Guide To Starting A Catering Business

Does serving delicious food to a crowd of party goers sound like a dream? Do you want to take your love of desserts to weddings and other special events? If so, becoming a professional caterer could be the right career path for you.

In this guide, we’re going to explore what it takes to start and fund your own catering business. We’ll walk you through every step, from creating a business plan and funding expenses to marketing your new business.

How To Start & Fund A Catering Business Step-By-Step

Starting a catering business takes time and money, but the reward at the end is worth it for many aspiring entrepreneurs. Here’s how to launch your catering business.

Step 1: Pick Your Niche

Instead of trying to offer services to everyone, pick a niche.

There are a wide variety of catering niches to consider, including:

• Weddings
• Corporate Events
• Adult Parties
• School Events
• Children’s Parties
• Festivals
• Sports Events

Keep in mind the type of food you’ll be making to help narrow down your niche (i.e., lighter fare is better for business functions and luncheons, while fancy entrees are better suited for weddings).

Make sure to do market research in your area, too. Identify where there are gaps and what niche is overcrowded. Your biggest odds for success are in fulfilling a need that isn’t currently being met.

Step 2: Create Your Business Plan

Your business plan should not only include details about your business in the present — your management team and your mission statement, for example– but it should also serve as an outline for how your business will hit future targets. Keep it short and sweet with a one-page business plan.

Your business plan acts as a blueprint, outlining how your company will become successful and profitable. It’s also critical when it’s time to obtain financing. Banks, nonprofit lenders, and even some alternative lenders may require a business plan as part of a loan application.

Step 3: Create Your Menu

Once you have a niche in mind, you’ll be able to narrow down your menu choices. Here’s what to consider when selecting your menu:

• The type of food you’re experienced in making
• Your target demographics
• Including items with easy-to-source ingredients
• Keeping your menu to a manageable size
• Including items for guests with dietary restrictions (vegetarian, gluten-free, dairy-free, vegan)

Performing a test run or two can help you further improve your menu. Tweak recipes as needed, change techniques to become more efficient, and be honest with yourself about what works and what doesn’t. Then, alter your menu accordingly.

Step 4: Source Your Ingredients

After creating your menu, you’ll need to source your ingredients. While purchasing from a grocery store or wholesale club may work in the early stages, now is the time to start building relationships with local farmers, restaurant suppliers, and food service vendors.

Step 5: Find A Food Prep Space

If you plan to cater from home, contact the health department in your area to find out more about the regulations of home-based catering businesses, including inspection and permit requirements.

In most cases, you’ll need to rent space for your kitchen. There are two ways to go about this:

• Rent or purchase commercial space: Most suitable for full-time caterers; expensive as it requires the purchase of equipment
• Use a commissary: Suitable for part-time caterers; doesn’t require investment in equipment

Step 6: Calculate Startup Costs

Before starting your business, sit down and make a list of your total expenses. Expenses could include a number of things such as:

• Rent for a commercial space
• Industrial equipment
• Serving equipment
• Transportation vehicles
• Insurance and registration costs
• Payroll

Once you’ve made your list, start shopping around to get an idea of costs. Check out prices online or visit local commercial kitchen equipment and supply stores. Once you have an idea of how much funding you need, it’s a smart idea to add about 30% to those costs to prepare for the unexpected.

Step 7: Register Your Business

Your business will need to be registered with federal, state, and local agencies.

To get started, you’ll have to choose a business name and check your Secretary of State’s website to ensure that this name is not already being used by another business.

Next, you will need to select your business structure. This is an important step because your business structure determines how your business is taxed and your personal liability for debts incurred by the business.

After you choose your business structure, you will need to register with the state where you will operate. You can register through your state’s Secretary of State website. Application and fee requirements vary by state. If you plan to offer services in more than one state, you will need to register with each state.

Another important step in registering your business is obtaining an Employer Identification Number (EIN) from the IRS. This is a necessary step if your business will have employees now or in the future.

Step 8: Get Permits & Licenses

After registering your business, it’s time to apply for the permits that you need to legally operate your business.

State and local laws surrounding permit and license requirements vary. Some of the permits and licenses you may need to legally operate your business include:

• Business licenses
• Health permits
• Food-handling licenses
• Liquor licenses

You can contact the local health department, the state Alcoholic Beverage Control board, and other state and local agencies to learn more about the licenses required in your area, how to apply, and any applicable fees.

Step 9: Get Business Insurance

Protecting your catering business is important, and there’s no better way to protect yourself and your business than with business insurance. As a caterer, there are multiple insurance options to consider, including:

• General liability insurance
• Errors and omission (E&O) insurance
• Property insurance
• Worker’s compensation insurance
• Liquor liability insurance

Learn more in our guide to common types of business insurance you might need.

Insurance requirements vary by state. Talk to your local insurance agent to find out more about the laws in your state and to create a personalized insurance policy for your new catering business.

Step 10: Seek Business Funding

We’ve already reviewed many of the costs you’ll encounter when opening your own catering business. Now, it’s time to determine how to pay for those costs. Options include:

• Using your personal savings
• Asking for help from friends or family
• Using business or personal credit cards
• Getting a personal loan or line of credit
• Tapping into your retirement accounts
• Using crowdfunding to get community assistance

Unsure of where to start? Kick off your search with the best loans for startups.

Step 11: Choose The Right Software

From keeping track of events to accepting credit cards, the right software can help you do it all. As a caterer, there are several types of software you should consider investing in to keep operations running efficiently.

Step 12: Hire Employees

When you first start your business, you may be a one-man operation until you start bringing in revenue. However, you eventually need to hire employees if you want to grow and scale. Potential staff members include chefs, services, bartenders, and event planners.

Do your research to get an idea of the average pay range in your area for each position. It’s also important to remember that other expenses come with hiring staff, including workman’s compensation insurance, training costs, and benefits.

To find employees for your business, ask friends, family members, and colleagues for referrals. You may also post a job advertisement on online job boards. You can even contact local temporary agencies to find the help you need.

Step 13: Create A Web Presence

To reach clients, you’ll need a web presence.

Social media is a great way to reach new customers, and best of all, setting up your profiles is free! Create business pages on Facebook, Twitter, Instagram, and/or Pinterest. Include contact information, service areas, and type of events catered. Later, add menus, price lists, and photos of past events.

In addition to your social media profiles, you also need to build a website. This is made easy with website builders that don’t require previous design experience. Make sure that your website reflects your branding and includes contact information.

Step 14: Advertise Your Business

Boosting your web presence is a great start to advertising your business, but make sure that you don’t stop there. There are many ways you can advertise your business — both online and off. Some possibilities include:

• Distribute fliers
• Run ads online
• Run ads in the newspaper
• Attend wedding shows
• Get featured on wedding and event websites

The Bottom Line On Starting A Catering Business

Starting your own catering business is exciting but venturing out on your own can also be a little scary, especially if you lack business experience. However, you can be on track to owning and operating a successful catering business with careful planning, preparation, and strategic borrowing. Good luck!