How to Start a Catering Business
Everything you need to know about starting your own catering business
Research & Refine your Business Idea
Starting up a catering business seems like a logical step for a person who loves making food for others or someone who already works in the food industry. But opening up your own food business is not as simple as deciding to do it and then booking your first gig the next day. There are several items to consider before you should accept your first catering client and we’ll discuss these things in this article.
First, the fun part! Let’s get specific. Chances are you have a couple of dishes or desserts that you’re really good at making. You’re already semi-famous in your own social circle. That’s a great place to start but it’s best for you to “niche down.”
If you’re living in a smaller town, you may be able to get away with catering from a large menu, from backyard barbecue to fancy cocktails and hors d’oeuvre. However, if you’re in a city or you find that you’ll be competing with many other catering businesses, it’s worthwhile to do some research and find out who’s already supplying what kind of catering services.
Once you know who and what’s out there, plan to get more specific with what you want to serve, which events you want to cater to, and who your ideal clients will be.
Actually, it might be worthwhile to set aside what you want to do and consider what the greatest needs are. What is the catering business in your area missing?
Maybe you want to focus on weddings but there are already a dozen other catering companies in your neighbourhood that handle weddings. Maybe you should look into the funeral catering business. Or see if there is a need for catering at corporate functions or birthday and holiday parties. Maybe there’s a need in your area for a daily soup and sandwich service.
Next, it’s time to work on a business plan. This is where you’ll also get into the specifics of financing. Where will your start-up funds come from and what exactly will your initial costs be?
Aside from a registering a business name and obtaining a business license, you’ll need to check out local health and food safety regulations in your region to find out which permits and licenses you will need. The food industry has many potential risks including kitchen fires, transportation accidents, and food poisoning so make sure you have all your insurance bases covered. If you plan on working out of your own kitchen, you may need to get a loan to bring it up to code.
Creating your Business Website
The purpose of a business website is to attract potential customers. Today, most people do their pre-shopping on the internet. If someone’s looking for a nice hotel, they’ll check the hotel’s website to read reviews and view pictures of what it looks like.
The same goes for catering. Your website should showcase professional pictures of the food you make and events you’ve worked at. It should also include some sample menus and general price guides. Over time, you can collect customer reviews on your website which is a great way to increase your business.
Your website should paint a clear picture for any visitor to see exactly what kind of food you serve and what events you cater to. Make it easy for people to find out the most important information they need to know about your business.
You might want to consider hiring a professional web designer or contract out the web building to a freelancer. Just be sure to include that cost in your budget.
Setting up a website isn’t as hard as it may sound. In fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website. Their service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.
Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.
Your website also lets you track your visitors and you can study the data analytics to see who is visiting your site. This kind of information can be useful if you find that you’re not attracting the customers you’re looking for.
Get ideas for your catering business name!
Marketing Your Business
A catering business will need to use a variety of marketing avenues, both online and physical. Since food is largely based on appearance, having social media accounts on Facebook and Instagram can be beneficial for reaching your more tech savvy customers. However, the point of these platforms will be to drive traffic to your website for more information.
Along with Facebook and Instagram, use Google to set up a business account. Google is the number one way people will found out about your catering business.
While the appearance of food is important, the actual taste of it is what will actually seal – or break – the deal. Here are a couple of marketing ideas you can use that will get your food into your potential client’s hands.
Farmer’s Markets, festivals, and fairs are great places to set up a sampling centre. Make sure that you have great signage, attractive brochures, and business cards along with delicious food.
If your target clients are in the business field, consider contacting some larger local businesses to ask if you can bring over some samples.
Donating leftovers to a food kitchen can also go a long way to building a good reputation.
If you know of any food bloggers in your area, see if you can meet up with one of them to arrange a taste testing. They may also be good resources to ask for referrals.
Check out venues in your area that typically host banquets and receptions and see if your business can be put on a vendor list.
Register with your local chamber of commerce.
Build relationships with people in complementary industries such as wedding planners and rental companies. Many of them would be willing to hand out your business cards and you can return the favour.
The best form of marketing is word of mouth. If you do a catering job where the food is perfect, the service is excellent, and the event is successful, you’ve just got yourself the best kind of free marketing there is!
Setting Goals and KPI’s
KPIs are key performance indicators. They can help you set goals and move forward in your business. Before you even have your catering business up and running, you can use the concept of KPIs to keep you on track.
The process of researching the catering market, writing a business plan, registering your business name, and going through all the paperwork to obtain permits and licenses for your catering business can take several months. Breaking each step down into doable goals and assigning them each a KPI can help you stay focussed on your goals rather than getting overwhelmed by everything on your to-do list.
Use measurable goals that you can achieve in short periods of time to get through each step.
The most important thing about KPIs is that they are specific, measurable, and attainable. You can’t expect to have a six figure month in the first year if you have start up bills and loans to pay.
Keep your goals small and review them often. Always have a plan to improve and become more successful.
Once you’ve booked your first few clients, you can continue to use the KPI concept to obtain more clients and build your business.
Plan your Finances
Starting a catering company can be expensive, especially if you plan to build your own commercial kitchen. Before you decide to go that route, check to see if you can rent a kitchen that is up to code in your neighbourhood. This is usually the least expensive way to go.
You’ll want to keep your business finances separate from your personal finances so set up a business account at your bank. It will also help you keep track of all your business expenses and income and give your business credibility. Also, a business account is essential when it comes to filing taxes.
When it comes to start up costs, you’ll need to set a budget and then make a plan to obtain the funds you’ll need. Along with opening a business account, you can talk to your bank about obtaining a small business loan. There might be grants you can take advantage of.
Lastly, you can turn to crowd sourcing and family and friends. If you do borrow money from people close to you, be sure to write up a detailed repayment plan.
Costs you should consider as you write up a business plan for your catering company include:
- licensing and permit fees,
- attorney fees for creating legally binding contracts,
- business expert fees to help with business plan,
- insurance costs,
- professional photographer for website and marketing material pictures,
- website builder,
- marketing materials including business cards and attractive brochures,
- building or renting of commercial kitchen,
- food and food service inventory,
- transportation costs,
- hiring staff.
Adopt an Entrepreneurial Mindset
How do you feel now about starting your own catering company? Feeling slightly overwhelmed is normal. However, don’t let all these details rob you of your excitement! Where there’s a will, there’s a way!
If you’re not feeling all gung-ho, remember that you can work on becoming more entrepreneurial minded.
Entrepreneurs are a special breed of people.
They are creative. If plan A, B, C, D, or E doesn’t work, they come up with plans F through Z.
They are tireless. Initially, many in the catering business work full-time while pursuing their catering job on the side. It can be very tiring.
But entrepreneurs don’t give up. When things get tough, they persist. They find a second wind – and a third and a fourth – and push through until they see their business start to grow.
Through it all, entrepreneurs have a passion to do what they love and make a living from it. And at the end of the day, the thought of providing delicious food at big events is often what gets them through the tough times. Catering can be a very rewarding business.
You may or may not feel you have an entrepreneurial mindset. That’s okay. It can be developed. Read books, listen to podcasts, get on mailing lists designed to help small businesses. There’s a lot of great information out there on creating an entrepreneurial mindset and learning and being open minded is a great first step.
Other things to consider when starting your catering business
Registering your catering business as an LLC is the simplest way to protect you from legal and financial liability. It also allows you to grow and hire additional employees. In short, an LLC is the best way for you to open up your own small business.
Next, and before you purchase a domain name, you’ll need to check to see if your business name is available. You’ll also need to register your business and get a business number for income tax reporting purposes.
Set up a meeting with a lawyer who is knowledgeable about small businesses. You can gain valuable advice that will help keep you and your business safe and free from legal allegations. A lawyer can also help you draw up the contracts you’ll need to have your clients sign.
You should also make sure that you have all the food handling permits and licenses that you require, depending on the state, province, or country you live in.
Accounting & Bookkeeping:
The best way to keep track of your finances is by using an online accounting software such as QuickBooks. There are other accounting programs available for small businesses. Do some research or talk with an accountant to see which program would work best for your catering business.
If numbers aren’t your thing, consider contracting out your accounting and bookkeeping to someone who knows what they’re doing. This can also be done as a virtual service. You can hire a freelance bookkeeper through UpWork, for example. This can save you time and time is money!
Chances are that you’ll need to hire employees for your very first catering gig. You’ll need servers and, depending on the size of the event, you might require help with food preparation, transportation, and setup.
Most catering businesses that start out hire workers on a contract basis. It’s a good idea to have a contract drawn up for potential workers that state that each catering gig is an individual event and not a part time job.
You’ll want to look for people who will take their roles seriously. Your business reputation is on the line. You don’t want a server showing up with a hang over, dressed improperly, or sneezing into the food. There will be minimum level of professionalism that will be required of all your onsite help.
As your business grows, you may find that you’re struggling to keep up with everything on your plate. You might consider hiring a part time employee to handle the administrative parts of the job including emails and social media accounts while you focus on handling the sales side of things.