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How To Calculate Start Up Costs For A Catering Business

By on September 2, 2011

How To Calculate Start Up Costs For A Catering BusinessThe catering business is relatively simple to setup as compared to a restaurant, a fast food joint or a cafe. It is one of the most satisfying and highly paying business options available with huge potential for growth. It is fun at the same time extremely challenging.

Every catering event, be it for a couple, a small birthday party, an office party or a grand wedding reception, is unique in its own way. Catering is lucrative provided you have loads of stamina, are able to deal with pressure situations and have a good understanding with your staff.

While calculating how much money you will need to set up a profitable catering business, you will have to consider initial opening costs as well as continuous operating costs. Since any business is not going to earn revenue within the first few months, you will have to set aside some funds to get through the initial days. Operating costs would normally include rent, salaries, electricity bills, internet bills, etc. Also remember, you will not be able to take home a paycheck during the initial days of the business.

You can start a catering business with as little or as much as your wallet can allow. Before you set out on this humongous task, you will need to list your start up costs just to make sure you do not get into debts even before you start. Listed below are some of the main components that will add to your start up costs.

Licenses

Contact the Local Health Authorities and enquire about the required licenses to run a catering business. Get an estimate of how much this would cost.

Kitchen

For a start up with a limited budget, you may want to rent a kitchen if available in your area or you may also consider your home kitchen. If this is not an option, you will need to setup a kitchen of your own with all the amenities. The location of your kitchen is also an important factor. Scout for a space that is not in the prime location, as you will end up paying a huge rent.

Equipment

it is advisable to start up with renting equipment from a supplier. In this way, you are not incurring heavy expenses and at the same time, if you wish to wind up your business sooner than you thought, you won’t be left with a lot of expensive equipment.

Advertise

Any business, big or small, will need advertising. Your advertising costs will include logo designing, a website, banners, a name board, letter book, visiting cards, flyers in the area, etc. Getting uniform for your staff with the company logo is a good marketing ploy. Getting listed in the Yellow Pages is also worth the premium. Pick your advertising channel according to your budget.

Manage the Business

You need to decide whether you are going to manage the business by yourself or are you going to appoint a person to look after your business. You will also need staff like cooks, captains, cleaners, servers and you will have to keep their salaries in mind.

Insurance

Get your business covered by an insurance company. Get both personal cover as well as insurance for the equipment and vehicles used in the business. What would be the premiums you need to pay for insurance?

Add the above costs to determine your approximate start up cost for setting up a catering business from grass roots. Keep in mind that you will always be faced with unprecedented expenses, so allow for miscellaneous expenses while planning your budget.

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