If you enjoy cooking and entertaining, a home-based catering business can be a great way to turn your passion into profit. But starting a catering business takes hard work and planning and involves more than just creating menus and cooking dishes.
In this post, I’ll share ten must-follow steps to start a catering business from home. I’ll also highlight the benefits and drawbacks of owning a catering business so you can understand if it's the right fit for you.
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10 Steps to Start a Catering Business
There are several things you need to do to get your business up and running. Follow these steps and you’ll be on your way to success!
1. Find Your Niche
The catering industry can be a competitive one. To get ahead of the pack and make it easier to market your business, it can be a good idea to niche down and pick a specialty. This could be a particular cuisine like Thai, Mexican, Italian, or vegan food. You could also focus on certain types of events. Will you do weddings or corporate functions like office lunches? Will these events be large or small?
Whatever you decide, the key is to choose a niche with a large enough customer base that has the potential to be lucrative. For example, suppose your business is in a big city. In that case, a good niche to focus on could be catering for corporate lunches and parties, as there are likely thousands of potential customers. This would, of course, be a bad idea if you're based in a small town with mainly small businesses.
Once you've worked out your niche, research your potential customers and soon-to-be competition. Get familiar with other caterers in the space to see what you're up against and identify opportunities. Look at their reviews to see what they're getting right and wrong.
It's also good to speak to your friends and family about their experiences with local caterers. If you know anyone who organizes events, that's even more valuable. Find out from them who the best caterers are and what they look for when they hire one.
2. Determine Licensing, Permits, and Insurance
While requirements differ from country to country and state to state, you'll most likely need a license or permit before starting your catering business.
For example, most states in the US require a food safety certification or a food service permit to ensure your operations and home kitchen meet local health codes. Similarly, if you're based in the UK, you must apply for a catering business license. Once registered, you may face random inspections by the local authorities.
Beyond licenses and permits, you'll need adequate liability insurance in case of any accidents, injuries, or illnesses that occur during catering events. Contact your local health department or relevant government agency and ask about the specific requirements for starting a home catering business.
3. Register Your Business
Registering a business and choosing a business structure with the government is required in most countries. In the US, for example, there are three main types of entities: Sole Proprietorships, Partnerships, and Limited Liability Corporations (LLC).
Sole Proprietorships:
- You are liable for business debts
- Business income is taxed as part of your individual income
Partnerships:
- For businesses with two or more partners
- You are liable for business debts
Limited Liability Corporations (LLC):
- For one or more owners
- Offers limited liability for business debts
The structure you choose impacts the taxes you'll pay and your personal liability for debts and other legal matters, so it's an important decision.
4. Create a Business Plan
A business plan for a catering company should include standard sections included in all business plans, but it should focus on relevant points specific to the catering industry. Here's a quick rundown:
Executive summary: Summarize your business plan, highlighting the key takeaways from each section.
Company description: Include basic information about what your company does, its location, and its facility.
Products and services: Include your cuisine type, menus, and pricing.
Business structure: Feature basic information about your ownership structure, e.g., sole proprietorship, partnership, or LLC.
Market analysis: Analyze competitors, market demand, and opportunities.
Marketing and sales plan: Outline strategies you'll put in place to promote and grow your business.
Financial projections: Show 3-5 year financial projections, with budgets that include fixed and variable costs such as equipment, food, supplies, salaries, etc.
Operating plan: Include operating hours, the types of events and quantities you can cater, staffing information, insurance, permits, and any food service certificates.
5. Develop Your Menu
When creating a menu, you'll need to consider costs, prep time, and the types of events you'll be catering. With this in mind, devise a list of core menu options you can customize based on client preferences and event type, e.g., canapes for an office party, main course dishes for a sit-down dinner, etc.
After developing your menu and documenting the recipes, cook every dish several times to perfect the taste. But don't just try it yourself. Get other people to taste your menu items and provide honest feedback. This way, you'll better understand which dishes are a hit and which need improvement. You'll also learn a lot about the practicality of your menu in terms of costs and prep time.
6. Set Up Your Accounts
It's exciting to think about creating menus and entertaining clients at events. But your catering business will become a nightmare if you don't get your accounts and bookkeeping in order.
First, you'll need to open a business bank account to separate your business finances from your personal funds. If you don't, you'll find tracking and reconciling your business expenses challenging. You'll also end up eating into your business cash flow by spending funds designated for business purposes for personal use.
You'll also need a way to manage your business finances and accounts. You can choose to buy accounting software or just use excel. But if you don't have any accounting experience, hiring a bookkeeper is a good idea and well worth the money.
Whatever option you choose, keeping your accounts organized is vital to track cash flow, pay your bills, and ensure you're getting paid by customers. You'll make your life a lot easier with an accurate record of all your expenses. You can also claim maximum deductions come tax time!
7. Purchase Kitchen Equipment
Make a budget and draw up a list that includes the kitchen equipment you need to cook, such as utensils, pots, pans and appliances. You'll also need to list all the tableware you'll need to present and serve food at events like cutlery, dishes, and glassware.
When writing your list, separate your must-haves from nice-to-haves and highlight what you can buy second-hand because not everything has to be brand new. See what you can use from home too!
Once you've set your budget and created your list, it's time to start looking for suppliers. Ask around and research online to find wholesale suppliers selling high-quality kitchen equipment and tableware at fair prices. You'll also need to find regular, reliable, and well-priced food suppliers for ingredients.
These expenses can add up so if you're running short of cash consider obtaining a small business loan or a line of credit. But remember to keep a strict budget that reflects your business needs.
8. Create a Website
Your website is your business’s most important digital asset. It’s the first place people go to learn about your services and find information about your business. Your website also provides a way for you to get paid and acts like your digital sales rep, working 24/7 to promote your services.
Before creating your website, brainstorm all the main reasons why people would visit your site. Some people may visit to find out about your pricing or menus, while others may want to find your contact details or pay you for your services. Regardless of why people visit, your website must help people achieve their goals and make a great first impression.
You don’t need to hire an expensive developer to build a custom website for you. Several website builders, like Wix and Squarespace, provide industry-specific templates and designs that make it quick, easy, and inexpensive for you to create a fantastic website.
9. Set Up a Payment System
With cash and checks becoming relics of the past, your business must provide convenient credit card and online payment options. The quickest and easiest way to do this is using a payment service provider like Pay.com.
Pay.com makes it simple for businesses of all types to accept payments via credit cards, debit cards, and many other payment methods.
Besides enabling payments through your website, Pay.com allows you to create Pay Links and send them to customers via email or SMS. When customers click the link, they’re directed to a customized checkout page where they can make a payment. Pay.com also enables you to collect customer credit card details over the phone and securely process the payment through your Virtual Terminal.
One of my favorite things about Pay.com is it's super simple to set up. You can start accepting payments in a few minutes and track all your customer payments on a single user-friendly dashboard. Click here to find out how you can get started.
10. Market and Grow Your Business
In previous years, getting clients and marketing your catering business was about networking, going to trade shows, and paying for ads on popular industry websites. These strategies aren’t entirely irrelevant, but times have changed.
The first thing you need to do is get inside the head of your perfect client. Get to know who they are and which websites and social media platforms they use.
Once you know what social platforms they use, it’s about getting your business in front of them. For example, suppose your ideal clients spend their time on Instagram and Facebook. In that case, you should create a profile on these platforms and post high-quality pictures and videos of your cooking. Another option is to develop and share blog posts with recipe tips. You could record videos with you cooking a delicious dish.
It’s also a good idea to cater an event for a friend or family member to get some experience under your belt. You can use this experience to attract new clients by printing brochures and handing out business cards at the event.
You can also ask your guests to post reviews on your social profiles, website, and any online forums that review local businesses. Be sure to take lots of photos as well and share those on the social platforms where your ideal customers spend their time.
The Pros and Cons of Starting a Catering Business from Home
Starting a catering business out of your home has distinct advantages and disadvantages. Here are some of the key pros and cons to consider.
Pros
Low startup costs: A home-based catering business typically costs much less to start than other food-based businesses, like a restaurant or cafes. You don't have to worry about the high costs of renting a commercial kitchen space or retail location. The main startup costs include equipment, supplies, staff, website, and insurance. That's mostly it!
Lucrative: Home-based catering businesses offer a cost-effective alternative to traditional catering companies and can be very profitable. If you're savvy about food and staffing costs and target the right clients, you can charge high rates and maintain a healthy profit margin!
Built-in advertising: In the catering world, every event is an opportunity to advertise and impress potential customers. If you provide delicious food, people will be sure to remember your name when they're planning their next event and you'll have a steady stream of new clients.
Flexibility: One of the best things about starting a catering business is that you can do it on your own terms. You can choose what kind of events you want to cater, how often you want to work, and how much you want to charge. You could even start a ghost kitchen! Plus, you'll have the satisfaction of knowing that you're providing delicious food for people's special occasions.
Social: Catering is a social kind of business that enables you to meet all sorts of people. You might cater intimate dinner parties, black-tie galas, or lavish weddings. Either way, you'll attend some great events and get the chance to mingle with interesting people.
Cons
Mix of home and work life: When working from home, the line between work and home life can quickly disappear. It can be tough to stay focused when there's so much going on at home, especially if you have kids. It's also easy to overwork, making finding time for family and friends challenging.
Limited space: If you're working out of a small kitchen, it can be challenging to prepare and store large quantities of food. This can limit the size and scope of the events you're able to cater to and make your home a cluttered mess.
Health regulations: You'll need to ensure your kitchen meets all health department regulations. This can be costly and time-consuming and may require periodic inspections to ensure compliance with local, state, or federal regulations.
Responsibility and liability: Cooking for other people involves a lot of responsibility. Mishandled food can make guests sick, creating potential liability issues.
Multiple roles: Owning and managing a successful catering business requires skill in many different things. Besides being a great cook, it's beneficial to have a basic understanding of marketing, accounting, and event planning (among other things). If you don't, consider hiring people that do.
The Bottom Line: Is Starting a Catering Business Right for You?
So, there you have it! 10 easy steps for starting your own catering business from home. With a bit of planning, hard work, and the right processes and systems, you can soon be on your way to being your own boss and making great money doing something you love.
Take things one step at a time and be patient. Rome wasn’t built in a day, and your catering empire won’t be either.
Don’t forget, payments play a vital role in every successful business. When you partner with Pay.com, you enjoy a quick and easy onboarding and setup process, and you can start accepting payments right away. Click here to find out how to get started.
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