A catering business needs to know its target market and what types of events are profitable. It also needs to be able to predict seasonal ups and downs in labor cost and customer demand.
Choose a name for your business and check with your Secretary of State and local health department to see what licenses are required. Also, research vendors in your area.
Keep Track of Your Stock
Whether you are cooking in your home kitchen or a commercial facility, you need to have a way to track inventory and ingredients. You’ll need to know what you have, how much you need, and how quickly you can replenish your supply. Keeping this information organized can save you time and money by helping you avoid over or understocking. It will also help you make more informed procurement decisions.
If you don’t have an inventory management system, now is the time to consider investing in one. A system can help you generate LOT and serial numbers for your products automatically, reducing data entry and tracking time. It can also automatically create purchase orders based on your stock levels, making it easier to manage your finances and keep your suppliers happy.
Start with an inventory of all the equipment and supplies you need to get started catering, including plates, utensils, serving dishes, coolers, and anything else you might use for an event. Compare your list with the items you already have and note what you will need to purchase or rent. Keeping startup costs low can reduce the amount of time it takes to break even and start turning a profit.
Determine if your state requires a food handler’s license, and find out how much it will cost and any additional costs you may incur, such as health inspection fees and annual renewals. You’ll also want to have liability insurance for your business.
Finally, develop a marketing program to get the word out. Hand out business cards, make a brochure with photos of your signature dishes and post regularly on social media (showing all the prep work as well as the big, splashy images from events). Consider sending email newsletters to clients, including coupons, special offers and updates about new menus or services.
Offer a Few Specialty Services
When catering, you must be able to do more than just cook the food. Caterers are often required to provide linens, china, glassware, utensils and sometimes tables and chairs. Some caterers also supply beverage services, and some must obtain a liquor license to do so. The laws in different states vary, but you should always make sure that all your paperwork is filed, licenses are in place and that you have proper insurance coverage.
Offering a few specialty services can help you attract and keep clients. For example, some caterers offer cake decorating and floral arrangements in addition to cooking. These can be great add-ons to your menu and give you a competitive advantage. In addition, you can use social media, email marketing and online banner ads to promote these offerings to customers.
Another way to grow your business is to join industry organizations and networking groups. Many of these groups offer referrals to potential customers. They also provide opportunities to meet with other people in the food service industry, which can help you learn tips and tricks that can boost your business.
If you don’t have enough start-up capital to launch a catering company, you can look into getting a loan from your local bank or credit union. You can also find other lending sources, such as online lenders or community development finance institutions. Make sure that you research your financing options carefully and choose one that fits your budget and financial goals.
Once you have the money to launch your catering company, be careful not to spend it all at once. It is better to be cautious and plan your expenses, including your kitchen equipment purchases, so that you can build your business gradually. You can even rent the equipment and food preparation space you need instead of buying it all up front if that makes more sense financially.
You will also need to decide on a tax entity for your business. Nolo and other legal resources suggest that a corporation or LLC is the best choice for catering companies. This type of structure offers protection for you and your employees and provides tax benefits.
Be Flexible
Having a flexible attitude when it comes to catering is essential. There will be times when things may go wrong or a client will change their mind at the last minute, so you need to be able to adapt quickly. This will not only help you to stay on schedule but also reduce any stress that could occur.
Keeping your initial costs down is an important factor to consider when starting your catering business at home. Depending on your budget, you can start off by renting equipment and food prep space rather than purchasing everything up front. It’s also possible to find second-hand items that can save you a lot of money in the beginning.
Before you purchase any large catering equipment, you should create a catering menu and determine how many events you can reasonably cater per year. This will give you a better idea of what your overhead costs will be and how long it may take to recoup those expenses. If you find that your startup costs are too high, you can always apply for a small business loan to help get your catering company off the ground.
As with any type of business, it’s important to establish a legal entity that offers you protection and a clear separation between your personal assets and your company’s assets. According to Nolo, you may want to choose either an LLC or a corporation. This will allow you to keep your personal finances and business finances separate, which will make it easier for you to accurately track your profit and expenses come tax time.
Finally, you’ll need to market your catering business to help attract new clients. This can be done by distributing business cards at every event, posting pictures on your social media accounts of the preparation and cooking process, and sending email newsletters to current customers informing them of discounts, new dishes, and other news about your business.
If you’re planning to serve alcohol, you will need a liquor license as well. You can contact your local authorities and the Small Business Administration for guidance on establishing this and what your state’s requirements are.
Be Creative
If you want to stand out in the catering business, it’s important to be creative. Catering isn’t just about preparing and serving food; it’s also about creating an experience for guests that will make them remember your company after the event is over. This can be done through unique menu designs, innovative presentation styles and the ability to adapt to a variety of themes and dietary needs.
When designing your menu, it is also a good idea to figure out what types of workspaces and equipment you will need in order to prepare the foods that you are offering. This can help you decide if your home is suitable for running a catering company and will allow you to plan accordingly. You may also want to check with your local or state food safety authorities to see if you need to establish an onsite kitchen or a license to run your business.
Once you’ve established your menu and the necessary space and equipment, it’s a good idea to create a budget for starting up and operating your business. This will allow you to determine how long it might take to recoup your initial startup costs. It will also help you figure out how much you can charge for your services in the beginning and how to manage your expenses.
Finally, don’t forget to market your business! You should always carry business cards to events, post on your social media accounts regularly (showcasing all the preparation that goes into each event as well as big, splashy images from the actual event itself) and send email newsletters to your customer base informing them about discounts, new menu items and other relevant news.