I am thankful.
I’m thankful because I’m fortunate enough that my ability to earn what I need to earn with this delivery gig was better than I expected.
There’s a challenge with that though, especially when it comes to operating a website (and now a class) related to delivery:
How much of that is because of what I’m doing right? (And how much MORE could I do if I didn’t do everything wrong that I don’t know that I’m doing wrong???) And how much of it is because of where I am?
I’m not a fan personally of legalized marijuana here in Colorado. That’s just me. I don’t like my town smelling so much like skunk. That said, I probably have to admit those laws may have something to do with how well I’m able to do. A lot of people get the munchies, and that keeps the delivery biz hopping.
I see a lot of people who believe that how they do things is the only way to do things. They don’t understand the nuances that different markets can have. If you’re in a spread out community, you may have to do a lot more driving, whereas there are people in downtown New York or Chicago who do this entirely on foot.
I can reject a lot of orders here in Denver. That method might not work as well in other areas.
Understanding your market is a huge part of the decisions you have to make.
For a little more depth, check out episode 4 of the podcast (or read about it on the associated post).
An important part of a business plan is an evaluation of the market.
Can your business do well where you are?
My wife and I were just talking this morning. We’ve been looking at lots in Lake City, Colorado – it’s just one of those last unspoiled uncrowded mountain communities. We’d love to build a place to retire to some day. She was joking that maybe I would have to start my own delivery service there since Doordash, Uber Eats, and Grubhub probably aren’t there serving the three restaurants in town.
It’s all about the market.
What is it about where you are that can allow you to earn well? What is it that’s going to be a challenge?
Most important, what’s the potential profitability?
Is it enough? Does the market support your business?
Here are some thoughts about knowing your market:
You want to understand who your potential customers are.
I really emphasize the “S” on the end of “customers.”
And by customers, I’m referring to Grubhub, Doordash, Uber Eats, Postmates, any of the gig companies you contract with.
That’s another ‘we’ll get into that soon’ type of thing, but I can’t emphasize enough how important it is to have more than one customer. It’s just too easy for things to go south with any one delivery app. The app crashes (Doordash anyone?) or they start losing business (I don’t know about you but I’m seeing that with Grubhub) or something outside your control costs you the ability to deliver.
You already know who you deliver for. I’m going to guess that you have a good idea which ones can keep you busy at times and which ones are less reliable.
Who else is out there? And how do they fit within your business style?
For example, in my market there’s GoPuff and Instacart and Shipt that I’m not signed on with. I keep thinking I should, just to be able to better experience them for the sake of this website. But from my delivery business perspective, they’re not a good fit for me because of the longer time commitments that are involved.
Here’s another part to think of: How saturated is the market with drivers in your area, on a company by company basis? Does anyone seem to have too many drivers? Are they begging for drivers? Pat attention to what they’re offering for referral fees in your area, if anything. That’s usually a good indication of what they expect the need to be in the future.
You want to understand the industry in your market.
What is delivery like in general where you are?
What are the restaurants like? Are they grouped together or are they spread out?
What type of restaurants are on the platforms you deliver with? Which of them are faster and which ones tend to have the better paying deliveries?
How much driving do you have to do on orders? What parts of your market are more efficient? Suburbs are often easier when it comes to parking but you often have longer drives. More congested areas might have more traffic and parking issues but also have much shorter deliveries.
Who’s ordering food in your market and why? Communities with a lot of college students might have a lot more fast food orders. Communities that love their sports team are likely to have more business during sporting events.
Get to know the layout of your area.
This is as much about operations (which we’ll get into later) as it is about planning.
I see a lot of Doordash Dashers who just added Grubhub who ask, how do I know how far I’m going? On Doordash you get used to the offer screen telling you how many miles you’re going. Grubhub doesn’t give you that information.
The better you can get to know your market, the better you can get at looking at the map given of a delivery and estimating how far you have to go. That’s why I call this an operational thing.
At the same time, knowing the layout also helps you with a bigger picture of what delivery might be like. What are the higher traffic areas? What about the layout of your market could slow you down? Is safety a factor?
Know how the economy is in your market.
During this pandemic, it’s pretty likely that the economy just stinks.
The thing about meal delivery is, when things get really tight for people, this is one of the first things they can cut from their budget. That makes a difference.
It’s possible people tip differently in different markets. If your area was hit harder by this recession, that’s something to be aware of. If your market is recovering quickly, that’s something to be aware of.
Be aware of the politics in your market.
Understand, I’m NOT telling you to get political. I’m not endorsing one side or the other (frankly they both tick me off).
But I am really encouraging you to keep an eye on things, especially where the politics can impact your ability to work as an independent contractors.
If you’re in California, you’re already aware of AB5. That’s a law in California that defines when a company can use contractors, and it’s really aimed at gig economy companies. The state is starting to enforce the law – to the point that Uber and Lyft came within hours of shutting down before courts allowed a little more time. Doordash has been sued under AB5. The bottom line is, the state intends to force all of these gig companies to use employees.
I’m glad I’m not in California.
New York and New Jersey are a couple of states I know of that could start taking similar measures. There’s national legislation called PROACT that includes language that would apply what California’s done nationwide.
The point of this isn’t to endorse any political party or approach, but it’s to encourage you to be aware of the political things that could impact what you can do. If in California, an important part of your business plan might be to figure out what to do if you do lose the ability to work as a contractor. If you’re in a state that leans similar to California, you want to be aware of the potential that things could change, understanding that these things take time.
Is it sustainable?
If you are taking a business plan to the SBA or to a bank, they want to know if your business is sustainable. Can it make enough money that you’ll be in business to pay them back?
The beauty of gig work is, we don’t need a loan to get started. We get to start with our car and phone. Or maybe our bike – in some places maybe your feet.
But your time has value. The whole idea of this business plan thing is to look at your business as a business and ask yourself the same question: Is it sustainable? Can it be what you need it to be? Is it worth the time?
And can it work in your market? A ski shop is less likely to survive in Jacksonville Florida than here in Denver. At the same time, I don’t expect to see a Ron Jon surf shop open up here.
Understand your market. Know what it is about the area that can make your delivery business sustainable, and what might get in the way.