Starting up a business for under $10K

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Finch

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#172056 10-May-2015 13:30

Hello.

I woke up this morning and thought "I wonder if I can start up a business for under $10K" Is this at all possible? It would be a business in the hospitality industry, more specifically food.

Right now it is simply an idea, literally have done no research on this. It would be in the wellington region, at a small premises and I could basically put as many hours in as needed, at least during the day.

Have you had any experience starting up a business? More specifically have you started up a business in the Hospitality region? What was your budget? What was Hells Pizza's budget does anybody know?

I think I read/heard something a little while ago that 3/4 businesses failed within the first 6(?) months. I am not sure if that was worldwide or if it was in NZ.

Anyway, as mentioned above, I have done no research, simply looking into the idea. Probably just a spur of the moment thing but for now I am interested in getting more information :)

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#1301409 10-May-2015 13:33

Many small businesses are setup as a part time thing, while you a still a wage slave. The big cost is your wages, so if you it is going to be your main source of income from day 1, then 10k won't get you anywhere.

Finch

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#1301410 10-May-2015 13:34

mattwnz: Many small businesses are setup as a part time thing, while you a still a wage slave. The big cost is your wages, so if you it is going to be your main source of income from day 1, then 10k won't get you anywhere.

Thanks for the reply.

No I would still keep my current job, working afternoons/evenings/nights.

nakedmolerat

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#1301411 10-May-2015 13:36

You can start lawn mowing business at that cost.

Food hospitality business can be a bit difficult unless you already have prior experience managing one.

Batman

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#1301432 10-May-2015 14:06

i don't know much about business, but the most successful ones I can see, have these things

- start small, don't over commit with clients/capital
- do a few things for a few people very well
- never shy to ask/borrow instead of buy/buy
- able to adapt/change

but I don't know ...

mattwnz

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#1301447 10-May-2015 14:34

The easier (although not always) path many people take is buying into a franchise. Then you have an established brand, and you may also have some certainty of cashflow and clients, and there is certainty on processes and equipment and space you need. But there are big costs with that and risk, and other costs that you may have to commit to. Setting up your own business brand potentially requires a lot more work initlaly, but maybe more satisfying, and those are the types of business that are more likely to fail IMO. The other option is to buy into an existing business.

Virgil

Dangerous Chocolate
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#1301455 10-May-2015 14:53

We have done this. 2 years ago my partner was made redundant from her office job, and so we indulged her long term passion for making chocolate truffles.

As you will need a council permitted kitchen for anything involving food, we rented a small shop in a cheap part of west Auckland and proceeded to outfit it as cheaply as possible to meet council regulations. We spent about $28,000 in the first 9 months to get it off the ground - and that is not including wages or salaries or directors fees back to us at all.

Fortunately I have been able to keep working independent of the chocolate shop, so that has paid personal rent and food and stuff. The good news is we have absolutely no bank or credit card debt, so that is a good feeling!

PS, on Mother's Day, a Chocolate and Coffee Shop is a good shop to own :-)

Lurking ...

timmmay

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#1301465 10-May-2015 14:58

I think I saw something a while back that to buy into the burger fuel type chain was starting at $150K... but that could be too low. Not sure if that'd include fit out either.

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wanghou168

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#1301482 10-May-2015 15:31

any of the franchise business will be 100k plus, there is renovation, building, stock and franchise payment etc.

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macuser

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#1301486 10-May-2015 15:58

I'd try do a baking company that supplies cafe's with unique products. Cronut's were cool for a while and I'm sure they were supplied by only a couple business' (though I don't actually know that).

You could ask to use someone else's kitchen.

There are also cool liquors that can be made with a small investment, obviously there are difficultys with making alcohol and having the licenses but that could be an avenue as well.

JimmyH

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#1301499 10-May-2015 16:58

Depends on what type of food business.

A catering business where you did most of the stuff yourself on a part-time basis, from home using mostly existing gear, maybe.

Otherwise I suspect your budget is too low. Esp if it involves premises and equipment, let alone staff and vehicles.

The other issue with food is that the councils go compliance crazy on you. Getting all of the required food handling certificates, premises inspections, and permits is time consuming, and can be expensive. Particularly if they start requiring things to be done to your kitchen, this could blow your budget as well.

mattwnz

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#1301501 10-May-2015 17:06

JimmyH: Depends on what type of food business.

A catering business where you did most of the stuff yourself on a part-time basis, from home using mostly existing gear, maybe.

Otherwise I suspect your budget is too low. Esp if it involves premises and equipment, let alone staff and vehicles.

The other issue with food is that the councils go compliance crazy on you. Getting all of the required food handling certificates, premises inspections, and permits is time consuming, and can be expensive. Particularly if they start requiring things to be done to your kitchen, this could blow your budget as well.

Exactly,. This is one reason why so much food is now imported, where the food is made/prepared outside these regulations. There is also an ongoing certification cost.

Fred99

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#1301729 11-May-2015 09:32

mattwnz:
JimmyH: Depends on what type of food business.

A catering business where you did most of the stuff yourself on a part-time basis, from home using mostly existing gear, maybe.

Otherwise I suspect your budget is too low. Esp if it involves premises and equipment, let alone staff and vehicles.

The other issue with food is that the councils go compliance crazy on you. Getting all of the required food handling certificates, premises inspections, and permits is time consuming, and can be expensive. Particularly if they start requiring things to be done to your kitchen, this could blow your budget as well.

Exactly,. This is one reason why so much food is now imported, where the food is made/prepared outside these regulations. There is also an ongoing certification cost.

There's another even more difficult barrier to overcome - the way the supermarket chains dominate distribution to the consumer. That makes entry to the volume market effectively impossible unless you've already established that demand exists, that margins can be made, that quality/supply can be sustained. Finding an incentive for a supermarket chain to put product on the shelf which competes with an established brand won't be easy or cheap.

Finch

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#1301774 11-May-2015 10:24

Thanks for the reply. My product wouldn't be stocked in the supermarkets, I was heading towards making fresh burgers. I would aim to bake the buns, make the patties myself etc. I think that would be quite time consuming, especially the buns so would probably look at buying those instead. However all sauces/meat products etc would be made by me. Again, this is simply an idea and nothing more :)

Smithy100

180 posts

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#1302178 11-May-2015 18:39

Sounds like a lot of time for a little return.

Whilst considering the ingredients your margins may look ok, but add in your own time/wage and you'll need to be selling a lot of burgers to make it worthwhile - especially after spending time making the ingredients.

If you need to buy any equipment, both for making the ingredients/burgers, and/or for selling them, even second hand... ten grand may not go a long way. Then there's distribution costs unless your selling from the point of manufacture?

Marketing costs - even social media, it may be "free" but the time investment alone is not insignificant.

Good luck... if/when I see a Finchburger down here in Wellyfornia I'll certainly try one!

Sideface

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#1302186 11-May-2015 18:48

Smithy100: Sounds like a lot of time for a little return. ...

+1

Keep your $10,000.

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