business. Our place is located in a town of 55k and we are in one of the busiest plazas in the city. We opened up with no marketing materials other than a sign above the shop and 2 signs in the window. We did not advertise in the 1st year. After making a detailed business plan which included our menu, I priced new and used equipment and bought used except for fryers. We did all renovations ourselves with exception of hood and gas hookups. For the hood and gas hook ups you absolutely need the pros. (I just priced a new 8’ hood installed price was $14,000 plus tax.) I used my own money to purchase and set up everything with no loans or credit lines. All partners involved had other incomes to support us and we all worked the place; two of us full time. Used equipment purchases were approx $20,000; new equipment with small wares was approx $24,000 and stock was around $3,000. My reserve was another $50,000. Our main menu was fish, chicken and fries. We also offered subs, onion rings etc. By the end of the 1st year, we were covering monthly costs with no pays as long as no unexpected charges came up. This year 4th year in we are adding pizza slices to our menu. I bought all equipment used.
The key to accomplishing successfully what you want to do is planning and experience.
Good Luck
CaptnSammy
I’m sorry I mis-interpreted your post I thought you were asking for advice rather than making a statement.
I didn’t actually realise that marketing was there to gain market share and eventually profit. I mistakenly thought that you might be starting a business to gain market share and profit as soon as possible rather than after a year when you’ve developed your recipes and systems etc.
As you say whilst you have no experience of day to day operations in the pizza world you, unlike everyone else, do have the luxury to plan to run a loss making business for 2 years so good luck to you.
“Maybe I am way off here…but I am considering starting a shop,
I have no idea how to effectively start up with less, and be successful at the same time. I am not expecting to be an instant hit, but at the same time I will be planning for it just in case”
If you dont feel like advertising that much, but maybe just want to get some local exposure for a few orders/day so you can practice, (1 block) you could give free cheese pizzas to the local businesses in your plaza and neighboring areas during the work day. The boss can put them in the break room for people to have a slice when they’re on lunch.
It may sound kinda corny but it works. A privately owned sub-sandwich place did that for me at a retail store i worked at while i was going to college. All my fellow employees were very excited to have free food waiting in the break room, its just a nice thing to break up a rather monotonous day. It makes a huge impact on the minds of a potential customer in a way no other advertising can. We even got a discount card for 50% off one meal that were passed out to us. It made at least 15 people from just my work place go to them on their lunch breaks regularly to order something. So that guy got his investment back and then some. I went there a lot when i wasnt working, and brought friends with me. So its a great way to just do a slow customer build, without giving up on marketing at all.