So, you want to start a home-based catering business? Great idea! But…how the heck do you get started? Where’s the starting point? Don’t know alright, we’re going to show you exactly how to do it.
Our step by step guide on how to start a home-based catering business covers all the essential information to help you decide if this is the right choice for you.
Starting your catering-business is easy but making it a profitable business, is more difficult than it might seem at first sight.
Catering business is good for someone who enjoys cooking for others. Someone who passionate about cooking and spending more time cooking, planning to cook, and serving that cooked food for others.
So an owner will need to be flexible to analyze the different needs of their customers according to their occasions, it may be a social gathering, parties, festival or corporate events to deliver them effectively.
In case if you don’t have a passion for cooking that’s fine it’s not an issue but it’s certainly an advantage.
I want you to increase your expertise in cooking because the catering business is all about providing food service.
You must need to develop your skills as a caterer. You have to start somewhere on your path to becoming a caterer.
9 Steps to Start Catering Business
1. Research
Before starting down the path I want you to do proper research on your market.
If you don’t know much about the business then you should spend enough time learning about it before you begin.
You should do proper research to understand whether you and your business are a good match.
A catering business is a high-stress job with demanding clients and you have to become a master of multitasking.
So the research will help you avoid making mistakes in your business planning.
It becomes much easier for you to understand your chosen business is a good fit for your personality?
Once you’re sure of your business, dig in deeper. Effective market research not only helps you get inside your customers’ heads but also helps you to examine your competitors.
Examining your competitor will give you a much better idea for your business plan.
Develop the necessary skills will be required for you to run the catering business.
I want you to improve your management skills, communication skills, problem-solving and sales skills along with willingness and energy to work hard.
2. Choose Your Niche
Once you decided to start your catering business the very first step is to pick the right niche. The industry offers a wide variety of catering services.
Don,t sell to anyone to everyone. Even well-established businesses can get failed in practice.
It becomes very important to choose the right niche for yourself. The niche is a category you will be in and the types of products you will sell; it’s what you specialize in.
Here I want you to target a specific audience. Who is your ideal customer? Do you want to target on corporate or private events? Wedding catering? Social event catering or Small dinner parties.
Your targeted location plays an important role in deciding your niche.
The best method for choosing the right niche is to understand your competitors and what they offer can help make your products, services, and marketing stand out.
Research the marketplace and analyze your potential customer will give you a better idea to decide what type of catering you should offer.
The customer demand will vary according to the type of catering you are going to offer. Different kinds of events will demand different things from you and your staff.
Once you come up with the right choice then develop your product or service to target specific customers, and manage your brand once you launch.
3. Funding
Calculate how much startup capital does it need to get started. Start-up costs depend much on what type of catering service do you want to target.
That includes corporate events, private events, Wedding catering, Social event catering or Small dinner parties.
But that,s not enough you have to be more specific about your delivery.
Like the buffet style, it consists of several dishes from which guests serve themselves.
But in case of seated dinner, it provides an entirely different event experience and it is much more expensive than a buffet-style because you need servers to serve the guests.
You may want to have bartender if you decide to add alcohol to your catering menu.
Once you choose a specific category you will get an idea of how much money does it cost you to manage a catering service.
But that’s not the end you need to have the necessary equipment to run your business that includes ovens, stoves, dishware, and cooking utensils.
Apart from that, we have to estimate other costs that are related to staff salaries.
After doing proper research make a list of expenses and then estimate how much they’ll cost.
Once you’ve identified your business expenses and how much they’ll cost, it will give you a good idea about start-up capital you need to start the business.
4. Set Up Your Kitchen
Make a list of cooking equipment you’ll need to purchase to begin catering.
Once you come up with the right types of equipment, you should gather equipment and supplies.
For example, your household equipment is not capable enough for catering services.
You, ll need to have a separate freezer, conveyor dishwasher to wash enough dishes, serving dishes, coolers and much more…
What you need from a home kitchen almost certainly differs from a commercial kitchen, and a catering kitchen requires commercial cooking equipment.
There are several ways that the Commercial kitchen differs from the home kitchen.
The commercial kitchen is much bigger, in its functionality, it is highly capable of doing things that a home kitchen could never do.
Refrigeration often has a larger compressor which means it can handle harder use. It will be louder than your home refrigerator or cooler.
Create a budget having a price range in mind that will help you to figure out exactly what you’ll need to run your business.
Be more specific about what type of catering service you are providing. Seated dinner requires different serving equipment than the equipment required in a buffet system.
At a minimum, you’ll need dinner plates, salad plates, water glasses, wine glasses if wine is being served.
Other than that you’ll need tablecloths napkins, centerpieces and serving trays and much more…
5. Acquire All the Necessary Licenses
Generally, a person’s home kitchen, where food is also prepared for family members, will not meet the regulations to be licensed. To operate any type of catering business, you will need a Food Establishment License.
Usually, in most states, the department of health provides a food service license.
You can get the food service license from your local health department, either online or in person.
In general, the process involves filling an online application the licensee must fill license application with company or organization name and location along with the appropriate fees.
Before opening, the inspection must be completed by the Health Inspector responsible for the facility to ensure the company or the organization is operating under restaurant food safety regulations.
You may need to have a business license to see if your state has that requirement visit the official site of the U.S. Small Business Administration (SBA) for licensing.
Do your proper research to ensure you get the appropriate license with the right insurance coverage.
If you decide to add alcohol to your catering menu you must need to have a liquor license.
A liquor license allows you to sell alcohol in your business. You may need to visit your state’s Alcohol and Beverage Commission for specific requirements for your state.
Different states have different laws make sure that you understand your state’s liquor laws.
Once you understand the laws of your city and state then fill the application.
You’ll need to contact your state Alcohol and Beverage Commission to get appropriate forms, fill them out, and submit them.
Do this as early as possible, your application can take up to six months to be approved.
6. Pricing
When it comes to pricing it is a significant decision that impacts every aspect of a business and directly related to the company profitability.
You must need to calculate the cost of food, drinks, and the cost of labors to establish a price that will make you profitable.
Deciding right menu prices with your desired gross profit margin is the first step toward making a profit.
To determine the best price for your menus you may need to do some research about your market.
How your competitors are pricing their menus for similar dishes can help you to determine the best price.
Once you get all the data about your competition and potential customers, what they want and what prices your customers find acceptable.
Then you can decide what price you should offer to attract enough clients to make a profit.
7. Hire Staff
How many employees you’ll require will vary depending on your service, location and the type of catering you have.
Analyze the basic staff members required for your catering business.
The number of staff required may fluctuate for an event than others. But there are certain roles require for every catering event.
The staff you recruit can make or break your catering business. Make a list of jobs according to their roles and responsibilities.
Basic staff members involve supervisors, chefs, servers, bartenders, dishwashers and many more…
In addition to filling the jobs, you’ll also need to determine how many of each, because some job requires more employees than others.
It’s challenging to find out the best possible employees who can fit within your organization.
Certain roles will help you with recruiting all the employees you need.
There are a lot of positions to hire for a new catering business. There are certain positions you must hire someone with experience, while others are perfect for newcomers to the business.
It’s very important to hire experienced kitchen staff. The success of your catering business highly depends on the kitchen staff. You must need to have a skillful chef.
Bartender’s position demands certain skills along with the experience. The bartender must serve the right drinks, entertain, good memory, offer needed advice.
A good bartender will know how to create an unforgettable experience.[Source:thebalance]
8. Marketing Your Business
The catering industry is highly competitive. One of the biggest challenges a catering business owner faces is competition.
Starting a new catering business means competing with hundreds of other caterers.
To stand out from the crowd you need to go laser-focused on a chosen market segment.
If you’re going to run a catering business, you need customers. Without the customer, you would not be able to survive even for 12 months.
Here marketing plays a vital role to help you to develop services in your catering business that meet the needs of your chosen market segment.
Find out what makes your business unique from your competitors. That will motivate your potential customers to choose your services over the competition.
There are various methods you can promote your catering business. Create an effective business card, create your brochure.
Creating a basic website is another crucial way of attracting a loyal audience and growing over time.
Collaborating with the non-competitive businesses in your area and agree to cross-promote.
Build a network and send your non-ideal customer to others and they will return the favor.
Collaborating is one of the best methods to expand your customer base because you’ll be reaching new people.
9. Growing Your Client Base
Once you get your company off the ground, built up a small customer base.
Want to grow your customer base and ready to take your business to the next level.
Analyzing your customer needs can give you good insights into your audience and allows you to develop services that are matched to your customers’ needs.
Try to offer personalized service according to their needs. Make sure your customer will be happy and want to return to you every time they want catering services, it can be tricky to imagine how that’s possible.
For that, you need to stay in contact with potential and existing customers and add more value by finding them great deals and curating unbelievable experiences for them.
This is where you have a competitive advantage over bigger suppliers. You have good relationships with your customers.
You can also use networking as a tool for finding new clients and referrals.
Create a strong network of friends, family, colleagues and business connections-these connections could be a great way to get your foot in the door.
Networking will also help you to engage with your contacts, existing customers and finding new opportunities to assist them helps to strengthen the relationship.
You should invest your time and money in learning, developing your understanding of your business and build a stronger relationship with them.