Q: I am interested in starting a small catering
business. Because I feel the business community is my primary
market, would it be legally better to operate this business out of a
commercial kitchen, or is it possible to start it as a home-based
business?
A: First, let's separate the legalities from the
marketing issues in order to make this decision. From a legal
perspective, it doesn't matter whether you're serving the business
community or individuals. Although many people operate small
home-based catering businesses, health regulations usually require
better facilities than most home kitchens can provide.
Considerations may be the number of sinks available, dishwashing
facilities, and refrigeration. So you may not legally be allowed to
operate from home, unless you construct a whole separate kitchen for
your business. You should also check with your municipality to be
sure the zoning bylaws in your area allow home businesses.
Another thing to consider is income tax. Depending upon the tax laws
where you live, you will probably be allowed to deduct the costs
related to the use of space in your home by your business. However,
in many cases, the space must be only used for your
business. So you would be forfeiting the business-use-of-home
deduction if your business were to use the same kitchen in which
your family meals are prepared.
From a marketing perspective, you should consider the effect - if
any - your location will have on your business image. Some clients
may feel that your business is too new or too small to properly
serve their needs because it's located in your home. For others, it
may be a quality issue. And some clients won't care one way or the
other. That question should be part of your market research. The
best answer to the marketing aspect of this question will come from
asking your prospective clients as part of your market research.