How do I get my business idea off the ground?

October 20, 2006 10:16 PM

I'm seriously thinking about starting a small business/personal project, but the logistics are a nightmare. Help me get it off the ground, Hive Mind!

I have identified a need in my area. I live in a rural town which happens to have a large college in it. There are no food delivery services here outside of pizza places, so I want to start something akin to Pink Dot (www.pinkdot.com, not sure how to put links in here) except we would deliver anything you can buy locally. In theory, someone would call my business, they would tell us what they want (and where to get it if we don't know), we would call the business to get a quote, call the customer back with a price, and then we would go get it for them. Simple right? This is where it gets complicated. These are my concerns:

- Unless payment is upfront, I could see people using this service to request high-dollar items and then just robbing the driver when he gets there. However, if payment is upfront we may run into an issue with items being out of stock and we couldn't take cash. Not sure what to do about this one.
- I don't know how much would be reasonable and marketable to charge.
- Without a lot of drivers, a high volume of calls could make the service useless to most customers. I imagine most calls would just be for food from sit-down restaurants and that's not something people want to wait for while we finish our backlog.
- I don't know how to take credit cards, which would be the payment method most used.
- I'm not sure what the laws on delivering alcohol are.

Anyway, you business gurus probably have spotted several holes in my scheme, because I know there are lots of things I haven't thought of. If it turns out to be profitable, I may invest in a brick-and-mortar location, but that's a huge if! So I ask you geniuses of the net, help me get this idea off the ground!

posted by Willie0248 to work & money (14 comments total)

Work with the businesses. Get specific delivery menus agreed to with the businesses. You add a delivery fee or hide it in the menu price. Work out with the businesses how to handle false calls (you of course need caller ID etc.). Get a credit card account as everyone uses credit for everything these days. Put suggested tipping amounts on the menus?
posted by caddis at 10:24 PM on October 20, 2006

Oh, don't even bother with the alcohol.
posted by caddis at 10:25 PM on October 20, 2006

dude.

waay too complicated. focus on one thing and do it well.
you're in a college town infested with pizza delivery joints while the civilians are yearning for more.

the people wanting delivery are not people who want almost anything delivered. the people wanting delivery are (if it is a normal college town) probably drunk and hungry.

so with a plan of being a delivery service, you ought to focus on one of these options. and since i doubt an alcohol delivery service would pass legal muster in many states, maybe you ought to focus on food.

not pizza, of course. burritos? sandwiches? crepes? other non-pizza foods (of which there are many, of course).

i guess the point is to find one food to be the best at and business will follow from there
posted by localhuman at 10:29 PM on October 20, 2006

As for the comment...

Without a lot of drivers, a high volume of calls could make the service useless to most customers. I imagine most calls would just be for food from sit-down restaurants and that's not something people want to wait for while we finish our backlog.

...I wouldn't worry about this too much. Having more business than you can deal with is a good problem to have. How many people have opened restaurants while thinking "Oh, but what if we get really busy and I have to tell people there's a 2-hour wait for a table"?. Succesful restaurants are like that, and having more demand than supply is an enviable position to be in. If you find you have a lot of demand, raise your prices and then use the extra money to higher more drivers. The worst thing that could happen is that people will be so frustrated that they might give up and not call you again, but that would just mean that your demand would fall back down to a level you can handle and everything would even out to a happy medium. No problem.

As for credit cards, I know you can get credit card processing from www.authorize.net, my company uses them.

posted by Vorteks at 10:54 PM on October 20, 2006

succesful = successful, higher = hire. Sorry.
posted by Vorteks at 11:01 PM on October 20, 2006

I think for this to work you're looking for mainstream workaholics/busy-family types with plenty of disposable income, which might be a scarce demographic in a small "ruralish" college town. The working class really can't afford or care much for this, college kids are just fine with cheap pizza. Arguably the more educated folks (who make up the town's upper crust) will tend to have rather traditional, healthy, or specific dining habits and barring that will go to a restaurant for the atmosphere. I think it's the techie/play hard work hard types that go for this niche. Yeah, it's sort of my own theory so do what you will with it.

Though the modest amount of business you could get might scale well with your plans, the problem I see is largely with getting the word out. I think it could take a year or two to spin the business up to the point where people remember to think of you when planning a meal. It may be an uphill climb... yellow page ads are expensive, people these days tend to ignore or get annoyed by flyers, web sites will reach only a tiny fraction of people, etc. What I see working are things like using your cars to advertise.

When I lived in Austin I used one of these services, because I was making good money, pizza was old, and we didn't have time to mess with dinner or slog through traffic for takeout. Perfect niche. But the sum of the markup and the tip kept me from doing this type of premium thing more than a few times.

Anyway, just my $0.02.
posted by rolypolyman at 11:05 PM on October 20, 2006

There are several such companies around Seattle and Redmond where I have lived. I believe they tend to make most of their profit on the transactions through what are essentially kickbacks from the restaurants. EG: We will deliver your stuff for X of the usual price and pocket the difference. They also probably make some money for charging to advertise the restaurants in their flyers / menu pamplets.

And the ones in Redmond make a big percent of their sales delivering to the various Microsoft campuses. Over 25,000 employees in Redmond and they work late a lot (free dinner).
posted by Riemann at 12:18 AM on October 21, 2006

1. You should have a menu that you publish. That's going to be a) your main advertising medium and b) the way that you make this whole thing somewhat predictable.

2. There are people in most cities that have excess transportation capacity from time to time. They are called taxis, and in Montreal, the original multi-restaurant delivery service was actually called "Takeout Taxi". See if you can sign up some drivers at least for overflow delivery capacity.

3. Find someone who has worked in a delivery-based business to help you on the security front. Understanding the problem is the most important thing.

4. The fees for customers will have to be relatively low, and if you're dealing with 10+ menus in your flyer, you could establish your own pricing. I wouldn't do that though. I would charge a flat fee ($2.50 or so per restaurant per delivery) for the service and publish the same prices in the menus as the restaurants charge for onsite customers. I would come to an agreeement with the restaurants to a) charge you less than list based on $X of business per week or month or b) charge them to be included in your menu (this is revenue they otherwise would not have access to). The second option is not very likely to be popular if you're new.
posted by mikel at 5:18 AM on October 21, 2006

There is a company in my (college) town that might give you some ideas. They only do food, but you can get just about anything you hunger for. They seem to be doing decent business because I see more of their signage on vehicles.

Gatorfood

Might it be best to start with one genre of items, ie food, and branch out from there?
posted by iurodivii at 5:23 AM on October 21, 2006

You can make various arrangements with different restaurants, whatever they want. In my experience doing exactly this kind of business, we had some places that would call the delivery service when they had a customer that wanted delivery. They did all the marketing and taking orders and such. But just as often we would deliver stuff from places like McDonalds where there was no such arrangement.

Delivery of miscellaneous other stuff, from legal documents to auto parts, was also part of the fun. Groceries and cigarettes were also fairly common orders, and occasionally some mysterious packages that to be delivered from one place to another with no questions asked. To be able to get enough business to keep drivers on call all the time, rather than just at peak times, it makes sense to get as much diversity as possible in your customer base.

Normally, we wouldn't have to "call the business to get a quote". People typically know approximately how much a quart of milk or whatever they want is going to cost. Just give them the receipt from the store; unless it's some crazy high-ticket item, they'll normally be happy to pay whatever it cost.

Delivering alcohol may be difficult if you want to stay legal. Where I lived, it was required that we go to the customer's localtion first, verify they were of legal age, then go get the booze. In practice that wasn't always done. Beer was probably the most popular item to order, overall, so it may be worth doing. Very busy on weekend nights. Good tips from drunk people. Your market may differ.

Ideally what you'd want for drivers to get started are a bunch of students with cars and the willingness to take a shift any time, on short notice when things get busy. You'll need some way to communicate with them while they're on the road. Cell phones could work I guess, radios like those you've seen in taxis are better. Depending on the density and size of your city you may have to charge more than $2.50. That's not much to split between the driver, the dispatcher, and the business operating costs.
posted by sfenders at 5:57 AM on October 21, 2006

If you can find a company offering this service in a smaller community such as yours, see if you can arrange a brief apprenticeship. Work for them for a couple of weeks for no pay, for a chance to experience not only delivery and order-taking, but learning what it takes to run the business. Perhaps they'd agree to show you their books, and you'd be in a better position to decide if you can make this work in your town. It could shorten your learning curve significantly.
posted by Snerd at 6:51 AM on October 21, 2006

Entrees on Trays (http://www.entreesontrays.com/) is a business here in the Fort Worth, TX area that does exactly what you are looking to do. Take a look at the website. I know a guy that works there, so perhaps if you are interested in an inside view of the operations, I could hook you to up over email or something.
posted by jxpx777 at 10:17 AM on October 21, 2006

Delivery time is what's going to kill you. The only way to do this profitably and keep your prices down to something people would actually want to pay is to buy in bulk at a discount from the merchants what you think people are more likely to buy and warehouse it, but you'd need to convince the businesses to give you that info and somehow convince them that you won't be stealing profit from them.

My initial impression is that this is a non-starter except in a highly populated area where it's inconvenient to drive and occasionally unpleasant outside.
posted by Mr. Gunn at 5:47 PM on October 22, 2006

When I was in college some students on campus set up just this kind of business. It was oriented toward students, so the food was pizza, cheese steaks, hamburgers, subs and other fast, cheap standards. Today, I would add Starbucks or other good coffee. They had the advantage that the local pizza joint did not deliver. They charged a nominal delivery fee, and of course the students tipped for crap if they tipped at all, but the business made a ton and they were able to sell it to some underclassmen upon graduation. This sort of business can work, you just need to adress your market, your costs and of course execute well.
posted by caddis at 8:03 PM on October 22, 2006