Cooking up revenues - expansion strategy of Ruth Meric Catering

Nation's Business, Feb, 1996 by Ruth Meric

Necessity, it is often said, is the mothers of invention. For me, it also could be considered the mother of expansion.

From almost the moment I opened my Houston-based, full-service catering company in 1988, I began expanding into related businesses - not in traditional employees, equipment, or facilities, but in terms of developing new avenues for generating revenues.

Even today, with sales of roughly $1 million, the Ruth Meric Catering company continues to grow, most recently through a new software program for full-service banquet and catering companies and through selling holiday gifts at the Houston Ballet's November Nut-cracker Market. This holiday gift show and sale coincides with the annual production of "The Nut-cracker," and a portion of the sales benefits the ballet company.

These new ventures help to even out cash flow while helping retain our employee base - vital issues, considering that we do a third of our annual catering business in just 20 days during December.

When looking for new revenue streams for your small business, consider these suggestions:

* Start with what you know My initial expansion into consulting came out of a direct need to keep money coming in - and to keep myself busy - in the early days of the business. My experience as a chef means I understand what makes food look and taste good and how cooks use a kitchen, so expanding into diet development and kitchen design was a natural offshoot.

Consulting - such as the "heart healthy" recipes I developed for Baylor College of Medicine's diet-modification program for heart patients - now accounts for just 10 percent of annual sales, but it allowed me to use my expertise to survive while honing my marketing and off-site-catering skills.

* Follow customer leads. Early on, when establishing cash flow was vital, I was asked if I ever gave cooking classes. I said I'd happily teach a class if someone else would get the group together.

That initial suggestion has grown into our "Evening With the Chef" parties, in which guests participate for about an hour in preparing dinner and learning techniques and tips, and then enjoy the results in the form of a four-course meal in our private dining room. Inevitably, some of the participants become catering clients.

* Do it better than the other guy. About three years ago, I realized we needed to computerize our efforts, but I didn't know where to start. Existing software for caterers was outrageously expensive as well as inefficient, meeting only a small portion of our requirements. So I hired someone to write a simple program whose primary purpose would be to allow us to draft our catering proposals efficiently.

Later, while at a national catering conference, I watched as a software firm was flooded with inquiries from caterers and hotels about a program that I felt was far less useful than my own. Seeing both need and opportunity, I expanded on our existing software program to more completely fulfill a caterer's needs, from assembling proposals to calculating rental costs and managing staff schedules. We began marketing the software in July.

* Take a few risks. The most recent offshoot of our catering efforts - the booth at the annual Nutcracker Market - was a real opportunity to expand. Whereas other efforts have focused on food preparation and catering, the market booth focused on merchandising nonperishable food items and gifts such as unique cookbooks or silver boxes filled with chocolate almonds.

The results of these actions illustrate why many entrepreneurs should consider expanding into related fields.

Instead of having a seasonal business that had trouble retaining employees and meeting its bills during slow times, we now have a company that makes the most of its resources - particularly the experience and talents of its employees - and an accommodate even more growth. Ruth Meric, president of Ruth Meric Catering, in Houston prepared this account with Contributing Editor Susan Biddle Jaffe. Readers with insights on running or starting a business are invited to contribute to Entrepreneur's Notebook. Write to. Editor, Nation's Business, 1615 H Street N.W., Washington, D.C. 20062-2000