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The Financial Considerations: How Much Money You Need to Start a Catering Business

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?

Factoring


Bank Loan


Savings


Crowdfunding


Finding Angel Investors


Microloan


You need money to start your food service offering or else it will limit your capability to buy quality biodegradable tableware from a reputable catering supplier. You won't be able to buy enough disposable tableware like plastic cups, plates, bowls, and sauce pots for your event needs. But don't worry because you have lots of options to finance all these.

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