 Are you thinking about starting a food business? If you are, make sure you guys pay close attention because in this video, I'm sharing with you four huge mistakes that I've made. So then that way you can go ahead, build your food business and avoid these four mistakes at all costs. Make sure you guys keep watching. Hello friends, my name is Wilson, your friend in helping you build a profitable small business and a thriving food business. If this is the type of content you enjoy, if you wanna support this channel, go ahead and smash that like button because that just shows the YouTube algorithm that this is good content and we make more of this for you. So go ahead and smash that like button. For my previous videos and all the emails that I'm getting, a lot of you guys are interested and passionate about food. But before you dive right in, before you fork out all your hard-earned money, I want you to make sure you guys watch this video because it is super important for you to understand the pitfalls. So buckle up guys, I'm gonna be sharing with you the four very costly mistakes to actually see whether or not you are cut for this business. Let's dive right in. The number one mistake is jumping into business just because it's the nice shiny object right now, just because everyone else is doing it does not mean that you are cut for it. What do I mean by that? Running a business with passion alone is just not gonna cut it. In my last decade of doing business so many times, I wanted to throw in the towel because of how volatile it gets. Business goes up, I'm happy, business goes down. I would go on months, if not years without any payment, without any income to support myself at all. So if you're not cut for that, then you know what, having a nine to five is no problem at all. On the contrary, if that's what you believe in and if that gives you security, gives you peace of mind, gives you something that you're comfortable with, then you know what, so be it. That's you, own up to that. That is something that I am, that is something that I enjoy, and it is completely fine. And that's part of the reason why I never push any of my friends to be in business because it's just not cut for them in terms of their risk tolerance. However, if you like to live through this roller coaster, if you love creating things that people enjoy, then we're gonna be in for a good ride. Now there are three questions that you must answer for yourself. Be completely transparent and really own up to the answer because it is really for yourself. Be honest with yourself. The first question is, are you really willing to work more than 40 hours a week? If you're the type of people that just goes to your nine to five and you really enjoy your weekends, you really enjoy your time off and are not willing to compromise, are not willing to put in the extra effort to build things on your off times, build things that would pay off in the years to come, then that is not the right mindset to have. We must be able to actually put in the work, build this engine, build this engine so then that way, it gets to run automatically for us in the future. Initially, that building up process, those times, it's gonna be tough. It's gonna take you a little bit more hours, but after you built this engine, that's what allows you to be hands off for years to come moving forward. When I first started my business, I spent every single weekend in my summertime to build my business. Now, I don't even need to spend any days working. Last week, I was on vacation while my business was automatically generating income for me. That's what it takes is to be able to invest in those hours to begin with. Are you ready to work more than 40 hours a week for your own future? The second question you must ask yourself is do you really enjoy serving people? At the end of the day, food industry is about hospitality. What does that mean? That means serving people. That means having satisfaction, seeing people's really enjoying your food, seeing people happy and actually having that fulfillment. That itself is super, super rewarding. Now, if you do not enjoy serving people, none of that would ever matter to you and none of the stuff that you do would give you the satisfaction and that's the reason why you must ask yourself, do you enjoy serving people? Because at the end of the day, food business goes way beyond just the food. It's about the experience that you're able to deliver to the people who are really enjoying your food, enjoying the atmosphere, enjoying the whole experience of what you want to deliver. So at the end of the day, ask yourself, do you enjoy serving people? Now the last question you must ask yourself is are you willing to go without pay for a little bit at a time? When it comes to business, oftentimes it would take years before you recoup back your investment. What does that mean? That means you're not gonna get paid for months if not years at a time. So if you need that cash flow to sustain livelihood, if you need that cash to actually feed your family, then most likely you would probably either need to run your business while having a part-time job just to sustain yourself. Now on the other hand, I've also seen other businesses make back their investment and being the profits in the first three to six months, being able to make back their initial investment within such a short period of time really comes back down to knowing what they're doing. That's the common thread that I see people who are successful, my friends who are making it in the field. And majority of the time, it really comes back down to choosing the right product, knowing your numbers, knowing the margins, knowing what menu item to set, knowing your customer profile, identifying it and creating the experience specifically for them and then marketing it to them at the right channels. And all of this, if you do not get right, then it's gonna take you much longer to recoup your investment. And that's the reason why we created the free training down below. This free training allows you to actually understand the fundamentals of what you need to do in order for you to make your profits in the first three to six months. So go ahead and check out the free training below. It is completely free over an hour long of training that I really, really suggest you guys to check it out if you're serious about running your own food business. The second mistake that I see a lot of people make is not knowing their customers. Now I talk about this a lot. Almost in all my videos, I talk about understanding who your target market is and it is still something that I find people ignore all the time. And this is what's really gonna bite you behind the back when it comes to running a business if you do not understand your target demographic. And what's gonna happen is you're gonna spend tens of thousands of dollars on marketing agencies, hoping they can turn it into miracle for you to bring in the customers for you. You end up staying up at night, trying to figure out why your marketing strategies are not working, why people are not coming through the doors, why your competitors are running such aggressive promotions and why you're not getting the customers that you deserve. You end up not being able to actually have fans that really enjoy what you have to sell, really enjoying your food and you wonder why is life so not fair? And now what do you do? You go back to your menu item, you're trying to figure out is it the pricing, is it new items that you need? Is it variations of the new items? And what this really stems from is none of that. It's not your marketing, it's not your menu, it's not your pricing. It is your lack of understanding of your customers. That's the cause of the whole problem. And that's the reason why I repeat, your whole business needs to revolve around your target demographic, your pricing strategy, your menu item, the colors you use, the website, the language you use, where you promote, who you talk to, how you talk to them, how you greet them, the actual items that you're serving. Everything that I talked about needs to revolve around your target demographic. And the biggest pushback that I always hear is but listen, if I'm narrowing down my target demographic to one person, serving that one person, wouldn't I shut down the rest of the market? Isn't that a little bit counter-intuitive? When you're trying to actually market to everyone, you end up being way too general. Your message cannot cut through the crowd, no one hears you because there's so many different noises. You are jack of all trades, that means you are nobody. You must identify one core demographic that you're speaking to, that you're serving, and when you can do that, that's how you can cut through the noise and that's how you can build a thriving food business. Now, if you're still very confused about how do you craft your target demographic, then definitely in the link below, the free masterclass is where I'm gonna be sharing with you how do you craft your customer demographic because that's really where your whole business is being built. It is an hour long of a free masterclass where I share with you the fundamentals that you need in order for you to build a very, very successful food business. So go ahead, check it out in the link below. What I'm sharing with you works. So definitely go check it out in the link below. Third mistake, this is a deadly mistake. This is basically the arrow through the heart is not knowing your numbers. You'd be super surprised by how very, very little amount of business owners that I talk to actually knows their numbers. This is huge when it comes down to it. If you don't plan for your success, if you don't plan for profits, how do you expect yourself to make any profits? This is a deadly mistake that I made in my early careers. Is that I see an opportunity, I see this food item doing really well, ice cream must sell really well. You know what, I don't need to know my numbers because this product will sell. I put arbitrary numbers out there in the marketplace just because other people are selling it at seven, I sell it at seven, hoping that by the end of the month I would have a surplus in my bank. But little did I know that this is a really, really deadly mistake because what ends up happening is that in my bank, every month I'm seeing $100, $200, and I'm seeing negatives. I do not know how come I'm not getting profits even though I'm selling my ice cream at $7 and my cost is only a dollar, $2? I don't know where my money goes because I never planned and paid attention to it. Now before diving too deep into the mathematics, I'm sharing with you three key numbers that you must understand so then that way you can actually make a difference in your food business. First number to be aware of is your average order value. What does that mean? That means if you're selling a piece of cookie for three bucks and average people come in and buy two cookies, that's $6. Whereas if you can bundle that up, sell cookies in batches of six and 12, what's gonna happen is instead of a $6 transaction, you end up having an $18 transaction. You end up having a $48 transaction because you're able to bundle it up properly. Now your average order goes up by three and four times just because of the fact that you are pricing it strategically and now your cost of acquiring your customer, your cost of actually marketing to your customers goes down substantially because more people are paying more dollars to you and your business. Paying attention and understanding your average order value is really, really important. Now for example, if you wanna make $1,000 a month, you don't need to sell to 150 customers. Everyone's just paying you chump change. No, all you have to do, sell to 50 people at $20 a bundle. Now you can focus your attention, the experience on the 50 people. That's how you're gonna make it. And by the way guys, this bundling concept does not only work on cookies. It works on any type of bakery, any type of food item that you have. It is just you understanding how to strategize to uplift the average order value. The second number that you must know is the cost of goods sold. Basically how much is the ingredient that you're putting into each item that you're selling? That includes the extra labor that goes into making this. That includes all the ingredients, all the packaging that goes into it. And if you do not know this, then how can you make sure that you set the price so that way you can actually make margins? That way you can actually make profits. So many people out there, people that I consult for, it is because they're lack of understanding in the cost of goods solds. What does that mean? That means they're setting the price too low. They end up just setting the price as a number that they thought of that the market would want. Instead, they should be setting the price to account for all the cost that goes in addition to your cost of goods solds. That's how you can run a profitable food business. For example, let's say if you run an ice cream business and you are making and selling these pints of ice cream, you're selling it at $8 because you know what? That seems like a very reasonable and attractive price for selling a pint of ice cream, $8. But now, because you didn't calculate your costs, actually adds up to $4 per pint. What does that mean? That means you only have 50% $4 to account for your rent, your marketing, and any type of labor that you are putting into creating the ice cream. All the extra work that you're doing, let alone marketing and everything else, that means you're actually losing money per pint that you're selling. That means you did not price your pints accordingly. Typically speaking, we should account for labor costs to be 25%, costs of goods solds to be 25%, and rental, if you have any, to be 25%. That's how you're gonna be able to run a profitable food business. Now, how much should you price this pint of ice cream? Anywhere from $12 to $16 is what you should be pricing this pint of ice cream for. How can you add value? How can you actually have your customers want to buy this $12 to $16 ice cream? Now, that comes back down to the storytelling, that comes back down to the packaging, that comes back down to your ability to communicate value to your potential customers. Does not mean you should compromise on the price that you're setting on your pints of ice cream. A quick tip for you guys is that you can actually utilize seasonal items to make your items much less in cost of goods solds and a lot more in marketing value. What do I mean by that? Let's say mango is in season and mangoes are very, very cheap right now. Then you can run a special item menu that actually features your mango ice cream. Not only are you able to buy the ice cream at reduced cost, and at the same time, you can actually promote it on social media through your marketing campaigns, just because it's mango season. Now your ice cream is that much better because you use fresh mangoes, that adds perceived value, yet your costs would go down as well, a win-win situation for you. And the last number you should understand is your burn rate. What does that mean? That means how much are you gonna be forking out if you have zero business in a month? Let's say if you're running your food business in a restaurant, then yeah, it's gonna be a much higher overhead. Usually that's five, six, $7,000. Whereas if you're running a food business from your own home, then you know what? The cost and the burn rate would be substantially lower. So that's the reason why you must understand what your burn rate is, so then that way it keeps you out of bankruptcy. It keeps you in the game. It keeps you actually being able to continue to build this food business for your friends, your family, and your customers. So many times I see people go out of business into bankruptcy because they do not have enough cash flow. And how can you project for cash flow? Then you must know your burn rate. You must know every month how much you need to account for as a fixed cost. Whether that's $2,000 for rent, whether that's $3,000 including your labor, you must understand this. You must have enough of this cash flow in your banks, stash the side for the rainy days, so then that way you can actually live to fight another day. Now you should always account for your plan B. What does that mean? That means if you're truly out of cash, where can you get additional cash flow? Just so then that way, you can stay afloat for another month until you can actually make it, until you actually have a solid base coming in. Cause sometimes all you need is that one customer that's gonna turn the whole business around for you. So where else can you get additional funding? Well, here is just some areas that you can find additional funding, whether it's from the government grants, whether it's from your bank line of credits, your friends, your family, you must be able to have these things planned out, thought about, so then that way when the time comes, when you need it, you can access it. Because when you're applying for a grant, it could easily take you months if you're applying for a line of credit that this could easily take you weeks. If you're asking friends and family, they must know what you're up to. They must understand what you're trying to build. So when the time does come that you need additional funding, then you can share with them that hey, you know what? I just need an additional month of cash flow. So in that way I can live through this and actually I have a catering order for the next month coming. And then that way I can return the cash flow back to you then. This is what you need to be prepared for. Now when it comes to numbers, I fall asleep with numbers. It is scary. It's a big hairy monster for me even though I've been running my business for more than 10 years. Reading a P&L sheet, reading a balance sheet still puts me to sleep. And that's the reason why for me when I'm running my food business, there are only core numbers that I focus on. These things that truly matter. The rest I don't care about. I take those numbers out and I share it with you. And if that's you as well, you wanna understand what numbers to pay attention to, then definitely check out the free masterclass down below because that's where I share with you all the key ingredients that you need to know in order for you to build a thriving and profitable food business. So if you're interested in seriously building a food business that works, check it out in the link below. And the fourth biggest mistake is not having a growth mindset. I've seen so many people fall into this pitfall. My friends included. They would think that they understand how to do something that they don't need to ask for help. What do they end up doing? They end up repeating the same thing over and over and over again, expecting a different result. What does that lead to? It leads to years of inefficiency, years of not being able to make it. Whereas if you're smarter, you can work smart, you can actually learn from people who have done that, people who have taken a few steps ahead of you and then ask them what they would have done. What are they doing to get ahead of you? What are they doing that can shortcut their chances of success? That's what we need to do. And that's why I'm super excited that you're here, that you're watching this video because you too are trying to learn. You too are trying to shortcut your time for success and I'm really, really glad that you're here. So what is the whole moral of this point? Continue to learn or be left behind. Learn how to best serve your customer, whether it's learning the technology, the loyalty program, the POS systems, you must learn these things to serve your customers much better in today's world. Learn how to reach your customers, learn how to actually market to them. Learn the latest tactics and marketing tricks that is out there, that is working in today's age. Learn from your community, learn from your peers, being able to hang out with people who are like-minded to learn from them, see what they're doing, see what strategy is working, see what is the most up to date and that's how you can get ahead. To have that learning mindset, to get ahead of everyone else, to shortcut your time for success, then definitely check out the free training that I've put together in the link below. The reason why I keep pushing you guys and sharing with you guys, encouraging you guys to check out the free training is because it is that good. I spend a lot of time creating content and this content is top notch and that's the reason why I really want you to be able to actually get ahead, shortcut your time. I only wish I had someone like myself when I first started and that's the reason why I'm paying it forward to you. So I invite you guys, check out the free masterclass down below and thank you so much for watching this video. The four huge mistakes that you must avoid at all costs. Go and be honest with yourself. See if you're cut for the business, know your numbers, know your target demographic and have that learning mindset. That's what's gonna make a difference for you. Guys, I really hope that you have enjoyed this video. I had a ton of fun sharing everything with you guys. If you enjoy this type of content, what do you do? You smash that like button so then that way. I know this is the type of content you enjoy or if you just wanna show some support for us spending hours creating this content for you then you too can smash that like button to show some support. Otherwise, I'll see you guys in the next video.