The idea of this post came out from a discussion I had with my partner last week. Just for fun, we were talking about how we could make money from a side business (yeah… another one!). It seems that we don’t have enough with our day jobs, sites and families, lol!
More seriously, we were discussing another option but more for the fun of it and not for the actual purpose of setting this up. My partner’s premise was the following:
There are tons of tasks we do each day for free.
Most of these tasks are boring and take up a lot of our time.
We would likely pay someone to do these tasks just to free up some time.
Most services exist already, but it’s only a matter of finding a twist to optimize the structure.
Optimization – The Most Amazing Ever
His idea was simple – just optimize something that already exists!
You can find a cleaning lady, someone to mow your lawn and take care of the flowers or someone to cook you home made meals. These are tasks that have been identified by many self-employed individuals and they offer multiple services to ease your pain.
The best way to sell something is well known; ease a pain. Do you remember how much you were ready to pay the last time your back or your tooth hurt? It’s priceless; you just want the pain to stop and you are ready to pay. If you think about parents with young kids where both of them work; they are constantly in pain. If you find an efficient way to ease their pain, you will earn a client forever.
So the idea is not new, the service is not new either. So what’s new? Optimization. We definitely know a lot of things about optimization since this are what we do best within our company: we buy existing websites and optimize them to make more money. Therefore, we thought it could be a good idea to build a “case study” on how you can build a business with day-to-day tasks and see how we can optimize it to make it profitable.
Here’s The Idea… Cooking for 100K per year…
My partner insisted that he was convinced that cooking meals for people would be profitable. He is convinced that within 2 years, we could reach a 6 figure profit.
All right… stop! 100K per year when the average cook in a restaurant makes 30K per year… Where in the hell can you find such “optimization”???? I’ll tell you something; it is because it seems unreal that it’s challenging. But daydreaming won’t get me anywhere, so let’s dig deeper and take a look at how it can be done (btw, at this very moment while writing this sentence, I have no clue how I can make it happen). But if a physiotherapist can make over 400K/year, I guess I should be able to find a way to make 100K cooking meals!
I think the most important thing to do when you start a project is to set a goal (making $100K/year) and then calculate backwards to see how you can reach it. You’ve done this millions time at school doing maths… this is no different. I’ll start with some assumptions and see how we can make these assumptions become reality.
How much profit? My partner argues you can make $10 per client per week in profit. I’ll go a different way and assume a profit of $5 per dish. If we think a dish would cost around $15 to $20 for 2 people, the markup is still low standing between 25% and 33%.
How much to make $100K profit? Easy calculation here: 100,000 / 5 = 20,000 dishes. That makes 384 dishes per week.
How many clients for 384 dishes per week? Assuming each client order 2 dishes per week, you need 192 steady clients.
Based on these calculations, my cooked meal delivery service would generate between $300,000 and $400,000 in revenues with an objective of $100,000 in before tax profit.
In my opinion, making these calculations was an easy step called “daydreaming”. I can identify some “real life” problems to this business:
Production: How can you truly produce 384 dishes per week in your kitchen? Is it possible? I don’t think so. Chances are that you will need a commercial setting to be able to cook all that food.
Space: Another problem is how you store all these meals. It is one thing to make them; you need to find a place where they will be stored. Most preferably in a freezer 😉
Delivery: Once you have cooked almost 400 dishes in your week, you still need to deliver them! Assuming you have 192 clients, you better hope they all live close by. You need to draw a delivery roadmap along with a specific set of hours when people can receive the food.
Packaging: Technically, if you are going all in and producing so much food, you will most likely deliver it frozen to make sure everything tastes good. So packaging frozen food is another story as well.
The Solutions (?)
I’m not sure I can come up with solutions to all these problems. One thing you can tell yourself is that you start small and can avoid these problems for a while. Wrong thought. If you don’t optimize right now, you will never be able to optimize later on. This is why it is so important to set your business model right from the very beginning.
Production: I think you can cook 76 portions per day on a 5 days schedule (to make 380 dishes). Technically, you have to cook 13 portions per hour to leave you some time to package and store the food. Still, someone alone could definitely cook that many plates in a day.
Space: You need a basement ;-). The purchase of 2 freezers won’t be a waste of money. Then, you can store your food inside the freezer with a classification system (dish / date).
Delivery: Determine cities you want to deliver and set the delivery days. For example, you can decide to deliver all the food on Sundays. Drawing a delivery roadmap for 1 day is not too complicated.
Packaging: For now, I’m not sure about the format to use. It depends on the type of portions and what freezes and unfreezes best.
I’m Definitely Not Done Yet!
This is not a complete case study, that’s for sure! But I’ll stop here today to think more about it. The profit margin, payment methods, delivery and cooking processes are still to be detailed more precisely.
Has anybody ever thought of doing this? Do you think I’m going out to left field with this idea?