Business idea... what am I overlooking?

[bdawg56kg]

Hi guys, this is my first post. First I wanted to say that this forum is really great. I recently came back from a trip to Japan and I noticed that almost every store had a fake food display. These are extremely realistic and I found them to be very effective. Just looking at them made me hungry. I am hoping to bring the idea back home to Hawaii, where I live. Almost no stores here have fake displays.

I did a little research on what it would take to create the displays myself, but I have never been an artistic guy, so I think this is pretty much out of the question. So I started contacting fake food companies and am trying to get quotes for typical local foods. I don't think there are any local companies that do this, so I'd have to bring them in from the mainland. Once I get a general idea of the cost, I plan to go around to local eateries and ask them if they'd be interested in this.

Obviously I would take a cut from each sale. Any ideas on how much my cut should be? 10%? 20%? Also, would it be a good idea to ask one of the fake food distributors to form a partnership with them, with me being an affiliate of sorts? Any other tips? Thanks.

[akula]

Once I get a general idea of the cost, I plan to go around to local eateries and ask them if they'd be interested in this.

Obviously I would take a cut from each sale. Any ideas on how much my cut should be? 10%? 20%? Also, would it be a good idea to ask one of the fake food distributors to form a partnership with them, with me being an affiliate of sorts? Any other tips? Thanks.

hi. i like it. i think you're onto something here.
i also think that it's plausible to make resellers out of your customers and charge a trailing commission...the technology to implement this is cheap, easy and available.

also, since you asked...in terms of tips...i can tell you one potential problem that you're gonna have, and the solution for it.

the problem: it's likely that you'll get your pricing wrong. in other words, when you're gonna be selling fake food to food retailers, you'll charge them the wrong price per piece...this error will lead to you taking much longer to break even, meet your hurdle rate and turn cash flow positive. it's also likely to send you broke before you can break even. it's "likely" because entrepreneurs make this mistake all the time.

the solution: get your pricing right. pricing consists of correctly balancing a four factor equation - your costs (fixed and variable), how much the customer is willing to spend, what the competitors charge and your requirement for a profit

right now, most probably, out of this equation, you know less than one of these four points. in other words, you only know your variable cost (i.e. how much you will be charged to buy fake food from fake food manufacturers), you don't know your fixed costs, how much food retailers would pay for this stuff, what your competitors are charging, or what your hurdle rate is.

so...the tip is..to prevent your self from screwing up your pricing, balance the four factor pricing equation.

[bdawg56kg]

hi. i like it. i think you're onto something here.
i also think that it's plausible to make resellers out of your customers and charge a trailing commission...the technology to implement this is cheap, easy and available.

Thanks for responding. I appreciate it. Can you explain a little more on this? How would this system work?

also, since you asked...in terms of tips...i can tell you one potential problem that you're gonna have, and the solution for it.

the problem: it's likely that you'll get your pricing wrong. in other words, when you're gonna be selling fake food to food retailers, you'll charge them the wrong price per piece...this error will lead to you taking much longer to break even, meet your hurdle rate and turn cash flow positive. it's also likely to send you broke before you can break even. it's "likely" because entrepreneurs make this mistake all the time.

the solution: get your pricing right. pricing consists of correctly balancing a four factor equation - your costs (fixed and variable), how much the customer is willing to spend, what the competitors charge and your requirement for a profit

right now, most probably, out of this equation, you know less than one of these four points. in other words, you only know your variable cost (i.e. how much you will be charged to buy fake food from fake food manufacturers), you don't know your fixed costs, how much food retailers would pay for this stuff, what your competitors are charging, or what your hurdle rate is.

so...the tip is..to prevent your self from screwing up your pricing, balance the four factor pricing equation.

The way I'm seeing things right now is that I'm basically just going to be a middleman, so I have almost no costs (apart from gas and time). I wouldn't sell a fake display to a store for less than it costs to have it made for me. Am I missing something? Also, how would you propose to find out the customers willingness to pay?

[DennisChang]

That's a nice idea. I didn't know that Hawaii doesn't have this, as such things are so common in my country.

One thing to note would be, there probably would not have a fixed price on this "fake food" (whatever you call that) because they would have to be customized. So it is not a simple case of importing in bulk and reselling. You will be presenting yourself as some kind of "fake food solution provider" to your customers, coordinating between your customers' requirements and the manufacturer's production. Those are the time cost that you would have to factor in.

[jasaunders]

One thing to note would be, there probably would not have a fixed price on this "fake food" (whatever you call that) because they would have to be customized. So it is not a simple case of importing in bulk and reselling. You will be presenting yourself as some kind of "fake food solution provider" to your customers, coordinating between your customers' requirements and the manufacturer's production. Those are the time cost that you would have to factor in.

Not sure what he has in mind, but in Japan there is no customization, all fake food looks the same. Every restaurant has the same fake food dishes on display that they offer, such that one restaurant's udon noodles look exactly the same as another restaurant's. Not sure if he plans on doing the same thing in Hawaii.