Do you want to start an ice cream shop business? If YES, here is a complete guide to starting an ice cream shop business with NO money and no experience.
Okay, so we have provided you an in-depth sample ice cream shop business plan template. We also took it further by analyzing and drafting a sample ice cream shop marketing plan backed up by actionable guerrilla marketing ideas for ice cream shops. In this article, we will be considering all the requirements for starting a ice cream shop business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start an Ice Cream Shop?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start an Ice Cream Shop?
According to reports, the first ever ice cream store in the united states opened in 1776 in New York City and ice cream has become one of the most popular treats in the country as there are now many ice cream parlors and vendors selling traditional ice cream and other niche products in the industry.
This business venture is tempting to the taste buds as well as lucrative. However, while it might be tempting to start your own ice cream shop, there are several factors that you will need to take into consideration if you want your business to become a success.
You need to first of all know whether running a business is something you can handle because even though having a business idea might be great, not everyone can handle the stress that comes with running a business. If you are one that cannot handle challenges, cannot thrive in difficult circumstances and aren’t comfortable with making big decisions or working independently, then you shouldn’t bother starting a business as you are setting yourself up to fail.
Once you have decided that starting a business is for you, you will need to conduct thorough research so you would know what the business is like and how you will operate it to become successful. In conducting your research, you will need to study similar businesses in your area in order to find out what they sell, how they advertise and market their products, who your demographics are, who your competition is, how you intend to win over them, how you intend to price your ice cream, and also where to find suppliers for all the various stock and items you will need in your ice cream shop.
Once your research is complete, take all the data and information that you gathered and use it to write a comprehensive business plan for your ice cream shop. It is important that your business plan outlines how much you intend to sell and what your operating costs will likely be for a period of at least 3 and at most 5 years.
Once you have set up your ice cream shop, you might need to consider joining a trade association in your industry. The National Ice Cream Retailers Association (NICRA) is an accredited organization that can offer immense benefits to your business as you will not only be exposed to a network of other ice cream retailers but also suppliers of cones, flavorings, toppings, nuts and equipment. Also, NICRA offers insurance programs, ice cream quality testing and scholarship opportunities for its members.
Starting an Ice Cream Shop Business – A Complete Guide
1. Understand the Industry
The ice cream market in the United States has seen flat earnings that haven’t surpassed $10 billion since 2010. It only surpassed the $10 billion mark in 2014 as it generated an extra $800,000. The reason for the flat market is because the market is becoming increasingly segmented due to the changing tastes of customers as well as the sensitivity of customers towards the prices for store-bought varieties of ice cream.
Another reason for the flat sales is due to the fact that customers are now conscious of what they consume and so prefer frozen yogurts or ice creams that have fruit and vegetable flavors. The three distinct segments are super premium, frozen snack and premium.
According to Packaged Facts, ice cream and frozen novelties are among the top ten purchased items in the food categories across super markets as more than 85 percent of households in the United States use ice cream. The fact that the industry is coming up with new product trends and innovations such as ‘free from’ for those who are intolerant of certain ingredients.
These new innovations have helped the market to overcome the lukewarm growth regarding its revenue generation. According to Packaged Facts, the ice cream and frozen novelties market generated nearly $28 billion in 2016 and it is expected that more will continue to be generated through 2021.
According to Packaged Fact, it is expected that the forces shaping the ice cream industry will continue to determine the direction of the industry for several years to come. The ice cream industry in the United States will continue to see new frozen dessert products and ice cream emerging from brands that are local or regionalized.
Even though statistics have it that the usage rates for ice cream and frozen desserts have continued to decline, there is however an ice cream segment that has seen an increase, which is the non-dairy frozen desserts that include plant-based ice cream products as an alternative to dairy milk.
Globally, it is estimated that revenue from the ice cream industry will reach $74 billion by 2018. Demand is expected to come from rising per capita income and awareness of consumers towards frozen dessert. The ice cream industry is moderately capital intensive; even as there are a large number of players in the industry intensely competing with each other in order to get a fair share or maintain their place in the market.
Classic ice creams which consists of non-fat, low-fat, take home and bulk ice creams contributed nearly 80 percent of the revenue generated by the industry globally in 2012.
On a global level, revenue generated was over billion as consumption was more than 23 billion liters in 2016 with the United States and China being major consumers, with China consuming more than 6 billion liters. The organic ice cream market has continued to drive the growth of the market as it generated more than $86 billion in revenue for the year 2016 and is estimated to continue to increase by over 40 percent. The reason for the growth of this segment is due to Millennials who are very conscious of what they consume even if the products are priced at a premium rate.
The leading product segment in the industry in 2016 was ‘take home’ as it controlled over 50 percent of the organic ice cream market. Demand for this increased due to the convenience organic ice creams offered families during occasions and gatherings. It is estimated that impulse ice cream will witness one of the highest growth of over 3.5 percent till the year 2024.
Since children are the major consumers in this segment, demand will be stimulated by products being innovated to bring in new flavors and design and also offer competitive prices. It is expected that Artisanal ice cream will generate more than $350 million by 2024 due to growing demand for fresh and natural ingredients.
It is expected that the United States will lead North America in the organic market and surpass the estimated revenue of $51 billion due to increasing health consciousness of consumers. The Asia Pacific will also witness significant revenue growth over the same time period as increase in disposable income will be responsible for growth of the industry in this region.
Europe remains the largest exporter due to the fact that it not only has the infrastructure but it also has a high quality standard when it comes to production. It is expected that the industry’s advancement in this region will come from technological advancements especially in terms of infrastructure transport.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic compositions of those that consume ice cream are children, Millennials, adults, baby boomers and senior citizens. It cannot however be restricted to just children and women even though these two groups are amongst the major consumers of ice cream.
If you are therefore looking to define the demographics for your ice cream shop, you should try not to restrict it to a certain group of people unless you are offering a niche product and will in that case have a selected amount of target market.
3. Decide Which Niche to Concentrate On
The ice cream shop is where ice cream is prepared and served to customers who might decide to consume the ice cream on-site, take it home or have the ice cream delivered to them. However, the ice cream industry has experienced flat revenue over the years because most customers see ice cream as unhealthy and therefore prefer alternatives that are healthy.
Knowing this fact, you might decide to offer niche products for your customers in order to penetrate a certain market instead of having to compete with other players in the industry for the general market. Ensure that you conduct a thorough research of the niche you intend to offer so that you do not end up wasting money and time on niches that aren’t worth it.
Below is a list of niche ideas within this particular business that you can specialize in;
- Traditional Ice Cream
- Ice Cream Treats
The Level of Competition in the Industry
The ice cream industry has seen flat revenue generation due to the maturity of the market as well as the abundance of too many players in the industry especially as popular brands are usually in more locations and can therefore command more customers than regionalized ice cream shops. This therefore goes to show the importance of location when it comes to competition in this industry.
Even though large scale ice cream companies are dominating the market, changing tastes and preferences of customers have ensured that smaller ice cream shops who are offering niche products are able to compete and get a fair share of the target market in their location only as large scale companies have the advantage of being in different locations and economies of scale.
Therefore, if you are looking to start your ice cream shop in the United States of America, you should be aware of those that are already in the industry as well as those looking to enter the industry and be prepared by having strategies in place that will enable you to compete.
4. Know Your Major Competitors in the Industry
There are several major players in the ice cream industry that have become known either for the kind of ice cream they serve, their innovations when it comes to flavor, design and their packaging. Some of the popular players have been in the industry for a long period of time, while others are new players who have attained popularity within a short period of time.
Below are some of the well-known brands in the industry;
- Cold Stone Creamery
- Foster’s Freeze
- Ben & Jerry’s
- Dunkin’ Brands
- Baskin Robbins
Ice creams are in the frozen dessert category and are usually regarded as an indulgent snack for those who have a sweet tooth. Ice creams usually come in a variety of styles from no-fat to regular ice cream. In the retail sector, ice creams are sold either through specialized ice cream shops or other different retail channels such as supermarkets, malls, restaurants and other such places.
In specialized ice cream shops, consumers usually order for their desired flavors and then combine them with mix-ins and toppings. Most of the ice cream manufacturers in the United State are those that have been in existence for more than 50 years and many are still family owned businesses. The ice cream industry creates more than 188,000 jobs and contributes more than $39 billion to the economy of the United States.
The ice cream market has continued to fragment because even though leading players are more visible, other smaller players continue to join the industry, thereby making the market to be more crowded and leading to the continued saturation of the market. However, product innovation is paving the way for stimulated growth in the market.
Due to health concerns from consuming regular ice creams which has led to a drop in the purchase of ice cream, most ice cream producers have started focusing on the ‘absence of negatives’ such as GMO free, hormone free, lack of preservatives, and reduced or no calories. Other innovative ideas regarding these health concerns are ‘better for you’ options as companies advertise the use of better ingredients as opposed to ‘absence of negatives’.
5. Decide Whether to Buy a Franchise or Start from Scratch
As an entrepreneur, one of the decisions that you will have to make when starting up your business is whether to start your business totally from scratch or to buy a franchise. While each option has its pros and cons, it is not a guarantee that your business will become successful as there are several factors that contribute to the success of a business.
Also, the option that you should settle for should be one that best aligns with your core goals and objectives. Starting one’s business from scratch is a great way of learning about running a business and also dictating the pace at which your business should grow. Starting from the scratch might overwhelm any entrepreneur which is why it is often encouraged that you have a comprehensive business plan at hand to help guide you in the process of running the business.
Buying a franchise usually has to do with the entrepreneur buying the brand of another and in exchange getting support and guidance in running the business. This means that when you have bought a franchise, you do not need to worry about advertising and promoting the business, training your staff or certain paper works that entrepreneurs starting their own business will have to worry about. Before you however pay for any franchise, it is imperative that you have thoroughly studied the franchises available so that you choose the one that will best align with your goal and budget.
6. Know the Possible Threats and Challenges You Will Face
No matter what venture you are looking to start, threats and challenges are bound to crop up and while some can easily be handled, some will simply be uncontrollable. Therefore, as an entrepreneur you must be prepared to handle situations when they crop up and when they are uncontrollable, remain focused on the reason why you started the business.
Some of the threats and challenges that you will face when starting your ice cream shop in the United States of America include; changes in tastes and preferences of customers, economic downturn, increase in competition from existing and new players in the industry and adverse government policies.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
When you are looking to start a new business, you will have to ensure that you carry out what is termed as ‘structuring’. How you decide to structure your business can have an impact on how your business can grow and enable you achieve your intended goals and objectives.
And so it is therefore important that you take the structuring of your new business venture very seriously. If you have the means to engage the services of a business attorney to help you in choosing the appropriate legal entity for your business, then do so.
There are various legal entities in the United States that entrepreneurs can choose from and they are sole proprietorship, partnership, corporation and Limited Liability Company (LLC). The kind of ice cream shop you intend to run will have a lot of bearing on the legal entity that you will end up choosing for your business. If for example, you intend running your business on a very small scale, where you are the only one making and selling, then choosing a corporation or LLC will be inappropriate.
It should be noted that the option of knowing which legal entity to choose is dependent on several factors such as the ease of set up, management and control, tax implications, flexibility, liability limit as well as several other factors.
The corporation and the LLC are similar and unlike that of the sole proprietor and partnership as they are considered as separate entities from those who formed them. This therefore means that liability is limited, thereby protecting the owners. However, these legal entities are considered to be very expensive and require a lot of record keeping.
8. Choose a Catchy Business Name
One of the most important decisions that you will take whilst looking to start your ice cream shop is what you intend to call the business. While you can use your name or come up with a fictitious name, you should ensure that the business name you are choosing is unique, easily pronounceable, memorable and isn’t being used by anyone else in the industry.
Some of the catchy business name ideas that are suitable for your ice cream shop include;
- Oliver Twist Creamery
- Stone Cold Ice Cream Shop
- Shoney Organic Ice Cream Shop
- Mesha Ice Cream Shop
- Ma Crème Inc
9. Discuss with an Agent to Know the Best Insurance Policies for You
If you are one who has risked a lot to start a business, then you will realize that the only wise thing left to do is ensure that you have bought insurance policies so that should any disaster – occur whilst running your ice cream shop, you will not be left to bear the risk by paying out of your pockets but will have had your risks borne by an insurance company.
Many businesses that made the mistake of not buying insurance policies have had to close down the business as most could not recover from paying for losses from their own pockets. If you are confused on the kind of insurance policies to purchase, you could engage the services of an insurance broker or agent to help you out.
Below are some of the insurance policies that you should consider purchasing when looking to start your ice cream shop in the United States of America;
- General Liability Insurance
- Workers’ Compensation Insurance
- Medical Insurance
- Health Insurance
- Casualty Insurance
- Commercial Property Insurance
- Professional Liability Insurance
- Business Auto Insurance
- Umbrella Policies
- Contents Coverage
- Food Contamination Endorsement
- Mechanical Breakdown
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
An ice cream shop primarily makes and serves ice cream to its customers and while it might offer unique products in terms of flavor, design and packaging, it cannot apply for an intellectual protection for these designs or flavor as doing so will be a waste of time due to the fact that implementation will be very hard to achieve.
However, if you are looking to build a brand that will be nationally recognized, then you might need to apply for intellectual property protection on areas such as your business names, logo or any other material you deem important.
11. Get the Necessary Professional Certification
Making ice cream and selling them does not require any sort of professional certification rather it requires certain skills and the ability to be able to experiment in order to come up with the delicious recipes. While professional certification is not necessary to become a success, it gives you leverage when competing against your competitors and also helps to boost confidence in your customers.
Most entrepreneurs in this industry do not however consider this as utmost priority when looking to start or run their business.
12. Get the Necessary Legal Documents You Need to Operate
Ice creams are under the food categories and therefore are subject to stringent policies from the local health department and so not having the complete documents before you start your business is likely to get you into a lot of trouble. If you aren’t sure of what documents to get for your ice cream shop, engage the services of a business attorney to help you out.
Even though some of these documents might differ from state to state, there are still basic documents that you will require when looking to start your ice cream business regardless of whatever state you might be operating from;
- Certificate of Incorporation
- Operating Agreements for LLCs
- Insurance Policy
- Business Plan
- Business Permit and License
- Employment Agreement
- Sales Tax Permit
- Local Health Permit
- Contract Document
- Employer Tax Identification Number (EIN}
- Federal Tax Identification Number (TIN)
13. Raise the Needed Startup Capital
While you might feel you have the best idea on how to make your ice cream appeal to everyone, without the capital to at least kick start the business, your business idea will never become reality. The importance of a start-up capital is so as to help your business idea not only become reality but also to sustain the business till it starts to generate revenue that will sustain and grow the business. If you are looking to approach external investors for start-up capital, ensure that you not only have your own capital no matter how small but also a business plan as this will show how serious and committed you are about the business you intend starting.
Some of the options that you can explore when it comes to raising start-up capital for your ice cream shop include;
- Raising capital from personal savings as well as sale of personal stocks
- Raising soft loans from family members and friends
- Applying for loan from the bank or financial institution
- Sourcing for capital from private investors
14. Choose a Suitable Location for your Business
One important decision that will have a huge effect on the success of your business is where you intend to locate the business. It is important that you decide on a location that is not only visible but one that is strategic as well.
It is important that wherever you are looking to locate your ice cream parlor be somewhere that is not only accessible and convenient for your intended target market and the location should be in the proximity of traffic either vehicular or foot without being too close to other ice cream shop.
When choosing the location, it is important that you hire or lease a facility that is not too small because you will require space to not only store your ice cream but also to sell to customers that will come to your store.
If you aren’t used to the dynamics of securing a good location, then you might need to engage the services of a real estate broker to help you out. Ensure that you are not close minded about the various sites that you may likely visit.
Ensure that the real estate broker is aware of your budget so that you don’t waste your time looking at facilities that are way beyond your budget.
15. Hire Employees for your Technical and Manpower Needs
Setting up the shop is very important and it is important that you get all the necessary supplies and equipment that you will need. You might need to meet with equipment suppliers and contractors in order to get quotes on the equipment you will need.
You might need to conduct further research on how to design your store in order to get the right décor. Your research should include visits to other stores so as to take notes and therefore get an idea of what you will need in decorating your own store.
The amount of equipment you will need to get will depend on the size of your facility as a smaller facility will only accommodate the basics. The basic equipment you will need are, sinks, ice cream cabinet, freezers, soft-serve machines, cooling systems, back-up generators, computers and phones. Aside from the equipment, you will also require daily supplies such as cones, ice cream, bowls, plastic spoons and others.
If you are not going to be running the business by yourself, it is important that you build a solid business structure that will enable you hire competent staff. There are several means you can use to try and find the right staff for your ice cream shop, from the traditional recruitment means or through modern techniques like the internet.
That you have found the right hands for the job is only one aspect as you must ensure that they are put on the payroll and that records regarding their earnings are kept for tax purposes.
The Service Delivery Process of the Business
The process involved in setting up and running an ice cream shop usually starts from getting an appropriate location and ensuring that all legalities have been covered. Once this has been sorted out, sourcing for natural ingredients from various suppliers are usually carried out. Entrepreneurs that use natural ingredients have to ensure that demand is synchronized with production so that the products are not under or over stocked.
Once ingredients to be used have been sourced, they are then used in producing the ice cream depending on the flavor and then packaged or kept cool for customers.
Customers usually take the ice creams in the shops, buy to take home or have it delivered to their preferred destination.
16. Write a Marketing Plan Packed with ideas & Strategies
- Marketing ideas and Strategies
Marketing is an aspect of a business that cannot be trivialized because as long as the aim of a business is to maximize profit, marketing strategies cannot be joked with. There are several factors that you would need to consider if you want your marketing to be successful and they are the location of your business, your demography, unique selling point and your competitors.
Before marketing strategies can be crafted, it is important that a marketing plan is in place as this will guide whatever strategies that are created, while ensuring that it aligns with the aims and overall objectives of the business.
It is pertinent that you engage in market survey so that you do not only know who your target market is but what it is they expect from you. You will also find out who your competitors are, what their weaknesses are and how you can exploit these weaknesses to the advantage of your business.
Because of how critical the right marketing strategies are to enabling a business achieve its goals and objectives, you must set aside a budget and must consider using various means to reach your target market. The internet has made marketing easier for businesses because not only do you get to market your products and services to a large market, it is usually more effective and cheaper in the short and long run.
Below are some of the marketing ideas and strategies for your ice cream shop;
- Ensure that you place adverts about your ice cream shop in local newspapers and magazines as well as on radio and television stations
- Ensure that your ice cream shop is listed in yellow pages as well as online directories
- Distribute handbills and paste fliers in various strategic locations
- Engage in direct marketing in order to create awareness for your ice cream shop
- Encourage your loyal customers to help spread the word about your business
- Use social media platforms such as Facebook, Twitter and Instagram to promote your business
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you intend for your ice cream business to be recognized, then it is important that you engage in activities or devise strategies that will ensure that your brand awareness is boosted and that a corporate identity is created.
If your dream is to start and run an ice cream shop that is not only going to be recognized in your region but all across the country, then you should know that boosting awareness for your brand is without question.
One good thing about engaging in publicity activities is that not all the activities will require you to spend money especially as the advent of technology has made it easier for businesses to achieve more publicity.
Below are some of the platforms that you can use to boost awareness and create a corporate identity for your brand;
- Create a website and ensure that you put up pictures of your shop as well as the ice creams that you serve
- Encourage your loyal customers to help spread the word about your business
- Make use of your social media platforms such as Facebook, Twitter, Instagram and Pinterest to boost awareness for your brand
- Advertise your ice cream shop in popular forums
- Distribute handbills and fliers in various strategic locations
- Participate in local community events in order to boost awareness for your ice cream shop