Your financial capacity will determine the type of catering business you will be able to start and maintain in the long term. When reviewing your finances for the business, you should consider capital and start-up costs, as well as required taxes.
Initial capital and cost
The cost of starting a catering business depends on how big you want to start. Would you like to be at home initially as a self-employed caterer or opt for a contract caterer even from the start? Either way, the initial costs include license fees, insurance, and promotions. The capital required also depends on your preferred corporate structure. Of course, if it is a sole proprietorship, less or little capital is needed. On the other hand, if it will be registered as a corporation, then a higher capital investment is required.
Tax Obligation
The amount of tax to be paid depends on the business organization, whether it is a sole proprietorship or a corporation. However, it’s best to hire a certified accountant to handle all money in and out flows.
Financing of the Operation
Today, there are many ways to finance the operation of your business.
first is you Savings. There are people who diligently save money before starting to avoid going into debt. If you can do this, that would be for the best as in the first 5 years, you will be focused on building the business and not making big profits.
The second option is to get Bank loans where the assets will be used as collateral. If you don’t own any business assets, your personal assets may suffice.
third is microcredits. These are loans provided by individuals or groups of individuals rather than by banking institutions. This is good for people who have a hard time getting approved by other loan companies.
The fourth is through factoring. This is considered 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 discount rate. Many have referred to this as cash flow financing or invoice discounting.
The fifth resource would be crowdfunding. By the name itself, crowdfunding is basically about getting people to fund your business. Ask for their help in whatever amount they can give. They can apply to be a shareholder or just donate for free. It just depends on the arrangement.
The last option is searching angel investor. Also called an angel or seed investor, it is literally having someone who is able to provide you with the capital for your business. Most of the time, they invest and become shareholders in return. But here, you need to be able to convince them that your business will eventually become a success.
So do you have the financial ability to start a food catering business? WWhich of the following would you consider to obtain good financing?