Think you make a mean chicken Kiev or create especially awesome buffets? Others might think so too–enough to the point that maybe you should consider starting your own catering business. But just because you’re a great cook or baker doesn’t mean you’ve got what it takes to run a successful catering company. Following a step-by-step, pre-launch research plan, you can determine in advance how likely it is that you’ll be able to pursue your dream of starting your own small-business and making it work.
Step 1: Research the marketplace.
The first step in launching a catering company is to check out who else is offering catering in your area. Check out your competitors’ menus, their list of services, prices and customers. Visit their websites and see if you can quickly find their unique selling benefits. You might think that successful caterers sell food, but you’d be wrong. Sure, you start with your food, but why should customers buy that food from you instead of somewhere else?
People who buy catering can get good food from a wide variety of local providers. When they shop for catering, they look for more than just food—they look for a benefit.To be a successful caterer, you’ll need to sell convenience, affordability, unique menus, or corporate style or white-glove service.
If you’re looking to do in-home catering for private parties, contact your friends with a short survey. Ask if they use catering services, and ask them to tell you why they hired certain caterers, what they liked about the providers and what they’ll look for in their next caterer.
Step 2: Identify potential customers.
Contact your peers in the business community to find out what their companies look for in caterers to help you determine what your potential customers want. If you don’t have personal contacts who can help you, cold-call a few potential customers. Let them know you are not selling anything and simply want to ask a few questions about what they would like caterers to offer. But be sure to take time to find the appropriate person at each company to contact, otherwise you’re likely to get the brush-off.
This will help you gather information about the services that corporate customers want beyond food (such as set-up, take-down, staffing, a bar, etc.). You can learn how these businesses budget for catering and how often they use catering. These interviews or email exchanges will help you launch your business with with a benefit or benefits you know customers will want, instead of ones you think they will want (“Everyone will love my dim sum carts!”).
Step 3: Choose your niche.
You might think you should start with your catering concept and research how to start your business from there—but you’re assuming people will like your idea and want to pay for it. Starting with marketplace and customer research will better help you decide what type of catering you should offer. Once that you know who your potential customers are, what they want and what your price range will probably be, you can decide what you think you should offer to attract enough customers to make a profit.
How to Brand Your Business: A Beginner’s Guide provides valuable information on how to determine your niche, develop your product or service to target specific customers, and manage your brand once you launch. You can go very narrow (corporate events) or offer a wide variety of catering services. But if you try to be everything to everyone, you might end up being “nothing to no one.” If you want to offer a broad array of catering services, set up different pages on your website and create different brochures or sell sheets that sell each service separately. Niche options for a small caterer include:
•Corporate events (cocktail parties, banquets, executive luncheons, golf outings)
•Adult parties (anniversaries, bachelorette, birthdays, holiday, dinner parties)
•Festivals, concerts and sports events
Within your niche, you can further narrow your service by focusing on a specific type of food, such as barbecue, healthy foods, vegan, upscale menus or affordable menus.
Step 4: Brush up on small business basics.
No matter what type of small business someone starts, entrepreneurs have a number of common startup tasks to perform. These include getting a business permit from your town or city, getting a post office box, setting up a website and email address, looking into setting up a corporation and buying liability insurance. You’ll need to check with your town to see if your business will meet any zoning requirements and check your home owners’ association rules, if you’re part of an HOA. Find more tips on small-business startup basics with our guide, How to Write a business Plan the Right Way.
In addition to these general tasks, you’ll need to contact your state department of health to determine how to get a food service license and what you need to make sure your kitchen, storage, transportation and serving equipment meet the necessary standards. Some states require that you take a course and become a certified food manager, or hire one to prepare and serve your food.
Step 5: Run some numbers.
To determine what it will cost to start a catering business and what it will cost to run it once you are open for business, create a budget. Our recent installment on Small Business Budgeting for Beginners tells you everything you need to know about projecting your expenses for a new small business.
Plan on spending at least several thousand dollars in startup costs to upgrade your kitchen and cooking equipment, get your licenses and permits, upgrade your office equipment and marketing materials, and get the word out. Depending on how large you want to go, your initial investment could be more than $10,000.
Step 6: Write a business plan.
You will be much more likely to succeed with a catering business if you answer all of the questions related to your venture before you start, instead of trying to address them as they arise. A written business plan is not a difficult document to create if you work on it one piece at a time. Don’t reinvent the wheel—just follow the steps in How to Write a Business Plan the Right Way (mentioned before) to learn how to create a biz plan that will answer all of your questions before you risk your first dollar.
Take your time!
Researching how to start a catering business doesn’t mean you have to commit to doing it. Starting a business plan doesn’t cost you a dime or force you to launch a company. If you divide your research and planning into bite-size chunks you handle over the course of several months, you’ll get a much better feel for what it will take to start your dream business. Yes, you can do most of your research in a week or so, but you really don’t need to move that quickly.
Don’t stress yourself out thinking you need to create your business plan in 30 days or less. Set multiple deadlines to finish each section of your business plan, or you might never get started or finished—but don’t set just one end date with no road map to get there.
Work on your plan when you’re excited and interested in doing the work and you’ll be surprised at how soon you can determine what it will take to launch your catering business.
Inc.: How to Start a Catering Business
Food Service Warehouse: Starting a Home Catering Business
National Federation of Independent Businesses: How to Start a Catering Business
Food Service Warehouse: How to Start Your Own Catering Business
Sam Ashe-Edmunds has been a small-business consultant and owner for more than 25 years. He has written for a wide variety of magazines, newspapers and websites, including Entrepreneur, The Chicago Tribune, Chron Small Business, AZ Central Your Business, TheNest, Zacks, Motley Fool, Synonym Money, GlobalPost and Opposing Views.