Before entering into Food Hawker Business

Before you enter into the food hawker business in Singapore, you have to be a Singapore citizen or at least become a Permanent Resident. If you are below 21 years old, you are legally too young to qualify.

Finding difficulty in gathering information about how to start a hawker stall business in Singapore but you saw the opportunity? The list below is an overview of things you should consider when planning for a food business at food center.

1) Make sure you have the Sustainable Capital

First of all, never underestimate the start-up cost of a food hawker business in Singapore. Things are not really the same if you compare with the past. Getting a stall at low cost used to be for the poor and uneducated families in the good old days.

However at present, S$10,000 may only be enough capital just for the start up cost. Of course, there are people who manage to start it as low as S$8,000. It also depends on whether there is existing equipment left at the stall that is relevant to your business.

Set aside some funds to sustain the business for at least a 6-months period as the business still has to go on even if it is not doing well. You still need to eat and pay all sorts of bills at home and business stall. Wherever possible, keep your expenditures lean and avoid overspending or food wastage.

2) Perform your Market Research

In all business, it is necessary to do your Market research. The success of your business depends on the right questions asked and the method you choose. This will ensure that the data will be useful for making good business decisions that is strategic.

To ensure a reliable and holistic data, use a variety of method with different strengths of accuracy. For simpler and affordable way, refer to Statistics Singapore website to obtain some free statistical and unbiased data. Another method is to do a visual market observation. Get a second person to do the observation using the same method you use for comparison. The third method is to do a face to face informal feedback with the potential customers who visit your competitors.

3) Determine your Business Nature and your Product

Refine your business strategy to find your niche at this point base on your analysis on the market research data you have. In food business, everybody seems to be selling the same Chicken Rice and thus, it is essential to differentiate your business from the rest.

4) Identify your teachers, partners and employees

It is never easy to work on the business alone though many may list out the disadvantages of partnership due to conflicting issues between partners.

Partnership or sole proprietor, you still need a good teacher to leverage on, especially for the first timers. Look for one that will offer you advise and recommendations to suppliers or open up new possibilities for you. If you do not have one, you should start looking for one or reading the books that they published.

If you have employee, treat them well and provide a learning environment. When they are motivated and they know you believe in them, they can go very far and perhaps become your potential successor. Motivated employees may also be happy to help you spread great news about your business.

5) Determine your Food equipment and other inventory list

After reviewing the recipe and the process of making the product, as well as applying it on a small scale, it should give you some idea what the equipments, food materials and serving inventory that is required for the business. Put in as much details as possible but try not to agonize over it if you think it is not detailed enough. The details will sometimes show itself at the later stage.

6) Determine your breakeven analysis projection (BEP)

Breakeven analysis projection is a useful formula for calculating the volume of the business required in order to cover all necessary expenses. It is the monthly fixed cost (i.e. rent, overhead/utilities, labour) divide by the percentage difference between the selling price and the cost price.

For example:

If your monthly fixed cost is $20,000, and the food cost is about 35% of the selling price, the formula should be applied as:-

BEP = $20,000 /(100%-35%)
= $20,000 /(0.65)
= $30,769 (i.e. Total $$ you need to earn in a month)

Assuming the operating hours is 6 days in a week (about 24 days in a month),

Average $$ you need to earn in a day
= $30,769 / 24 days
= $1,282 per day

Assuming that the selling price of a unit = $2.50,

Average number of units you need to sell per day
= $1,282 / $2.50
= 513 units

(Note: It is advisable to do this calculation for 3 probable scenarios (the best, the worst and the middle range scenario.)

7) Find the food stall location (food center, food court or cafe space)

With the calculated budget you have at hand, look for the right food stall for the right crowd you have designed to cater to. Sometimes, it is necessary to change or modify your menu to suit the type of crowd at your selected stall.

8) Determine your source of food materials resources

If budget is of concern, especially for those who are first timers, it is recommended not to overstock or it may incur unnecessary food wastage cost. Always be conservative on the portions to sell for the week and month. Typically, a wholesaler would only sell you for bulk purchase so it is wise to buy them nearby the food stall premise for start.

9) Get a 'Food Hygiene' certificate

It is compulsory for all food handlers to obtain a food hygiene certificate or there will be a major penalty. Since 01 Dec 2004, NEA has outsourced the trainers from various institutions or companies to conduct the 'Food Hygiene Course for food handlers'. The trainers will need to be approved by NEA.

The list of institutions or companies that conducts the course is currently maintained and updated at National Environment Agency (NEA) website.

The course and the examination fee differs slightly across the schools with different dates. One of the schools offers a transport to NEA for the examination immediately after the course, while another brings the NEA examiner to their school. So, do give them a call to see which one fits your schedule, budget and convenience before you make your decision.

10) Get your vaccination for Typhoid and Medical check-up for Tuberculosis (TB) (if above 45 years old)

All food handlers must be inoculated against Typhoid vaccination (Injection or Oral route) and subsequent Typhoid vaccination should be done every 3 years. In addition, for those who are above 45 years old, medical check-up and x-ray must be screen for Tuberculosis.

11) Get a license for your stall space

You can apply for your license online yourself or pay someone to do it for you. The website can be located at the home page of the NEA website at 'Online Application' folder, located at the top of the web page. From there, it will lead to a various type of license you would like to apply for.