November 17, 2011
Ms. H______ Y_______
I have received a copy of your letter to Sageworks regarding your desire to start a catering business, and have agreed to serve as a mentor to you in this process.
First of all, congratulations on taking the first step towards becoming an entrepreneur, by attending the Jobstart session and completing the Inmates to Entrepreneurs Questionnaire.
Being your own boss can be very rewarding and provide much freedom, control and economic opportunity. It is also a big challenge and very frustrating at times. If you persist and persist some more, you can succeed!
Have you begun to develop a business plan? If not, I suggest you begin immediately. A business plan does not have to be overly complicated. A good business plan includes information about these areas:
- The value proposition to your customers (Lowest cost? Fanciest service? Most convenient? Trendiest?)
- Facilities (Where will you operate? What equipment is needed?)
- Personnel (Will you do everything yourself? Hire others? If yes, what skills will they need?)
- Operations (For a catering business, will you prepare the food onsite or offsite? If offsite, how will you deliver, setup, cleanup, and control quality?)
- Competition (If this information is readily available)
- Customer acquisition (This is the most important item! To have a business you must be able to acquire customers. This seems very obvious, but it is surprising how many entrepreneurs do not give this enough thought until after they have established their businesses.)
- Financial (Including both the initial start-up costs and expected income and expenses in the initial weeks or months.)
Also I would like to ask what is the best way to communicate with you for now? Are there any restrictions or guidelines as to how much information I can send to you (including books or other publications)?
Here is a little bit about myself:
I currently work with the owners of private companies when they are ready to sell their businesses or thinking about how to sell their businesses in the future. I own my company, Arena Capital Advisors, which provides these services. I have owned other businesses as well, including a staffing company and a recreation business.
A few years ago I helped the owner of a catering company sell his business. At the time it was one of the largest caterers in North Carolina. For that company, food costs were approximately 22% of sales revenue, and labor costs were 23% of sales revenue. These figures may be helpful in your planning, although as a startup I would expect your food cost to be a slightly higher percentage as you would not be able to negotiate the same volume discounts on your purchasing.
Please let me know any questions you have, to help turn your dream into a reality.
Very truly yours,