How To Start A Food Delivery Business
Starting a business can be very overwhelming, especially one focused on food delivery. There are many considerations that you will need to have had thought about before embarking on your business journey. Read more to find out.
The food delivery industry has grown significantly over the years. With increasing job demands and busy schedules, cooking has become a luxury. People are becoming too busy to prepare their own meals. This has opened a gateway of opportunities for startups to grow as meal delivery businesses have gained widespread popularity. This also means that the food delivery market is very competitive. If you are intending to start a food delivery business, then there are a number of measures that must be taken care of before you enter into the market. This article will outline these considerations, including the administrative requirements to starting a business, legal documents, finance and much more.
You can also check out our online guide for more lucrative business ideas.
Starting A Business
The amount of effort and knowledge needed to start a food delivery business from scratch is much different to that required when buying a franchise. One of the advantages to starting your own business is not needing to pay fees to the franchiser. You also get to create your own rules and systems for running your business. More importantly, by running your own food delivery business, you have the chance to expand within the market and even start your own franchise.
Though before then, you need to first decide on how the food delivery business will be operated. This is an important decision that you will need to make as it will affect the future operation of your business, including issues to do with liability. Common structures to choose from are:
- Sole Trader; or
Choosing the right structure will depend on what you want to gain from your business. If you intend to grow your business all across Australia and into other countries, then choosing to operate as a sole trader is not the best option for you. A company or a partnership may be a better suited for you as liability can often be limited among the relevant stakeholders.
After deciding on your business structure, you should then think about a suitable name for your food delivery business. It is best to be as creative as you can because it will help with creating your business brand. It is also important that you check the availability of the business name you have chosen. If the name is available, then you should also ensure that you have exclusive use of your business name throughout Australia by registering your business as a trade mark. Otherwise, you may not be protected against any potential misuse of the name by other businesses.
If you have decided on forming a company, then you can also think about registering a company name, although a company name is not compulsory. Special approval is needed in order to use certain words in your company name, such as ‘Royal’. That is why it is important to check the availability of your company name on the ASIC’s website before registering it.
It is important that you also apply for an Australian Business Number (ABN) to gain all the benefits of running a business, such as tax benefits. If you have decided to form a company, then you will also receive an Australian Company Number (ACN) upon registration of your company.
You should also take some time to think about the different accounting requirements that you will need for running your business, such as:
- Record-keeping obligations;
- Business plans; and
- Marketing plans
This is an important step to ensure that you understand where exactly your money is going, especially if you are starting a company. A basic understanding of accounting will help you and others know what your business does and to determine whether to invest in it or not.
The next step is to determine where you want to operate your food delivery business. Depending on where you choose, there will be different requirements that you will need to satisfy. Some places that you may be considering about for the operation of your business are:
Terms and Conditions for Services Provided
It is important that you have a good set of terms and conditions for your business. Otherwise, you will lose your customer’s trust and be breaching the legal obligations that you owe to them. Some of these terms and conditions are:
- Details of the services you are providing
- The fees you are charging them for the provided services
- An indemnity clause for any damages suffered by your customers as a result of using your services
Given the amount of competition in this industry, you may also want to consider operating your business online by having a website and/or mobile application. In order to do this, you will need other legal agreements. These include:
- Website and/or mobile terms and conditions of use
- Website advertising agreement if you plan to allow others to advertise on your website
By deciding to operate your business online, it is essential that you keep your customer’s needs the top priority, and this means allowing them to pay online for their food orders. In order to do this, you will need to set up a merchant account and payment gateway, such as PayPal.
Hiring New Employees
Starting a new business can be overwhelming at times, so you might want to consider hiring new employees. Finding the right person with the right set of skills might be just the thing your business needs to steer it towards the right direction. Though, before you hire anyone, there are a few documents you need in place to protect your employees and your business:
Licences, Permits and Other Regulations
Since you have decided to operate a food delivery business, you may be required to apply for specific licences and permits to do so. An obvious licence that you or your employees will need for the operation of your business is a registered vehicle and a driver’s licence.
Other licences that are specific for food delivery services are include a Food licence and/or a licence for a Food Transport Business. For all food transport businesses, it is also a requirement that the Food Standards Code are complied with. Furthermore, depending on the exact foods you plan to deliver, you may have to comply with specific conditions.
Expanding Your Customer Base
There are a few ways you can use to attract more customers to your business. For example:
- Social networking;
- Online marketing; or
- Word of mouth
Advertising your food delivery business online may be the best way to go given today’s internet age. Another way would be to send notifications through email or SMS if you already have a customer base to begin with. However, there are important legal requirements that you will need to know before you decide to do this. The most important of which are the regulations governed under the Spam Act 2003 (Cth) that deal with electronic communications with customers.
If you are unsure of how to best promote your business online (or offline) then hiring external help for that reason may be an option for you. Just remember to have all the necessary legal documents in place before you hire anyone.
Intellectual Property Protection
You will need to register a trade mark for your food delivery business if you want to distinguish your business service from your competitors. A trade mark is not just a logo. It can be a particular word, phrase, sound, smell, image, aspect of packaging, or a combination of these.
A registered trade mark is important for your business, because it will provide you with exclusive right to use, sell and licence the protected trade mark. Thus, it is a very valuable marketing tool. Moreover, by registering your brand, you will be protected against any risk of registration by your competitors and from any potential misuse of your brand.
Insuring Your Business
There are a number of business insurances that you should consider for your business. For example, you may be planning to purchase vehicles for your food delivery business so that it can be lent to your employees. In this situation, it would be worth purchasing insurance. If you want to discuss more about insurance options, then it is best to seek an insurance lawyer.
It is vital that your business complies with all the legal requirements needed to start a business, and specifically a food delivery business, in Australia. Otherwise you may find yourself and your business caught in a number of unwanted situations later down the track and your business potentially going under. If you need further help with starting a food delivery business, then it is best to contact a business lawyer.
Lola is a Legal Tech Intern at Lawpath as part of the Content Team. She is in her final year of a Bachelor of Laws and Bachelor of International Studies (Major in China) at the University of Technology Sydney. She is interested in understanding the future of law and innovations in the legal industry.