The Legalities of Putting Up A Catering Business: Complying With All Legal Requirements

Choosing the Type of Business Structure

As you start offering catering services, you may notice your income increase overtime, especially when you cater to corporate functions. Of course, this is good news to your business, but all your efforts will be for nothing when the governing authority flags you for operating a non-registered business. So it is very important to decide the type of business structure and then proceeding with the registration. For example, in the US, the IRS will red flag a caterer earning over $600 without being incorporated.

The chosen business structure will be dependent on how you want your business to be taxed and what liabilities you can risk. A sole proprietorship company entails you, as the owner, to be held accountable to whatever unfortunate incidents in your operation. This is riskier compared to limited liability caterers and corporations. Remember that you will be serving food to the public so it would be best to go for a business organization that’s able to protect your own personal asset against any lawsuits.

Limited liability company frees the owners from personal liability for debts or any liabilities the company incurs. This corporate structure is a combination of general partnership and corporation. Corporations are seen as considered as the structure with the most advantages when starting a business because they have their own identity under the law. It exercises all the rights of an individual entering into business transactions and is led by board of directors.

So what business structure will you choose?

  • Sole Proprietorship
  • General Partnership
  • Corporation
  • Limited Liability Company

Crafting Contracts and Obligations

A business contract with a client will include the major services to be offered, how these services will be offered and how they will be paid for. This will provide you with some form of protection if something goes wrong. The contract should be well-detailed. Agree on who will be contracting the venue and taking responsibility of the damages.

Prioritizing Licensing

Some states have different types of licenses so select one that suits your business structure. Also, you make need to look into food-service license and liquor license.

Understanding Health Codes

There are health rules regarding how food is prepared and handled. All of these are done to ensure that caterers provide customers with high-quality and risk-free services. Hire a consultant to ensure that your equipment passes the standards set forth, and that your employees are well-trained to comply with the health rules and regulations.

Protecting Assets

There are a lot of risks associated with catering businesses: fires, food poisoning, and other hazards. Insurance will help you cope with these risks. Buy a policy that will cover up all of these incidents. Seek advice from experienced caterers on what kind of policy will suit you best.

Small Business Venture Capital Strategies

When launching a new small business, often the entrepreneur will consider venture capital as a source of funding. Here are 3 tips to ensure that venture capital funding can be secured when sending out your business plan:

  1. Send your business plan to the right people
  2. Venture capitalists tend to specialize in certain kinds of businesses. Some will specialize by industry, only investing in new energy companies, for instance, while others look for a certain size of company to invest in. It is worth doing the research to determine who the venture capital backers are for your industry, before you start sending out your business plan. Venture capitalists who are not specific to your industry can provide recommendations to make your plan more appealing to other venture capitalists. However, it would naturally be a mistake to send your plan to potential investors who will not even consider it.

  3. Make sure your business has the potential to be profitable enough
  4. Most venture capitalists look for a return of about 5-10 times their initial investment. For example, an investment in a company of $2 million should yield a return of $14-20 million after about five years. To satisfy these requirements, it is generally necessary to have a business which has the potential for a high rate of return on the amount invested. If the rate of return can reasonably be expected to be lower, such as for a clothing retailer, then it is probably better to look for an alternate source of funding, such as an investment or commercial bank.

  5. Remember to include an exit strategy for your investor
  6. Venture capitalists generally do not want to be involved with a new venture for an indefinite period of time. Most will plan to leave the new venture after about five years, so you should offer a clear explanation of how this may be achieved. There can be a variety of reasons for this; some venture capital managers require that the holdings periodically be sold off to acquire other offerings. Nonetheless, by demonstrating that you understand the limited time frame for many venture capitalists, you automatically make your plan more appealing than those which do not.

In summary, by sending your business plan to the right people, by recognizing what rate of return is necessary for venture capitalist involvement, and by including an exit strategy, you can improve your odds of securing venture capital funding for a new and growing business.

The Best Business Referral Program

The most ideal business referral program will likely come as a combination of several types of different programs and ideas rolled into one. Then that program should be custom tailored to your specific business, industry or niche. Business referrals themselves are an integral part of your company’s survival. For this reason, it is critical to come up with the best business referral program to meet your specific business needs.

Building a Business Referral Program

The main goal of any business is to gain customers and retain them. While gaining new customers is always a plus, without the effort it requires to keep customers coming back for more, even an endless stream of new customers will not help you to build your brand and will continue to be a serious source of loss capital when it comes to marketing and sales dollars. The point in advertising and marketing isn’t just to rake in new customers, but to do what needs to be done to keep them happy and fond of your business’s products or services.

– One method for keeping customers coming back is to create a functional business referral program. As long as you keep several important elements in mind when creating your program, you should have a program custom-tailored to your business that is flexible and can grow as your company does.

– A company will know that they have the best business referral program when customers are consistently thrilled enough with a business’s services that they tell others about their experience with it. This word-of-mouth sharing is usually done because a customer has been provided more value than they expected when using your services or products. Make sure every customer who utilizes your business is blown away by the services received.

– Another method of creating business referrals is to offer unique products, offers or experiences that no one else is currently offering. If other quick lube businesses provide magazines and a droning TV to keep waiters entertained, make sure your quick lube station offers free snacks, babysitting for busy moms and dads and unique entertainments.

– If you create a business referral program that includes rewards, make sure that your rewards are appropriately moderated to not be a detrimental loss of capital for your business. Before launching your business referral program, double-check to make sure the program isn’t so generous that it eats up the profit you gain from those new sales.

– Keeping that in mind, your rewards should still be substantial enough to garner attention for your business and brand. It can help to make the reward contingent on a purchase so that they are beneficial to you and to the consumer.

– Avoid business referral programs that are based on luck, such as lotto ticket style rewards. This can lead to consumer perception that there is no winning ticket and can lead to bad news for your brand.

The best business referral program may be difficult to perfect but will be well worth the profit and increase in new customers.