You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your hot dog stand business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a hot dog stand business?
Expenses include the following:
- Cost of food
- Permits/registration fees
- Commercial insurance
- Commercial kitchen space (note: not required for all hot dog stands)
What are the ongoing expenses for a hot dog stand business?
Hot dog stands typically need to account for the following expenses:
- Cost of food
- Registration/permit fees
- Commercial insurance
Who is the target market?
The target market can be anyone who wants a fast snack or simple meal. You can also appeal to people with ice cold drinks on a hot day or hot drinks on an ice cold day.
How does a hot dog stand business make money?
Hot dog stands make money by charging a small profit margin on all food and beverages they sell.
How much can you charge customers?
A hot dog can go for as much as $6 in a major stadium but is typically sold for between $1.50 and $3 in most major cities. Chips and drinks can be sold for around $1.50. Check the prices in your area before settling on a financial structure.
How much profit can a hot dog stand business make?
Profits from a hot dog sale can run as high as 80%, though the net margin will be smaller depending on the direct costs of the stand, permit costs, commercial insurance, and kitchen space (if needed).
How can you make your business more profitable?
Besides adding new items to the menu, consider renting out your hot dog stand to groups for special events. A family throwing a birthday party in the park may be happy to pay top dollar for the afternoon — especially if delivery and set-up are included in the price.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your hot dog stand business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a hot dog stand business
The best way to promote yourself is to go where people already are. Few customers will search for hot dog stands online or travel out of their way for a hot dog, so you need to be in the right place at the right time. Your cart should be clean and approachable with clear signage. Prices and menu items should be easy to read. You can also consider adding a daily special to your menu, especially if the majority of your customers are regulars in the area.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Retaining customers is all about serving them a meal that they'll remember. They should want to tell their friends about your cart the next time they see your name on a street corner. Even though hot dog stands serve an immediate need, they still need to sell quality food. A disgruntled customer could easily tell an entire line of people that the food isn’t worth the wait.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Hot Dog Stand Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This business is excellent for someone who loves to cook in a fast-paced environment. Owners should enjoy the action of a busy sidewalk corner and feel comfortable working under pressure.
What happens during a typical day at a hot dog stand business?
Hot dog stand owners will typically run their operation alone. They’re in charge of scouting locations, setting up the stand, cooking the food, and handling the money. Owners will spend the majority of their time fulfilling orders, but they’ll also need to handle the details of running the stand. A typical day may entail general accounting duties, negotiating with city officials to use public space, or working with third-party vendors to secure supplies. They'll also need to follow a schedule and arrange for their own transportation.
What are some skills and experiences that will help you build a successful hot dog stand business?
Owners need to be exceptionally fast thinkers and hard workers to handle an unpredictable and impatient customer base. They should feel comfortable working with a variety of personality types as they may need to placate angry or intoxicated customers. However, it will take more than just serving long lines and cutting down on wait times. Ideally, owners should understand how to infuse gourmet quality into their snacks without significantly raising the prices. They’ll need to be excellent planners to map out the most lucrative events or public spaces in which to set up shop.
What is the growth potential for a hot dog stand business?
A hot dog stand has significant growth potential, especially if owners can carve out a space for themselves in the most popular areas of a city. Many owners find themselves ready to purchase an additional stand after only a few months in the business. From bar patrons to theater-goers, there’s always a market for short-order cooks peddling the right fare.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a hot dog stand business?
Hot dog stands are usually a more affordable alternative to opening a food truck or a small restaurant. The start-up costs can be as low as a few thousand dollars, and it may only take a few busy months to start turning a profit. The key is to both figure out where people will be, and how you can tempt them to give up their diets and indulge in a treat.
The first task owners should tackle is to learn the local city ordinances that govern where and how you can sell food. Different neighborhoods may have different rules, and they can vary from block to block. If any safety violations are filed against you, you could face strict fines or even legal action. Some areas will require a commercial kitchen to prepare the food (e.g., chopping onions, peppers, etc.) prior to setting up the stand, so talk to a health inspector before getting started.
Once you’ve addressed the practical needs of your business, look for both major events (e.g., sports games, special engagements, etc.) and popular street corners. People may be looking for a fast fix to hunger pangs at the end of the night. Use aromas to spark people's appetites and entice them to stand in line. If there aren’t a lot of low-cost options in an area after the bars close down, you can easily appeal to people who want something affordable and fast.
Because the start-up costs are so low, some hot dog stand owners will use this business as their side gig to learn more about the business. Collect careful feedback at the beginning to see which foods are selling best, and use this data to guide your menu. From bacon-wrapped hot dogs to gourmet sausages, there are ways to distinguish yourself from other hot dog sellers.
How and when to build a team
Most hot dog owners will operate everything on their own unless they franchise their name to several carts. If franchising, look for people who are fast, street-smart, and friendly. However, even if you're doing it alone, you may still need to hire an accountant or general manager if the business quickly grows beyond its original scope.