How much does it cost?
Once you’ve got your killer business plan together, you’ll need to get funding in order to set up. Before you approach the bank, however, you’ll need to work out how much it will cost.
The major factor that will influence set-up costs is whether you start up at home or rent premises. Setting up at home will save on rent and equipment, although the alterations you may need to make to your kitchen in order to comply with food hygiene regulations mean that this is not the budget option it once was.
Even to run the most basic catering business you will need:
- Two ovens (£1000 each)
- Fridge/freezer (£900-£1200)
- A vegetable preparation unit (£700-£2000)
- Commercial microwave (£900)
- Pots, pans, knives and other kitchen equipment (£1000)
- Refrigerated van (£14,000)
You should also have a supply of crockery, cutlery, china and glassware that you can hire out to clients. You will need some working capital to begin with although, since this is a cash business, cash flow shouldn’t be a problem once you get going.
“You don’t need a huge capital expenditure to start up,” explains Quest. “You probably need up to £25,000 for all the equipment. Also, you may need to buy crockery, cutlery etc. which can be a significant expense.”
So you are looking at between £20,000-£50,000 to start up, depending on the size of business and whether you are starting up at home or moving into premises.
How much can you earn?
The catering business is not a sure-fire route to riches. Many people do it for the love of working with food and the satisfaction of helping people as they organise their special day.
Therefore, it might be worth starting it off as a part-time business to supplement your usual income, until the business has developed enough to support itself. Most of the caterers we spoke said it takes at least a couple of years before you are earning enough to live on.
It won’t be until you have a large operation that you start bringing in good money. Perhaps the best way of growing a catering business is by concentrating on the corporate market until you have established yourself as the preferred supplier to a large client base of businesses. Competition is fierce in this area, however, and you’ll have to work extremely hard to make an impact.
Established caterers in the private sector often diversify to increase their revenue streams, offering equipment hire (catering equipment, marquee hire etc.) for example.
Roberts started Topline Catering from her home in Bristol as a part-time business. The business has grown gradually over 20 years, moving from sandwich delivery to business lunches, and finally to corporate and private events for anything up to 1000 guests. From first-day takings of £13, the business now turns over £300,000 a year.
It obviously several years to build up to this size, but a small yet successful business could nevertheless turn over £100,000 and earn a net profit of £40,000.