There are three ways for you to get into the catering business:

      (a) start from scratch with nothing and build slowly into a business;

      (b) purchase an existing business with a name, client list, and equipment; or

      (c) buy into an existing business as a partner or work for an existing caterer to earn equity as a partner.

      The first method is by far the least expensive way to start, but without a client base, it is a slow rise to the top.

      Purchasing an existing business can be quite costly, but you are running a business from day one with a cash flow, presumably a positive one. Often the purchase agreement stipulates that the former owner will assist for several months with the smooth running of the business and perhaps even deal with the clients you inherit. You have all the equipment and staff in place.

      Buying into an existing business as a partner may also be costly, but you don’t want to take on all the responsibility and the tremendous tension of running a business by yourself all at once. Here you can ease into the business and partnership over several months or even years. These three methods are discussed in detail in this chapter.

      1. Starting Out on Your Own

      Most catering businesses start with one individual simply starting from scratch. Perhaps you are known as a good cook and organizer, have been in charge of several church dinners for 100 to 150 guests, and have pulled each one off beautifully. The dinners were great: the food was served on time and was plentiful; everyone was served promptly; you were showered with praise.

      Then someone who attended one of the dinners calls you and asks if you could cater her daughter’s wedding reception for 50 guests. You are stunned with the request and you give a noncommittal answer. You want to think about this for a day. But once you have a chance to consider the idea, it begins to take shape in your mind. What a challenge it would be! An exciting possibility to earn money while having fun at the same time. A career change is on your mind and by pure coincidence, an interesting possibility suggests itself: catering.

      So you agree to do the wedding, but before that event happens, someone else asks you to cater a classy dinner party for eight guests, which turns out to be a fabulous affair. You are gaining confidence, and by the time you’re getting ready for the wedding reception, you’ve not only earned a little unplanned income, you’ve also earned a great deal more self-confidence. You managed to cater two completely different events all by yourself. You may have made a few errors at the wedding reception, but neither the hostess nor the guests noticed anything thanks to your quick thinking in resolving the problems.

      This example illustrates how a large number of catering businesses start. When it is not by chance, it takes deliberate planning to begin a catering service. You may have worked for a caterer and come to the conclusion that you could do it even better. So you decide to go out on your own and perhaps even give yourself a tentative date to start your business.

      Virtually all caterers start out part time from their own kitchens on a very small scale and generally grow the business by word-of-mouth. This kind of catering is illegal in most, if not all, communities. Serving the public from a home kitchen is against health department standards; nonetheless, it is done all the time. As long as your business remains small, chances are you will not be investigated by the local health inspectors.

      Many caterers work out of their kitchens for years without a problem. But as the volume of business increases, you will attract more and more attention. If the local health department finds out about your catering business, an inspector will be ringing your doorbell and asking questions. Under very strict codes, you are legally allowed a limited number of meals served out of a home kitchen, perhaps eight meals a day, but this number varies in different municipalities.

      The next problem is your competitors. Once you challenge a significant part of their market share and undercut their prices (your overhead is almost nil when working from a home kitchen), they may report you to the health inspector. Zoning laws probably do not allow a commercial operation in your residential neighborhood, so an unfriendly neighbor may report you.

      Finally, chances are you are operating without insurance to cover your catering activities. Unless you are in commercial, approved facilities, you cannot be underwritten for a policy. It is unwise and dangerous to operate a food service business without substantial liability insurance. In our litigation-prone society, it would not take much provocation for a disgruntled client to sue you. Spoiled food that a guest became sick from, an olive pit inadvertently left in that broke a tooth, or a fish bone someone choked on when you served boneless fish fillets — all of these situations can result in a lawsuit that ruins your business. With no permit, no health inspection, no business license, and no sales tax registration, you don’t have a leg to stand on. That would be the permanent end to your catering career.

      Look into the laws in your area and decide for yourself if you want to start from your home to see if this field is for you. You may realize that the catering business is not just the pleasure of cooking, presenting, serving, and then waiting for the praise and the client’s check. Since you have invested very little money so far, you can easily change your mind. If you make arrangements for a commercial facility, you cannot change your mind without a great loss of investment, not to mention the blow to your ego.

      I know a caterer who worked eight years out of her home kitchen before trouble started from her competitors. She managed to avoid detection from the authorities for that long because her business started from a niche that didn’t bother the competition: She made the most sumptuous holiday fruitcakes.

      The business was seasonal at first. Her small operation was perfectly legal (though I doubt that her income tax form ever showed profits from the fruitcakes), and her reputation spread in the local community. In a few years the demand was so great that she baked fruitcakes five to six months out of the year and froze them for the Christmas season.

      Pretty soon calls started coming in to cater dinner parties, and in no time she was running a full-fledged catering business. The holiday fruitcakes remained a part-time operation. The competition started to notice and called the health inspector. She was told to go legal or close the business.

      She found a commercial, approved kitchen, and in a few weeks her operation continued as if it had never been interrupted — although it now had higher prices, more staff and equipment, substantially expanded space, and a great deal more overhead expenses and headaches.

      Her business soon grew big enough to hire an office manager/receptionist and a kitchen manager/chef. She spent all her time coordinating events, dealing with clients, and marketing her business. She rarely went to functions unless they were exceptionally classy. Instead, she played tennis in the morning, dropped by the kitchen mid-morning to have her coffee and taste a little bit of everything that was on the prep tables, and proceeded to deal with clients for a few hours. By mid-afternoon she left the facility in the capable hands of her staff. This is one of the few successful catering stories I know. It illustrates how catering can start from a small niche — in this case, a great fruitcake.

      You may find a similar niche for yourself. This is indeed an excellent and legally acceptable way of starting a food service from your home. The right product is very difficult to come up with, however. The market is flooded with every conceivable food product, and hundreds of new products come out every month. Only an extremely small percentage survive. If one of them is yours, you are in