Your financial capability will determine the kind of catering business you are able to put up and maintain in the long run˳ When checking out your finances for the business, you have to consider the capital and startup costs as well as the required taxes˳
Startup Capital and Cost
The cost of starting a catering business depends on how large you want to start˳ Would you like to be home based at first as a self-operated caterer or go for contract catering even at the onset? Either way, the initial costs include the fees for licensing, insurances, and promotions˳ The capital needed also depends on your preferred corporate structure˳ Of course, if it is sole proprietorship, less or small capital is needed˳ On the other hand, if you will register as a corporation, then more capital investment is required˳
Tax Obligation
The amount of tax payable depends on the business organization, whether sole proprietorship or corporation˳ Nonetheless, it is best to get a certified accountant to handle all your money flows in and out˳
Financing the Operation
Today, there are a lot of ways you can finance your business operation˳
First is your savings˳ There are people who diligently save money before actually starting so they can avoid incurring debts˳ If you can do this, then that would be best since in the first 5 years, you will be focused on building the business and not really about making high profits˳
Second option is getting bank loans where assets will be used as collateral˳ If you do not own any business assets, your personal assets can suffice˳
Third is microloans˳ These are loans provided by private individuals or group of private individuals rather than banking institutions˳ This is good for people having a hard time getting an approval from other lending companies˳
Fourth is through factoring˳ This is considered to be one of the most innovative ways to finance a business these days˳ It is very flexible too˳ How it works is that you buy the debts owed to another at a discounted rate˳ This has been referred to by many as cash flow finance or invoice discount˳
Fifth resort would be crowdfunding˳ By the name itself, crowdfunding is basically getting people to finance your business˳ You ask for their help in whatever amount they can give˳ They can either ask to be a stockholder or just donate for free˳ It just depends on the arrangement˳
The final option is by searching angel investors˳ Otherwise called as an angel or seed investor, it is literally having someone who is capable of providing you the capital for your business˳ Most of the time, they invest and become a shareholder in return˳ But in here, you must be able to convince them that your business will eventually become a success˳
So are you financially capable to start a food catering business? Which of the following would you consider to get good financing?
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