How to Start a Catering Business from Home
A step-by-step guide to starting a catering business out of your home.
If your talent and love of cooking has made you wonder if starting a catering business from home can turn your hobby into a full-time job then read on. The first step to understanding how to start an at-home catering business means bringing research and organization to the table. This guide will help you create the perfect recipe to make your passion become a reality. Read on to learn how to start a catering business, from building a plan to taking the right steps to get your new company cooking.
Create a Catering Business Plan
Before you begin applying for licenses or buying equipment, you need to create a catering business plan that lays out the particulars. A solid business plan should include:
- An overview of your company
- How your business will be organized
- What products and services you will offer
- Top local competitors and their offerings
- Information about your target audience
- Potential vendors and suppliers for both food and non-food products
Choosing a Type of Catering Business
While some catering companies choose to offer a wide variety, many specialize in a specific type of menu. Your focus may be vegan or gluten-free. Maybe you specialize in regional cuisine or want to cater certain types of events, like weddings or corporate lunches.
Choosing the kind of catering business is the first step in establishing a plan for your company. While you may not have the exact menu planned, ask yourself the following questions to solidify the type of catering business you want:
- What type of food will you serve?
- What type of events do you plan to cater? Think of the size and type of event, such as buffet-style or sit-down meals.
- How many catering bookings do you plan to accept in a month?
- Who is going to do the work? Will you work alone or hire a team?
Answering these questions can help develop a clear plan for your catering business. If you specialize in a specific type of food or event, research your local competition to see if anyone has already cornered your desired market.
On-Site vs. Off-Site Catering Businesses
In an on-site catering business, all food is cooked and plated at the event location, like a wedding venue. Off-site catering businesses usually prep in a commercial kitchen and transport completed dishes to the venue.
If you plan on starting a catering business from home, either of these business types need to meet all city and state regulations, so do your research before making a decision about which model is best for you.
Starting a Catering Business, Step by Step
As with any business, starting a catering company requires significant prep and paperwork. By following the steps outlined here, you can check off each item as you go and keep the process of starting your catering business neatly organized.
Research Local Catering Laws
Your city, county, or state may not allow you to run a catering business out of your home. Review the local laws to see if your business idea is feasible before you make any big decisions. You may have to alter your personal kitchen to meet regulations, such as adding extra ventilation or upgrades like stainless-steel countertops.
Choose a Business Structure & Register Your Business
Before you register your business with your state, it’s helpful to understand the types of business structures. When you start your own business, it is automatically a sole proprietorship. However, this business structure does not provide separation between your personal and business finances. A limited liability company (LLC) establishes your business as a separate entity and keeps your finances distinct.
To legally register your catering business, you will need to file articles of incorporation, which is a set of documents filed with a governmental body, whether county, city, or state, to legally document the creation of a business.
You will also want to apply for an employer identification number (EIN) from the IRS with their online application. Your EIN will serve as your business tax ID number and can help you more easily apply for financing.
Name Your Catering Business
Once you choose a structure for your catering business, you will likely need to register with the state you plan to operate in. If you choose to stick with a sole proprietorship, your business name will automatically be your own name. If you would like to change to a different company name, or if you decide to operate as an LLC, you can register for a DBA, which stands for “doing business as,” with your state.
Take time to think about what you want your company to represent and how you want customers to view your business. Your brand name should be easy to remember, bringing you quickly to mind for potential customers.
Apply for Licenses & Permits
You may handle food like a seasoned professional, but to open your business and serve the public, you will need to apply for business licenses and food handling permits from your state and/or county. If liquor is part of your catering services, you will also need to obtain a liquor license.
The licenses and permits you need will vary depending on your location and what your catering business offers. You can contact your local Chamber of Commerce or a Small Business Development Center to get a list of licenses you need.
Plan Your Menu
Write a rough draft of your general menu. Many caterers choose to create tiers: different pricing levels with different menu options. Customers can then choose from a set menu of items, making planning for events much easier for you.
Determine the menu by your capacity, the size of your cooking facilities, the equipment you have available, and by the type of food you will prepare and serve.
Secure Catering Business Insurance
General liability insurance is a must-have for any catering business. This type of insurance protects your company in case the unexpected happens, such as someone getting sick from a meal you cooked.
Other types of insurance you may want to consider for your catering business include:
- Commercial automotive insurance — for catering vans and any other vehicles used to transport food to venues
- Commercial property insurance — in the event of damage to your equipment or kitchen
- Unemployment insurance — often required by law if you have employees
Starting a catering business is an exciting venture for any food-loving entrepreneur. It’s more than a business — it’s a passion. We hope these tips help you discover where yours can take you.
Catering Business FAQs
Building relationships with suppliers is a critical part of starting your catering company. Not only do you need trusted food vendors to provide you with ingredients, but you want to find reliable vendors where you purchase items like table linens, dishes, and flatware. Research local food and rental options and don’t be afraid to reach out and introduce yourself or set up time to meet in person.
There are a variety of ways you can find customers, from traditional print advertising in local newspapers and circulars to social media posts and word-of-mouth. One of the best ways to find new customers is through referrals, so make sure you provide an incredible experience for each of your customers. Explore options like SMS marketing that have high engagement rates to get your message seen.
Yes, catering companies can apply for traditional financing, as well as small business loans, business lines of credit, and company credit cards.