It may be that you have been working in catering as an employee for a time and would like to open your own business. Or perhaps you have always wanted to be in the food industry, with catering at the front of the aspirational list. You could, of course, be starting out from a totally different non-catering direction, but with a passion for food, as well as wanting to be your own boss.

Whatever your background, you’ll need to consider what your first step to get into the business will be. There are four tried and tested ways to become a caterer:

• 1.Starting your own business from scratch and developing it slowly but surely.
• 2.Buying an existing business with premises, equipment, staff, a client base and a good name and reputation.
• 3.Becoming an investment/working partner in an existing business.
• 4.Working for a catering company to learn the business with well-respected professionals with a view to becoming a partner.

STARTING YOUR OWN BUSINESS FROM SCRATCH

Many small caterers have started from scratch. Peter’s experience is very much in keeping with those who start from nothing. You may decide to open your own business after several successes organising and cooking for large functions for family, friends or fundraising events. Or you may have worked in catering and decide you can do better, as in Peter’s case.

Party Ingredients has risen to cater for the Queen Mother’s 100th birthday celebrations at the City of London’s Guildhall, 10 Downing Street, state banquets, weddings, charity events and private parties. Peter is very much a hands-on employer who cooks at one of his restaurants as well as running the business.

Most caterers start part time from their kitchens on a very small scale. There are, however, lots of things to prepare. For example, you will need ample refrigeration and separate storage space amongst other things. You will have to check with your local environmental health officer who will need to inspect your kitchen for health and safety reasons, and you must register your premises with the environmental health service at your local authority at least 28 days before opening. You must get liability insurance too as you could to be sued if food poisoning or an accident occurs.

There is more information on the dos and don’ts and must-haves as set down by the Food Safety Agency in Chapter 4.

The growth of the small caterer is by word of mouth but marketing is of vital importance too. Gone are the days when you could just hope for client referral to make a decent living in anything, including catering. See Chapter 6 for lots of information about marketing.

Going down this home route has many advantages: it keeps overheads to a minimum, works around family life, and still, hopefully, gives you time for your own interests. You will be able to assess if this is the business for you after a period of time. If not, just pull out gracefully with little investment and expense apart from perhaps bruised pride.

You may decide you like cooking and serving food professionally, organising the party, and enjoy the interaction with clients. If you find that you are in demand and that your stamina and family aren’t suffering, you could be on to a winning career.

MAKING YOUR BUSINESS UNIQUE

Of course, home catering covers all sorts of food preparation. If, for example, your forte is cake-making, you could market it well. But does it have a unique selling point? It has to stand out from the crowded cake market to be a success.

This applies to any product. It must be good enough to give you a reasonable profit margin, taking into account all your other costs such as your ingredients, packaging, overheads (lighting, gas, electricity, phone calls, labelling, cleaning materials, petrol). And don’t forget to factor in your own, very precious, time too.

Take a leaf out of Ursula’s book. She decided to branch out by selling ready-made meals at farmers’ markets, making home-made terrines, pates, dips and other specialities using local produce. Keeping up with trends and reinventing a business is an excellent way to keep it fresh, alive and exciting. Find your own unique selling point to make the grade. Look at what is happening locally or nationally and adapt the best ideas to suit your business.

BEING A SOLE/JOINT PARTNER

The definition of a sole trader is that the business is owned and operated by one person. If two people join forces it is known as a partnership. A sole trader, whether or not in a partnership, is personally liable for debts.

Advantages

• A sole or joint partnership business is easier to set up with less formality and legal constraints than a partnership or company.
• There is no need to share the profits with anyone other than your agreed partner(s).
• A sole partner has complete control over the business, the direction it is heading, the style of the food, expenditure on marketing etc.
• There is no one to answer to as there would be if in a partnership or company.

Disadvantages

• If not in a partnership, you are the only boss and, as such, can find it difficult to get away at all, let alone to have a holiday.
• You are responsible for all the paperwork.
• You are responsible for liability and business debts.
• You don’t share other people’s expertise, fresh ideas and experience, thereby perhaps limiting your business.
• It can be lonely running your own business.

PARTNERSHIPS

You may be working with an active partner, one who is involved on a daily basis; a dormant partner who is a financial backer; or a silent one offering a name which lends some weight to the business.

If you are entering the business with a partner or partners, there is a strong case for setting up a partnership agreement in conjunction with a lawyer.

Some points to consider:

• The name, location and purpose of the partnership.
• What each partner brings financially to the business.
• What strengths each partner contributes to the business.
• What equipment each partner contributes to the business.
• A detailed outline regarding business expenses and how to handle them.
• What each partner is responsible for in detail.
• What each partner will receive for a salary.
• How the profits and losses are to be distributed to partners.
• How accounts will be handled.
• How the partnership can be modified or terminated.

FORMING A COMPANY

The same principles apply to forming a company as a partnership (see above). The company is the business and directors are the shareholders. A limited company means that the company, not the individual directors, is liable for any debts.

If forming a company, do shop around for a solicitor’s package deal. If you decide to operate as a company, you will have to pay corporation tax and make company tax returns. Soon after the end of the accounting period the Inland Revenue will send you a notice asking you to make a company tax return.

Company tax

If you decide to operate as a company, you will have to pay corporation tax and make company tax returns. Soon after the end of the accounting period the Inland Revenue will send you a notice asking you to make a company tax return.

Before setting up a company, consult an accountant regarding corporation tax. Unlike a sole trader or a partnership, company tax needs to be audited, which is an added expense.

You must normally pay any tax due by nine months and one day after the end of the accounting period. If, at that stage, you have not yet completed your company tax return you must make an estimate of what you think is due and pay that.

Send a completed tax return, including your accounts and tax computations, to the Inland Revenue by the filing date (which usually 12 months after the end of the accounting period). If the return is not delivered by this date, a penalty will occur.

Speak to your accountant or tax advisor to decide on the accounting period and tell your tax office. Work out the dates by which you need to pay tax and make your company tax return.

Plan ahead to make sure that accounts and tax computations are prepared in good time but always communicate with your tax office if you fall behind. Make sure it’s a two-way dialogue for peace of mind.

Keep proper business records (see Chapter 5 Business Finances) and keep these for six years after the end of the accounting period.

BUYING AN EXISTING BUSINESS

It may seem like an easy option to buy an existing business, which is readymade with staff, client list, premises, equipment, a good name and reputation. But first, decide if you:

• have enough funding to buy the business and run it for several months until you get established. Think about how much you will need.
• have sufficient catering experience to take over the business. This should cover your culinary strengths, your business backbone and financial ability.
• have appropriate, catering experience: you must be able to match the existing clients’ needs and ensure you can deliver the goods, particularly if the business you are taking over is more upmarket.
• are physically and mentally able to work a very long day: 14–16 hours is an average. Remember that it will even out once you are fully in charge and have gained the trust of your client base and established your business pattern.

Finding an existing business to buy

This tends to be a buyers’ market. Catering businesses can have a burnout rate due to the owners working long hours over a period of years. This is especially true if owned by a sole caterer who is keen to retire.

Ways to proceed:

• Look at existing businesses for sale in catering magazines such as Caterer and Hotelkeeper, or in your local papers in the ‘businesses for sale’ section.
• Contact agencies that advertise in these publications to find out what is on their books or to express an interest in buying a business.
• Contact caterers directly. They may be keen to sell.

Top tips for buying a business

• Make absolutely sure that it has good records and bookkeeping. You must know the annual turnover and profit for at least the past three years to be able to determine if the business is viable and that you are making a sound purchase.
• Always use a solicitor and an accountant. The accountant will help you determine a fair price. He or she will be aware of sharp practices and if the bookkeeping has been done professionally or not.
• Be aware that the seller may augment figures to make the gross annual profit and net profits look very high. Obviously, if these are both high then the business looks very successful and therefore a good bet. But is it?
• Discuss the client list with the seller in depth. Examine the list carefully. What kind of catering does the company offer? How often does each client feature? Is there good repeat business?
• Discuss the staff with the seller. How many staff are employed/semiemployed? What is the rate of pay, travel expenses, the package offered to staff (e.g. pension, sickness benefit)?
• Look at the profit margins. What are the profit margins per event? Is the caterer giving value for money or supplying quantity instead of quality? Are there any outstanding debts with suppliers? What is the geographical business radius?
• Establish what kind of a reputation the company has. If it’s less than your standards, or has a less than impressive record, then it might be an uphill struggle to convince people that you offer an improved service and better food. Look at the business with fine toothcomb.
• Offer to work alongside the owner for a week or so to find out more about the business. You will then know if it is for you or not. The owner should be very happy to oblige. If not, what are they hiding?
• Don’t accept the asking price of the business. It is time to bargain. You should take into consideration the state of the kitchens (do they need an overhaul or are they pristine?), the age of the equipment, the number of clients, and die turnover. Use your lawyer for die actual negotiations, but make sure you are involved at all levels of the transactions.

And, before signing die agreement:

• Ask the seller for a thorough inventory of the kitchen and hire equipment such as pots and pans, cookers, refrigeration, glass, cutlery, linen and plates, office furniture and computing equipment, any van or lorry vehicles or other items.
• Make sure that the seller passes you a list of clients with all the relevant details including who to contact and how (email addresses, phone numbers, when and what the last catering event was for the client, for example). This is known as goodwill, and also includes the name of die business and all that is part of a viable business.
• Make sure that there is a covenant within the agreement that the seller will not compete within a designated area and not for a minimum period to be agreed on. If you don’t do this, more unscrupulous sellers may just carry on with their existing customers, leaving you an empty shell of a business so insist on a covenant.

Of course, you won’t take over exactly where the seller left off. The business will change once you have taken over. That is guaranteed. Some clients won’t like your style of food or service perhaps and may wish to find another caterer. Conversely, they may be bowled over by your excellent standards and presentation, your efficiency and professionalism. You may have to convince those on the client list to try your new style and if they are reluctant to, discuss their needs with them. Asking them to sample dishes from your menu to convince them of your skills is one way forward.

BECOMING A PARTNER IN AN EXISTING BUSINESS

If you have worked in catering and have gained excellent experience and skills along the way, you may wish to move up the business ladder and work alongside a partner in an existing business. (See Chapter 5 for more information.)

It goes without saying that any agreement you enter into with a partner must be documented in full and be legally binding. You will need to find a lawyer who deals in partnership law. They will advise you on what you need to do and what costs are involved in setting up a partnership.

There are different kinds of partnerships. You may wish to join a friend, colleague, acquaintance or complete stranger who has a business and is looking for expansion.

Before you commit to partnership, think through the following:

• You should have the same aims and aspirations as your partner.
• You should have the same standards, attention to detail and work ethic.
• If there might be clashes regarding issues such as the menu, presentation, treatment of clients and staff, discuss them at length to come to a uniform conclusion.
• Look at the different strengths you and your partner(s) can offer the business so that it is a stronger company. Perhaps you have a good grasp of accountancy, and your prospective partner is strong in marketing.
• All partners should take on equal responsibilities if you are equal partners. Make sure you spell out the responsibilities and percentage of the profits of each partner.
• If you are a junior partner (one who has less experience and doesn’t put in the same amount of money) with less than half the ownership, have each partners’ work description written up or you may end up with a lot more of the dogsbody, menial work.
• Make sure that you have a list of all the contributions each person makes to the partnership. For example, who put up the cash, who owns the property, what equipment belongs to which partner. Draw up an agreement with a solicitor.

The advantages of a partnership are manifold and include the possibility of taking a holiday without closing the business for a week or two and sharing the strengths of each partner.

WORKING FOR A CATERING COMPANY TO LEARN THE ROPES

If you have little or no knowledge of the catering business but you are a good cook with some of strengths listed in Chapter 1, working for a respected catering company could be a fast way for you to learn the ropes.

Choose your catering company carefully before approaching them to see if there is a suitable vacancy. But if you have chosen the wrong company who you feel doesn’t mirror your wishes or standards, exit the door and do some research before becoming employed by another one.

WHICH ROUTE TO TAKE?

Choosing which catering route to take may seem daunting at first, and if you are still undecided, talk to established caterers to find out more information. If you don’t know any personally, I suggest you find one (but not in your area!) via the Yellow Pages or the internet and call or email them. If calling, do ask if it is a convenient time to speak to them as they may be up to their elbows in couscous. Dedication, research and perseverance is all in any enterprise.