The biggest danger to a catering business is that of mismanaged expenses. There are many costs that can sneak up on you. Many catering businesses struggle to stay afloat due to unforeseen bills. The owners may be turning over large amounts of sales only to find themselves in debt.

Before you get started, make a list of everything that you’ll need to spend your money on. You should also be aware of what your profits might be for each item you sell. For instance, you should know how much it costs you to prepare a cup of coffee. This kind of insight is crucial to ensure you have the right pricing strategy.

Staffing costs are another important consideration. This includes cooks, cleaning stuff, or people serving your customers. Make sure you’re clear on exactly how much you need to spend on employees. You could get into serious trouble if you don’t pay wages on time. Find out about taxes and employee-related laws as well.

You also need to have a marketing budget. You will need to spend money to get the word out about your business. Without a marketing budget, you may struggle to get your first customers. You will also need to keep attracting clients so marketing is one of your ongoing costs.

Equipment will likely be your largest initial expense. You will need various machinery for both the preparation and storing of food. Besides the initial purchase price, some of your equipment will also incur energy costs. This could have a serious impact on your business. Since it may take a while before you turn a profit, you may need to have extra cash to cover your electricity bills.