Starting an ice cream shop can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful ice cream shop.
Importantly, a critical step in starting an ice cream shop is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Open an Ice Cream Shop:
- Choose the Name for Your Ice Cream Shop
- Develop Your Ice Cream Shop Business Plan
- Choose the Legal Structure for Your Ice Cream Shop
- Secure Startup Funding for Your Ice Cream Shop (If Needed)
- Secure a Location for Your Business
- Register Your Ice Cream Shop with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Ice Cream Shop
- Buy or Lease the Right Ice Cream Shop Equipment
- Develop Your Ice Cream Shop Marketing Materials
- Purchase and Setup the Software Needed to Run Your Ice Cream Shop
- Open for Business
1. Choose the Name for Your Ice Cream Shop
The first step to starting an ice cream shop is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your ice cream shop:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your ice cream shop.
2. Develop Your Ice Cream Shop Business Plan
One of the most important steps in starting an ice cream business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your ice cream shop.
- Company Overview – this section tells the reader about the history of your ice cream shop and what type of ice cream shop you operate. For example, are you an ice cream truck, ice cream parlor, ice cream stand, or an ice cream cart?
- Industry Analysis – here you will document key information about the ice cream industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your ice cream shop? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your ice cream shop make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Ice Cream Shop
Next you need to choose a legal structure for your own ice cream shop and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the ice cream shop and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small ice cream shop owners. It is an agreement between two or more people who want to start an ice cream shop together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for an ice cream shop include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for an ice cream shop is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your own ice cream parlor, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Ice Cream Shop (If Needed)
In developing your ice cream store business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for an ice cream shop to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in an ice cream shop concept that they believe has high potential for growth.
5. Secure a Location for Your Business
When looking for a location for your ice cream shop, you’ll want to find a spot that is visible and easily accessible. You’ll also want to make sure that there is enough space for customers to park and for your staff to work. Another important factor to consider is the cost of rent and utilities.
6. Register Your Ice Cream Shop with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your ice cream shop’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your ice cream shop to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
The licenses and permits you need to start an ice cream shop depend on your state and municipality. Generally, you will need a business license, a food license, and a health permit. You may also need a special license to sell ice cream. Contact your local government office to find out what licenses and permits you need.
10. Get Business Insurance for Your Ice Cream Shop
There are a few types of insurance you will need to operate an ice cream shop.
Some business insurance policies you should consider for your ice cream shop include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Ice Cream Shop Equipment
You will need a commercial kitchen with all of the necessary equipment to make and store ice cream. This includes a refrigerator, freezer, and ice cream maker. You will also need commercial-grade mixers, blenders, and utensils.
12. Develop Your Ice Cream Shop Marketing Materials
Marketing materials will be required to attract and retain customers to your ice cream shop.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your ice cream shop. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional ice cream shop website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your ice cream shop.
13. Purchase and Setup the Software Needed to Run Your Ice Cream Shop
You will need a computer with a point of sale (POS) system software. This software will allow you to track sales and inventory and manage customer data. You may also want a customer relationship management (CRM) program, which can track customer spending and preferences. Other software that may be helpful for an ice cream shop includes a food ordering system and a recipe management system.
14. Open for Business
You are now ready to open your ice cream shop. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Open an Ice Cream Shop FAQs
No, it is not hard to start an ice cream shop because it is a relatively simple business to operate. Most ice cream shops require minimal equipment and ingredients, so they are relatively affordable to start.
The best way to start an ice cream shop with no experience is to research the industry and develop a business plan. Figure out what it will take to start and run a successful shop, from equipment costs to the amount of space you'll need. Talk to people who have already opened ice cream parlors and get their advice on things you may not have considered. Once you understand what's involved, put together your business plan and start looking for funding.
There is no one-size-fits-all answer to this question. The profitability of an ice cream shop will vary based on many factors, including the location, size of the operation, and demand for the products. However, standalone stores are often more profitable than food carts or trucks because these stores can operate year-round and carry a more extensive inventory. Additionally, owner-managed shops may be more profitable than those with an additional layer of managers because there are fewer employee salaries to pay.
The cost of starting an ice cream shop varies depending on the location and size of the business. However, a general estimate would be around $10,000 - $50,000. This includes the costs associated with setting up the business, purchasing equipment and inventory, and marketing expenses.
The most common expenses for an ice cream shop are the cost of ingredients, labor, rent, and utilities. The cost of ingredients can vary depending on the type of ice cream, but it is typically one of the most significant expenses. Labor costs can also be high, especially if the shop is busy. Rent and utilities are typically stable expenses, but they can add up over time. Other common expenses include marketing and supplies.
An ice cream shop can make money by selling ice cream, sundaes, floats, and other frozen treats. It can also make money by selling related items like cones, cups, and spoons.
Yes, an ice cream shop can be profitable because it offers a product that is in high demand, has a low cost of production, and has a wide variety of flavors that appeal to many people. Additionally, an ice cream shop can offer add-ons such as cones, waffles, and toppings that increase the amount of money customers spend on each visit.
There are many reasons ice cream shops fail. One reason may be that the owner did not do enough research on the business before starting it. They may also have chosen the wrong location or did not create a good business plan. Additionally, the shop may not be managed appropriately, leading to a decline in sales and profitability.