Open Your Own Catering Business - 3 Mistakes To Avoid
Catering entrepreneurs make a number of mistakes in their business
. The results range from company failure to depressing revenues or increase costs dramatically. These are three mistakes that are specific to the catering business.Working in an Unlicensed Kitchen
It is illegal to run a catering business out of just any kitchen, and certainly out of a home kitchen. While you may not run into trouble at first, or even for a long time, if someone should ever become sick from your food and you are sued, your insurance company can refuse to cover you if you were operating illegally. Furthermore, you could be shut down by the local health department at any time for working out of an unlicensed kitchen. For an aspect of your business that is so key to its success, make sure that you take every step to operate on the up and up.
Ignoring the Private/Corporate Balance
If you choose to serve only individuals or only businesses, you may simplify your marketing and save on some expenses in the short term. However, you will find at some point that you are missing out on business that will help your kitchen remain utilized more often if you serve only one of these markets. By balancing service to both, you hedge against trends that impact one market but not the other. You can also prevent too much of your business from coming from a few large area businesses by serving private parties as well.
Buying Too Much Equipment
When you launch your catering company, only buy equipment that you are certain you will use consistently. Keep in mind that event rental equipment companies exist, and you can build a relationship with a rental company guaranteeing a discount for your orders. This can make it possible to lower the cost to your customers while expanding their options for chairs, tables, tablecloths, silverware, etc.
If you buy too much equipment up front, you tie up a lot of your capital in these assets and may later find out that they are not the pieces that customers value. Operate for a while before buying more than the basic equipment and then only buy the equipment when you see you have had to rent it multiple times. Plan your capital purchases carefully and spread them over time so you can fund them with the company's earnings. You should either charge the same prices for the item's use as a rental company would and keep the eventual profit, or charge a lower fee if it will encourage more sales in the long-run.
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