HTM 2514 1st Edition Lecture 3Outline of Last Lecture I. Finding Catering IdentityII. Finding the Right Catering ScenarioOutline of Current Lecture I. Location for beginning your Catering businessa. Formal demographic market surveyb. Successful start-up tipsII. Creating Business Plana. What it includes specificallyb. Example of formal Business PlanCurrent LectureI. Location for Beginning your Catering Business – reserve capital, personal commitment and the location of your business are vital to success of your Catering companya. Location MUST fit target market’s identity/demographics/populationi. Ex: are you going after spectators desiring barbeque at sporting events?ii. Off-premise caterer has remote facility and still targets specific market, but on-premise must have the location to attract customersb. Conduct formal demographic market survey to produce info about residents in area:i. Total populationii. Average ageiii. Per capita incomeiv. Ethnicityv. Religion affiliationsvi. Spending habitsvii. Mobilityviii. Professions in the areac. Other considerations for determining location:i. Accessibilityii. VisibilityThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.iii. Cost – some businesses begin in affordable area then change locations once they’ve established positive cash flow1. Moving on-premise business can risk losing all/some customer based. Tips for successful start-ups:i. Commitment – commitment to quality and service is especially important in catering industry; long hours/high stress/physical exhaustion attached to job ii. Capital – new catering businesses take time to establish themselves; some expenses are sporadic while others are fixed (Ex: rent, utilities, insurance, labor)1. New business MUST be well-capitalized or it will be forced to shut down before ithas chance to prove itself/grow2. General rule: Caterer should have reserve of funds equal to 6 months of all fixed expenses + half of all labor costiii. Location – key factor in successful businesses1. On-premise caterers must be in safe, visible location 2. Off-premise locations don’t focus on safety/visibility, instead focus on accessibility for pick-up orders, etc.a. Must market themselves to their markets using advertisements/exposure because normally their physical business is away from people iv. “Know-how” – must set yourself apart from competition; essential to have:1. Well-trained chef2. Experienced service manager/maître d’hôtel 3. Competent bookkeeper prior to launching businessa. *These positions can be Caterer himself/herself if they are capable!4. Knowledge of kitchen, dining room, guest rest rooms, office, storage areas 5. Visit to trade show/food service equipment dealer 6. Assessment of Legal requirementsa. Adhering to zoning lawsb. Purchase liability insurance c. Necessary permits from building, fire, and health departmentsII. Creating your Business Plan – financial framework for running business; also need this to apply for loans/government grants or working with Venture Capitalistsa. According to U.S. Small Business Administration your business plan must include:i. Cover Sheetii. Statement of purposeiii. Table of contentsiv. Info about proposed business1. Description of business2. Marketing3. Competition4. Operation procedures5. Personnel – principals (owner, chef, sales leader, etc.) and staffing requirements6. Business insurancev. Financial data1. Loan applications2. Capital equipment and supply list (sample menus, unit cost of each menu item)3. Balance sheet (prepared with spreadsheet software)4. Breakeven analysis5. Pro-forma income projections (profit and loss statements) for 3 years – detailed monthly in first year and by quarters in second/third years6. Pro-forma cash flow month by month for first year, quarterly for second/third yearsvi. Appendices:1. Tax returns for principals for previous 3 years2. Personal financial statements3. Copy of proposed lease/purchase agreement4. Copies of licenses and other legal documents5. Copies of resumes of all principles6. Copies of letters of intent from suppliers, etc.b. Example of Business Plan:i. Executive Summary – “Greenfields Catering is a new off-premise catering company specializing in farm-fresh, organic foods prepared with contemporary French flair”ii. Company description includes address, phone number, website address, mission statement, future plans, and development/statusiii. Industry Analysis – describes the catering industry today and the future trends/strategic opportunitiesiv. Products and related services – showcases menu, production and the ways in which customers are served (carry-out orders, delivery, etc.), and future opportunities to bring in more customersv. Target Market – discusses market location and customers as well as lists local population, colleges around the area, tourism, local businesses in area, and the different customer profiles that the company will attract 1. Ex: “the ‘green’ business professional” and “the community-minded person”vi. The competition and competitive strategy to create advantage over themvii. Marketing plan/sales strategy – describing entry into the market, ways to market (print, broadcast, hospitality, direct mail, etc.1. Special events such as the opening, ongoing and point-of-sale2. Future plans/strategic opportunitiesviii. Operations – facilities and offices and their sizes, hours of operations, employee training explanation, systems and controls, food production and its standardsix. Management and Organization – lists the president, owner, etc.1. Compensation2. Board of directors3. Consultants/professional support4. Management structure – who reports to who?x. Long term development and Exit Plan – goals, strategies, milestones to reach, risk evaluation and exit plan (Ex: “Greenfields will expand to larger space in next 10 years”)xi. Financial Data and Statements – spreadsheets to show, income and expenses, cash flow