A catering business is a perfect idea for anyone who loves cooking and making people happy with their food. Moreover, it’s an excellent opportunity to start a company without much capital—you can even do it from your garage, cook for friends and acquaintances and build your way up step by step.
However, if you want to do it right, you need to plan everything carefully and prepare yourself. Since a lot will be at stake here, you certainly want to avoid unnecessary risks and reduce the probability of failure. And we are here to help you with that.
Below, you will find the essential tips for starting a catering business. Read on to learn all about choosing an entity type and working on your brand name, preparing your working space, drawing a business plan, getting clearances and licenses, marketing and more.
Come up with the Name and Choose an Entity Type
Keep the name simple but catchy. Make sure it’s easy to remember and spell and reflects who you are and what you offer. The catering business is popular, and there will be a lot of competition. You don’t want your clients to get confused and accidentally go to one of your competitors. This is why it’s vital that your company name stands out without being too long and complicated.
After deciding on the name, you need to consider how to register or incorporate your catering company. The two most common options are: LLC (limited liability company) and corporation.
The main difference is that LLC is taxed as a partnership while corporations are taxed separately from their owners. A single-owner LLC—for instance—can be reported on a personal tax return, whereas a corporation would be taxed independently. Having said that, there are certain restrictions related to corporations—for example, you need to have at least two shareholders. Also, LLCs are easier to form and maintain than corporations, so many people prefer LLCs when it comes to their catering businesses.
However, you should also research other options or contact a professional advisor.
Find Your Niche
You might make the world’s best vegan comfort food, but if you’re setting up shop in an area where there are already six other caterers who specialize in vegan fare, you’ll have a harder time getting your business off the ground.
Do some basic market research to find out what catering companies serve your area and what might be missing from the culinary landscape. You can browse your competitors’ websites or give them a call to get a sense of their menus, the size and type of functions they serve and how much they charge. You can also read reviews to learn what’s working for them and what their customers want them to do better.
With this information in mind, you can tailor your vision. If other caterers already serve the food you’re great at making, that doesn’t mean you need to give up on your dream or that you need to find other cuisines to master. Find an angle that sets you apart or gear your business towards a customer base that’s not currently being served.
Decide on a Working Space
Whether you want to rent out some space or work from your garage, you need to ensure it’s suited for a catering business. First, check with local regulators to find out what your space will need in order to comply with food safety standards.
Second, check the conditions of your space. You might want to add caulking to any gaps around your garage door or repair the windows to ensure that proper ventilation is not obstructed. Then, work on providing air circulation and insulation. After all, you will spend a lot of time there, and you will be working with food that can spoil easily.
After that, look for enough countertop space to work on and think about the lighting—you want to have enough natural light, but it shouldn’t be too bright or too dark. You also need a separate space for cleaning dishes, preparing foods, and so on. Make sure it has a sink with hot water, an oven, a refrigerator and so on.
Additionally, you should have enough storage space for food items, cooking supplies, cleaning supplies and so on. You can use a closet or a similar storage space, but also a place with the right temperatures for different types of food.
Moreover, make sure you have a strategy for food waste and trash containers for garbage. Ideally, these should be easy to clean and have lids. If you plan to use public dumping space, make sure you follow all the rules for cleaning up after yourself.
Last but not least, organize your cooking equipment. Depending on the type of catering business you are planning to run, you may need anything from pots and pans, mixers, blenders and so on to special equipment like a mobile kitchen trailer or a grill.
Prepare a Business Plan
A business plan will help you evaluate your idea and clearly define how your business will succeed. It forces you to think about all the major aspects of your catering company, which can help you avoid mistakes and improve your organizational skills.
The main aim of a business plan is to create a blueprint for your company—it should include a description of your concept, your goals, your strategy, market analysis and risk analysis.
Have in mind that writing a good business plan takes time and effort. Make sure you think about every aspect of your business and provide enough details. You can check out some valuable tips online and get yourself familiar with the process of creating a business plan. You might also work with a professional financial advisor.
Draw up a Budget
After preparing your business plan, you need to draw up a budget. This will allow you to determine how much money you need to start and how much you can make once you are operating. Also, it will help you assess whether your business idea is profitable and whether your strategies will be adequate.
You should have a detailed budget where you describe how much money you will be spending on different aspects of your business, such as food, marketing, supplies and equipment. Apart from these costs, you also need to think about factors such as loan payments, taxes and so on. Of course, this is just an estimated budget—it’s possible that things won’t go as planned, and you will need to adjust it accordingly.
Check if You Need a License or a Clearance
In the case of a food-related business, you will likely need to get a license or clearance in order to work in your area. This can include food handling licenses in most states and other types of permits, depending on the kind of company you plan to run.
To find out what licenses and clearances you need, check the rules and regulations in your location. Contact the right local authorities and ask all the necessary questions to ensure you don’t omit anything important.
Develop a Marketing Strategy
If you want to build a catering business, you need to develop a proper marketing strategy. Even though you don’t need a big chunk of capital and can even work without paying for advertising (which is better for smaller companies), it’s still crucial that you make people aware of your presence and what you can offer them. This means that you need to invest time in marketing activities.
The first step to improve brand awareness would be to create a list of all the possible ways to promote your business. Then, focus on the ones that are most practical and affordable for you. For example, you could start with social media marketing. Facebook is free to use, but other sites may require registration or payment. You should also consider using video marketing, including YouTube videos.
From there, go on to more traditional methods like putting up flyers and posters around your area. Don’t forget about local events—you can also get in touch with organizers and offer them catering services at the event. The same goes for fundraisers, weddings, parties and other events that could be a good opportunity for you.
Whatever option or a combination of options you choose, make sure you have enough budget for it.
Final Take
Now you have a clear goal and a step-by-step guide to starting a catering company. All you need to do is take action, analyze your results and make changes when needed.
If you want to start a catering business, be ready to work hard and get your hands dirty. You can’t get rich overnight, especially if you are a novice in the field. But, with the right strategy and enough inner motivation, you can make it. Just remember to develop a good business plan and a budget, get a good working space and don’t forget about marketing.
The most important thing is to be patient and persistent. The more time you dedicate to starting your own catering business, the faster you will succeed. And remember—research is vital, so make sure to follow all the steps we outlined above.
Feature image: Medina Catering; Image 1: Lukas Blazek; Image 2: Kelly Jean