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How To Start A Snow Cone Business

How To Start A Snow Cone Business

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How To Start A Snow Cone Business

How To Start A Snow Cone Business

If you’ve ever stopped by a snow cone cart at the beach, a fair, or a sporting event, then you already know how refreshing this favorite treat can be. Starting a snow cone business of your own can provide an exciting business venture, and when done on a smaller scale, startup costs are minimal. One of the advantages of this type of business is that it’s seasonal – it’s something you can do in the summer for extra income but doesn’t need to become a full-time, year-round business.

Business Overview

A snow cone business (also known as a shave ice or shaved ice) offers delicious frozen treats at convenient locations, like beaches and fairs. These businesses may take on various business models, including a full-service model where cones are served up ready to eat, to more of a self-serve model where kids get to churn their own ice and add their own toppings.

Snow cone businesses range from small, single-location stands to larger operations or franchises with multiple stands or mobile trucks. The business model can be highly versatile; snow cone stands can be located in a permanent location, but many operators choose to run a mobile business that can be moved to different events, such as fairs, carnivals, sporting events, and concerts.

Industry Summary

The snow cone industry is characterized by relatively low barriers to entry. Starting a snow cone business doesn’t require a large initial investment compared to other food businesses. The necessary equipment – a snow cone machine, flavors, cups, and spoons – is relatively inexpensive. Additionally, the operational and inventory costs tend to be low, which can lead to high profit margins.

One of the key success factors in this industry is the ability to offer a wide variety of flavors. Customers, especially younger ones, enjoy trying new and unique flavor combinations and toppings, so keeping up with flavor trends is important. The industry has seen an increase in demand for natural and organic flavors, in line with broader consumer trends toward healthier options.

However, like all businesses, the snow cone industry also faces its own set of challenges. The seasonality of the business means that operators need to plan for off-peak periods. In addition, there is competition from other frozen dessert businesses such as ice cream shops, gelaterias, and frozen yogurt stores.

Despite these challenges, the industry continues to thrive due to the enduring appeal of this simple, sweet treat. The future of the industry could see growth in areas such as artisanal or gourmet snow cones, the use of unique, ethnic, or adult (alcohol-infused) flavors, and increased focus on eco-friendly practices, like using biodegradable cups and spoons.

Checklist To Start A Snow Cone Business

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Starting a snow cone business can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.

Step 1: Research the market

Starting a new snow cone business requires proper market research to assess if there is enough customer demand to make the business profitable. Here are some methods to conduct this research:

Demographics: Determine the potential customer base in your chosen location. Generally, snow cone businesses tend to appeal more to children, teenagers, and young adults, but adults can be a market as well, especially if your offerings have an artisanal or gourmet appeal. You can use U.S. Census data or similar resources to gather demographic information.

Competitor Analysis: Look at other similar businesses in your area. This could be other snow cone businesses, but also ice cream shops, frozen yogurt stores, and other dessert places. Look at their menu, their pricing, and their hours, and try to determine their customer volume. This could help you identify a gap in the market that your business can fill. Tools like Google Maps or Yelp can be helpful for this.

Local Events and Festivals: Assess if your area has regular outdoor events like fairs, markets, or sports events. These can be excellent opportunities for a snow cone business, especially in warmer months (especially if there aren’t already other competitors). Because of this, you might want to consider a mobile setup to take advantage of these opportunities and go where there are large numbers of people. Local event calendars, news, or city council websites can provide information about these events.

Seasonal Demand: Remember, snow cone businesses are often seasonal, with high demand in spring and summer, and then a large drop-off in fall and winter. If you plan to commit to a storefront, you’ll need to factor this into your plans, perhaps by offering other products in the cooler months or finding ways to serve indoor events.

Remember, this is all exploratory research. Once you’ve gathered your data, you’ll need to analyze it to determine if there is a profitable market for your snow cone business.

Step 2: Create a business plan

A business plan is critical for any venture, including a snow cone business, because it helps define your business objectives, strategies, and potential challenges. It’s a roadmap for your business’s future and a tool to track your progress. Moreover, if you plan to seek financial support from investors or lenders, a well-crafted business plan is vital.

For a snow cone business, certain sections of the business plan are especially significant:

Market Analysis: A deep understanding of your target market is essential for a snow cone business, as it is largely dependent on the season and customer demographics. Understand the demand patterns, customer preferences, and your competition. Look into factors such as the local climate, population demographics, popular local events, and existing dessert businesses in your area.

Marketing and Sales Strategy: Your business plan should detail how you intend to attract customers, especially given the seasonality of the business. Considerations might include presence at local events, partnerships with local organizations, social media marketing, or loyalty programs.

Operations Plan: Detail how your business will function on a day-to-day basis. Will you operate from a fixed location, or will you have a mobile setup that moves around to different events? How will you source your ingredients? What will your hours of operation be? These details are particularly important for a snow cone business due to its unique operational needs.

Financial Projections: This is crucial for a snow cone business due to its inherent seasonality. You’ll need to demonstrate that you can maintain cash flow during the off-peak season, whether through lower operating costs, diversified income streams, or sufficient reserves from the peak season.

Remember, a business plan isn’t a static document. It should evolve as your business grows and changes. By updating your plan regularly, you can make sure it continues to align with your business’s direction and can help you make informed decisions as new opportunities or challenges arise.

Related: How to write a business plan

Step 3: Source financing

There are a number of sources to secure the funding to start a snow cone business.

Because the cost to start is typically low, a majority of entrepreneurs kickstart their businesses using personal savings. Another common source is loans from friends or family, although this should be approached with care to avoid straining personal relationships.

If the cost to start is more than is personally available or through friends and family, traditional bank loans are a frequent choice. These require a solid business plan and good credit history, and lenders look for the owner to personally invest between 15% and 25% of the total startup costs.

Related: How to get the funding to start a business

Step 4: Secure a location

When it comes to a location, a snow cone business is unique in that it can choose between a permanent location, a mobile cart for setting up at temporary locations and events, or a traditional food truck-type setup.

For a fixed location, finding a high-traffic area close to family events, parks, and beaches is often a good choice. The peak season for a snow cone business is typically from June through mid August, so plan accordingly when signing contracts for your location.

A mobile snow cone business that plans to sell at events like fairs and festivals can be a great option as they will travel to where there will be large crowds of people. Before committing to an event, be sure to research vendor fees, which are similar to renting the space for the duration of the event. These fees will vary depending on the event and location within that event. It’s important to carefully consider the potential profits the business could see at the event when deciding if the event fee is worth the investment.

Another consideration for a mobile snow cone business is what will you do with the equipment in between events and during the winter months. Don’t forget that the snow cone cart and other equipment will need to be stored while it is not in use. If you have a home garage, this will eliminate additional rental costs, but if not, be sure to calculate any storage costs.

Step 5: Apply for Business Licenses and Permits

Starting a snow cone business requires several legal considerations, and an experienced owner would stress the importance of properly registering the business before operating. While specific requirements can vary by state and local jurisdiction, here are general steps to consider:

Choose a Business Structure: The structure you choose impacts your liability, taxes, and how you run the business. Common structures for small businesses like a snow cone shop include sole proprietorships, partnerships, and limited liability companies (LLCs). Many small businesses in the foodservice industry choose the sole proprietorship because of its low cost, while others prefer LLCs because they provide liability protection.

Related: Comparison of business structures

Register Your Business Name: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Obtain Business Licenses and Permits: At a minimum, a snow cone business owner (and likely any staff) will need to obtain state and/or city licensing to prepare and handle food. According to Mobile-Cuisine, a snow cone business will need to obtain approval from the local health department. Many cities and states also require an owner or employee to take a food safety class and receive a food handler’s permit.  Be sure to check license requirements for every city your cart will operate as in many areas, the health department licensing doesn’t transfer over.

In addition, there will likely be a variety of general licenses or permits that will also be needed before opening. This could include a business license, seller’s permit (to collect sales tax), and Employer Identification Number (EIN).

Related: State guides for general business licensing

Step 6: Purchase equipment and supplies

Now that we have the preliminary tasks out of the way, it’s time to purchase equipment and supplies so you can get your cart or stand ready to open for business.

To get started, you will need some equipment. A commercial-grade ice shaver is a must for its speed and the quality of ice it produces. You’ll also need a refrigerator or freezer for storing ice, dispensers for your syrups, a sink for cleaning (often a requirement in food service regulations), a cash register or point of sale (POS) system, and storage for cups, spoons, and other supplies. To save money, consider looking for used quality equipment that is in good condition.

Throughout the setup process, organization is key. Ensure that everything has its place and that the layout promotes efficiency. For instance, your ice and syrups should be within easy reach of the person shaving the ice.

One tip for someone setting up their first snow cone business is to focus on quality from the start. Invest in high-quality ice shavers and syrups, as the quality of your snow cones will be key to attracting and retaining customers.

Additionally, plan your workflow carefully to ensure that you can serve customers quickly, especially during peak times. Finally, keep in mind that cleanliness is crucial in any food business, so ensure your space is easy to keep clean and that you have a routine for regular cleaning.

Step 7: Get your marketing plan in place

Marketing a snow cone business can be tailored to its unique charm as a seasonal, refreshing, and enjoyable treat, with strategies varying based on whether the business operates from a fixed location or a mobile unit.

For a fixed location, having an appealing storefront is crucial. Since snow cones are fun and colorful, use vibrant colors, eye-catching signage, and tempting images of your products to attract foot traffic and engage the interest of people walking by. Collaborate with nearby businesses for cross-promotion opportunities and become an active member of your local community, participating in local events and sponsoring community initiatives.

For a mobile unit, use social media to announce your location each day and promote special offerings. Instagram is especially valuable due to its visual focus; you can post enticing photos of your snow cones, highlight daily specials, and interact with your followers. Utilize geotagging to make it easier for potential customers to find you.

Regardless of your operation type, consider partnering with schools, community centers, or local sports leagues for events or fundraisers. Offering your snow cones at local fairs, festivals, or farmer’s markets can also help increase your visibility. In addition, having a menu item that you are known for, such as a unique flavor or a massive snow cone, can be a powerful draw.

In both cases, branded snow cone cups, paying for advertising at the events where the business is selling, and investing in eye-catching signage can be effective marketing techniques. Also, delivering top-notch customer service and high-quality products is crucial. Satisfied customers can become advocates for your brand, spreading the word about your business through reviews and personal recommendations. By building a loyal customer base, you can strengthen your reputation and grow your business.

Related: Low-cost ideas to market a new business

Step 8: Prepare to launch

As you finalize your plans to start your snow cone business, there are other items to knock off of your list. Everyone’s list will be different, but here are some common items:

Business Insurance: Secure a comprehensive insurance policy. At a minimum, you will likely need general liability insurance to protect against accidents or injuries. If you have a mobile unit, auto insurance will be necessary, and if you employ staff, workers’ compensation insurance will be a requirement in many regions.

Related: Common types of insurance a business may need

Bookkeeping: Implement a bookkeeping system to keep track of your income, expenses, and taxes. While you can do this yourself using software like Wave Accounting (FREE) or Quickbooks, you may also consider hiring a bookkeeper or accountant. This will not only help with tax preparation but also give you valuable insights into your financial health and profitability.

Banking: Open a business bank account separate from your personal accounts. This will help you track business income and expenses, and it’s important for legal and tax reasons.

Menu Creation: Make your menu visually appealing and easy to read. Use clear fonts and images that accurately represent your offerings.

Set Pricing: Based on your costs and competitive analysis, determine a price that provides a reasonable profit margin. Typically, snow cone businesses aim for a food cost percentage of 10-20%, but this can vary based on factors like location and business model.

Credit Card Processing: Choose a credit card processing system, as many customers prefer to pay with cards rather than cash. This can be part of your POS system, or you might choose a standalone service like Square or Stripe. When researching, consider factors like cost per transaction, ease of use, and reliability.

Employee Management: If hiring employees, you’ll need systems for hiring, training, scheduling, and payroll. Stay aware of all labor laws in your area.

Health Regulations: Maintain strict compliance with health and safety regulations. Regularly review your procedures and update them as needed.

Remember, every business is unique, so these guidelines may need to be adapted to your specific situation. Starting a business requires careful planning and attention to detail, but with the right preparation, you can create a successful snow cone business that brings joy to your customers and fulfills your entrepreneurial dreams.

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Greg’s Tip: The right location is critical to a snow cone business as it directly affects visibility, accessibility, and foot traffic, thereby driving sales. Prime, high-traffic locations, though more expensive, can justify the cost by significantly increasing exposure and spontaneous purchases, leading to higher sales and revenue.

Greg's Business Tip

Common Questions When Starting A Snow Cone Business

How much does it cost to start a snow cone business?

The startup costs for a snow cone business can vary widely based on several factors such as the business model (fixed location versus mobile unit), location, size, and whether you’re purchasing new or used equipment.

On average, starting a small to medium-sized snow cone business could cost anywhere between $2,000 to $20,000. This includes initial investments in equipment, initial inventory, permits, licenses, and marketing.

Here is a breakdown of the potential costs:

Equipment: This includes an ice shaver, refrigerator or freezer, and serving supplies. If you’re operating a mobile unit, you’ll also need to factor in the cost of the truck or cart. You can save money by buying used equipment, but new equipment could range from $2,000 to $10,000, depending on the specifics.

Inventory: Initial purchases of ice and flavor syrups will likely cost several hundred dollars.

Permits and Licenses: These can range from $100 to over $1,000, depending on local regulations.

Marketing: Costs for marketing materials and initial advertising campaigns could range from $200 to $1,000.

Insurance: Costs vary, but you can expect to pay a few hundred to a thousand dollars per year for a basic liability policy.

Rent or event fees: This will depend heavily on your specific location, but it could range from a few hundred to several thousand dollars per month.

In conclusion, while there’s a considerable range in startup costs, having a solid business plan and budget can help you plan for these expenses, so you can judge the potential profitability of your snow cone business.

How much can a snow cone business owner make?

The earnings of a snow cone business owner can significantly vary, depending largely on factors such as location, business model (mobile or fixed), size, seasonality, and competition. However, a rough estimate can be derived using a formula that takes into account the selling price, cost of goods sold (COGS), and the number of units sold per day.

Let’s say you sell your snow cones for an average price of $3.00 each and your COGS (which includes the cost of ice, syrup, cup, and spoon) is approximately $0.50 per snow cone (16.7% COGS). This means you make a profit of $2.50 per snow cone.

In a busy location, you might sell 100 snow cones per day on average. During peak season (roughly 90 days), this means:
Profit per snow cone ($2.50) x Units sold per day (100) x Number of days (90) = $22,500

This is just during peak season and does not account for sales during off-peak times. Remember, though, that this is gross profit and does not account for other costs such as rent, wages, utilities, insurance, and taxes.

It’s also important to remember that snow cone sales can be highly seasonal and weather-dependent. Sales will likely be higher on hot, sunny days and during summer months, while sales may decrease or even halt during colder months, unless you’re located in an area with a year-round warm climate. Some businesses branch out into other offerings to compensate for this, providing snow cones during the summer and offering other foods, like ciders, that appeal during fall festivals. Offering cold drinks and snack foods can complement the snow cones during the summer, potentially leading to higher sales.

Please remember that this is a rough estimate and actual earnings can greatly vary based on a myriad of factors. It’s crucial to perform a detailed financial analysis when starting your business to gauge potential profitability.

What skills are needed to run a snow cone business?

Running a snow cone stand doesn’t require a business degree, but certain skills and experiences can help to increase the chances of the business being a success.

Food service skills. Previous experience in the food service industry is an advantage and can give a business owner knowledge of safe food handling procedures, how to minimize service time, and more.

Customer service skills. Engaging with customers is a large part of this business. A warm, welcoming personality and strong customer service skills will go far, especially when a business repeatedly sells at the same location.

Mechanical knowledge. From troubleshooting cart or van issues to maintaining the snow cone machines and equipment, some mechanical knowledge can save a business owner from always needing to hire repair technicians.

Management experience. Previous experience in hiring, training, and managing staff will allow a business owner to put together a team of great employees.

Creativity. Creative marketing and ideas for new potential locations can contribute to the business’s success and drive sales.

Networking skills. Securing permission to sell at certain events may require connections with the organizers. A business owner with strong networking skills can build up plenty of connections with business owners and other community professionals. This can lead to future opportunities for the snow cone business.

Organization capabilities. Snow cone businesses frequently travel to different locations, so strong organization and scheduling capabilities are important.

What is the NAICS code for a snow cone business?

The NAICS code for a snow cone business is 311811.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources:
National Food Truck Association

How To Start A Snow Cone Business

How To Start A Snow Cone Business

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