Becoming a successful caterer does not come without any risks or hard work. Successful catering is a matter of giving your best to what you are doing. It is not enough that you have your love for cooking to succeed. There are also personal and professional traits that one must acquire to really become successful in this endeavor. Other than the love for catering, it is important to consider the financial aspects of the business, too. Financial acumen is essential to keep the business afloat, manage the input and outflow of cash, and expand operations whenever opportunities abide. Read on and find out how are you going to take care of your catering business’ financial side.
Getting your budget ready
A lot of catering businesses fail because of their inability to project sales then relating these actual overhead expenses. One thing is that these caterers would allocated a huge sum of money for rent, equipment, manpower, etc. However, they do not know that when sales fail and all, they will have a hard time recouping what they spend and so they either fold or incur additional debts and wait until profits begin to appear.
How do develop a budget? Make an estimate on the number of people that you expect to cater to every event or so. Also consider if your pricing per meal will yield enough profit margin for the business. Try offering cuisines using seasonal ingredients to save more and determine industry trends as well. Make your projections on an annual basis and then break this up month per month. Ideally you should categorize your expenses into four labels: cost of sales or goods sold, payroll & related costs, direct operating expenses, and salary for human resource.
Accounting for revenue and expenses
While there is less of an issue with accounting today because of the availability of the computer, it is important to have the knowledge of what you’re inputting into the system. While it is good to know how to manage the books, the service of a CPA is a must as well. Especially for year-end tax computing purposes. This will save you thousands of dollars in expensive accounting fees. Having the basics of accounting is a big help because the caterer will have a better understanding of how the finances are going on.
Income statement is necessary because it shows the profit or loss of the business for a specific period of time. Your income statement may show a month or year’s worth of financial inflow. Preparing this statement is a great way of measuring the financial condition of your operation on whether your catering endeavors, as a financial entity, is actually or losing money.
Analyzing financial statements
It’s not enough that you know where the numbers should be on your financial statement. As a business manager, you should also know how to analyze the data on the Income statement and other financial records. This will make you even better at making financial decisions for your business. Analyzing your financial statement is also a way of determining whether or not the figures you have put in are actually accurate. Thus, making great use of them.
Controlling costs in catering
Keeping your catering costs at the most manageable level is what every catering business should aim for. This will maximize the profitability. However, take note that controlling catering costs should never come after sacrificing the quality of your products, least you jeopardize your credibility as a caterer. There are so many companies that sell catering software to trim your business’ expenses. Companies like Better Cater actually service the catering industry by providing world-class and quality catering software that are of great use in trimming business costs while maximizing profitability.