Believe it or not, there are times when the best decision is to turn down business. You may not be able to envision it now, but there will be times when it's best for you and the client to decline to cater their event. The rest of this chapter outlines the situations when the right answer is to say “no” to a client.

If someone asks you to do a catering job and leaves you with a bad feeling in your gut, listen to your intuition. Here are some telltale signs of bad clients and suggestions for dealing with them.

The “Poor” Client

This is the client who can't afford to hire you because she claims she has no money in her budget. This type of client will try to take advantage of you and work hard to get you to provide catering services to her at cost or below. She might even try to leverage the fact that you're new, telling you that the job will be good for your portfolio. This is likely to be a client for a not-for-profit or private organization or someone looking to cater a private event who hasn't used a caterer before. Corporate clients will always have a budget and, for the most part, will respect your pricing structure.

If a customer approaches you for a catering proposal and has an unrealistically low budget, like $15 per person for a dinner, push back. In a polite but firm way, explain that her expectations are unreasonable. If she hasn't used a caterer before, she may very likely be unaware of the costs. Educate the client and tell her what the average price for a catered dinner costs in your area. You will have the information from your competitive survey research, so you can easily show clients where your prices fall among the competition if they ask. You shouldn't be the cheapest caterer in town and you probably won't be the most expensive one either.

Have confidence in yourself and in your work. If your services are priced correctly, there will be clients who will pay what your services are worth. Rather than catering a full meal for a tight budget, be creative and offer alternatives to a client who truly has very little to spend if you think the job is worth doing. If the client wants to serve a full dinner, but really doesn't have the money to spend on a per-person basis, suggest that she have a breakfast or brunch event instead. Alternatively, she may be able to afford a predinner hors d'oeuvre event or a late-afternoon tea event.

Don't lower your prices just because someone pleads poverty. Being the low-cost provider is not a winning strategy for caterers. Catering is a low-margin service business. You are providing a lot of time, creativity, and labor to bring someone's vision to life. You're offering a premium product and service, not selling laundry detergent or computer chips. Don't get involved in a price war. It's better to walk away from a client who is unrealistic about her budget than to get involved in a job where you'll lose your shirt.

If a client objects to the price of a certain dish, offer her less-expensive alternatives. If a client objects to you marking up table and chair rental, tell her that she's welcome to deal directly with the rental company to avoid the extra fee. Let her know that you have to be compensated for your time and effort if you're going to arrange for the rental. Suggest she take on more of the work for the event to reduce costs.

You can be flexible in order to get a contract signed, but don't give away your profitability. Offer a goodwill gesture such as serving the after-dessert truffles for free.

The Exceptions to the Rule

There are two exceptions to this rule. First, it's okay to provide catering services for a legitimate charity, a 501(c)(3). You may see some benefits from catering for a charity; it's a good way to support a cause you believe in, and it will bring you good exposure. Think carefully before you accept, and consider the pros and cons. If it's a huge job, you may have to turn a lucrative client down because you only have so much labor capacity and time for preparation. The cost of the food, and the labor associated with the job, however, is tax deductible. Make sure to record the food, labor, and associated costs in your charitable donations account, not in your regular food cost and labor accounts. Check with your accountant for the specifics.

Second, it's also all right to accept barter for part of your catering services.

If a client provides a service that could benefit your business, such as public relations, advertising sales, or transportation, then it might make sense to negotiate a deal where they pay the food costs up front in cash as a deposit and pay the balance of their fee in a bartered service. Bartered agreements need to be spelled out in writing and need to be equivalent in dollar amounts. If the balance of your fee is $1,200, then you need to receive $1,200 of a comparable service. Make sure that what you're getting in return is the current market rate and that you'll get prime goods or services. Sometimes customers try to barter away old goods, undesirable ad space, or a service they'll never get around to giving you. Make sure they agree to deliver their services according to an agreed-upon schedule. You should receive part of the barter before you finish the catering job.

The Internal Revenue Service requires that the fair market value of goods and services exchanged must be included in the income of both parties. Each party must file Form 1099-B. While there are some exceptions explained on the IRS Web site, you and your client need to record barter transactions on your books.

The Needy Client

This is the client who calls you twelve times a day to ask you what color the toothpicks are going to be and how many melon balls each person will get. He changes his mind about little details, and the sound of his voice makes your blood pressure rise sixty points. He calls you at 11 P.M. and expects you to be available seven days a week.

If you're busy, it's perfectly okay to tell this client you're booked. You can tell him you'd like to help him another time. The trick is to pick up on the type of client as quickly as possible so as to avoid committing to a job before it's too late. Look for signals in the initial contact and phone conversation that this person is going to be a lot of work. Does he need to know every detail? Can he delegate responsibility to you?

If you do want to take the job from this type of client, make sure to set the parameters clearly up front and spell them out in your contract/proposal. State that any changes made after a certain date will cost extra. Make your business hours clear.

The Very Rich Client

Many new business owners love to get jobs from extremely wealthy clients such as movie stars, sports professionals, and corporate magnates. Unfortunately, some of these people have a tendency to pay their bills very slowly or not at all. They're used to getting things for free.

If you're going to take a job from a high-profile client, make sure you get a larger-than-normal deposit up front to cover all the food costs and collect the balance due before the event. Large caterers require full payment prior to the event date, and you shouldn't be any different. Don't be afraid to charge a slightly higher service charge for these jobs either, given the extra risk and work that is generally involved.

If a client squawks at the idea, tell her that you're a small business and can only offer such attractive prices and excellent service because you proactively manage your cash flow and get paid before the job is completed.

If a client isn't sure of what she wants, it's your job to ask questions and to assess her likes and dislikes. Does she like casual entertaining, or is she more formal? You can get many clues from seeing how clients furnish their homes, how they dress, and how they speak.

Once you know something about a client and the reason she wants to hire a caterer, you can start to suggest options. Let her know price ranges with each option, and she'll tell you right away if you're in the right ballpark. If she doesn't balk at the prices you're giving her, ask her if you're in her budget. If she says yes, you may have some room to up-sell.

If a client can't seem to make any choices, tell her that you're the professional, and ask if she can leave all the details to you. Get her to agree on a price per person, get a deposit, and make sure that your agreement clearly states that the client is letting you make the decisions for menu choices, tableware, and decorations as long as you stay within her budget.