Industry sector:

Outside caterer: Capital expenditure


Now that you have given further thought to exactly how your catering business will operate, you might like to revisit your estimates of capital costs to make sure that you have identified all of the items you will need and any other capital costs you will incur.

Commercial kitchen equipment is likely to be a major item of expenditure. This applies whether you're fitting out an industrial unit or converting part of your house into a commercial kitchen.

Bear in mind that second hand catering equipment is widely available from specialist auctions and suppliers throughout the country. Although previously used, it's often still in good working order and can save you hundreds or even thousands of pounds compared to the new price - it often costs only around 10% - 15% of the original new price according to the experts. Of course, it won't come with the peace of mind of a manufacturer's warranty, but some suppliers will offer a limited guarantee on used items. Hilditch Group based in Malmesbury, Wiltshire run one of the UK's largest and best known specialist catering equipment auctions, holding sales twice a month.

Don't forget to include any expenditure on your premises such as sign writing, or having your logo and livery put on any vehicles. Make sure you have thought about any security measures you will put in place, particularly if you will be storing alcohol overnight - for example, an alarm system and shutters.

If you are paying cash for all the items you are buying for your business, enter the amounts - including VAT - in the months when you expect to pay for them.

If you decide to buy some items on hire purchase, or with a loan, enter the deposit and the monthly payments in the months in which you will pay them. These payments will be made up of both capital and interest. Enter the capital here and the interest under 'Bank/finance charges and interest' in your cash flow. The agreement will identify the amount of interest payable annually - if you deduct this from the total amount you have to pay each year the balance is the capital.