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Written by: Esther Strauss
Esther is a business strategist with over 20 years of experience as an entrepreneur, executive, educator, and management advisor.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on September 24, 2021
Investment range
$4,000 - $8,000
Revenue potential
$30,000 - $200,000 p.a.
Time to build
0 - 3 months
Profit potential
$27,000 - $100,000 p.a.
Industry trend
Stable
Commitment
Flexible
These are the critical aspects you should evaluate when launching your snow cone business:
Before starting any business, you should make sure it’s going to be right for you, your budget, and your lifestyle. Running a snow cone business is fun and relatively straightforward, but it may not be for everyone.
We’ve compiled a list of pros and cons of starting a snow cone business.
The snow cone is not a standalone industry, but a segment of the US frozen dessert market.
The biggest trend in recent years is that the snow cone has grown up and become artisanal. As a result, snow cone businesses now have more status and offer greater possibilities for flavor creativity. Luxury restaurants across the US and Europe are serving innovative versions, such as the horchata kakigori (Japanese shaved ice) at David Chang’s LA restaurant Majordomo.
Trends in the snow cone market include:
Challenges faced by the snow cone industry include:
Startup costs for a snow cone business range from $4,000 to $8,000, with the main cost being the required equipment. You can expect to pay $500 for an entry-level shaved ice machine, and around $3,000 for a cart and other equipment. Additional expenses will include a marketing strategy, a computer to run the business, insurance, and license and permit fees.
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Licenses and permits | $200-$500 | $350 |
| Insurance | $250-$250 | $250 |
| Marketing and advertising | $500-$1,500 | $1,000 |
| Website | $100-$500 | $300 |
| Software | $100-$250 | $175 |
| Cart and Equipment | $2,500-$4,000 | $3,250 |
| Raw Material | $100-$300 | $200 |
| Miscellaneous | $250-$700 | $475 |
| Total | $4,000-$8,000 | $6,000 |
In most areas, snow cones are only in demand in the warmer months, which means you’ll make nearly all of your revenue from May to September. From October to April, you may want to consider shifting to a cold-weather alternative, like hot tea, though some owners shut down for the winter.
As overhead is minimal, you should be able to achieve a profit margin of around 90%. The average snow cone costs $3. Assuming you’re able to sell 500 per week from May to September, you’ll have $30,000 in revenue. That means you’ll have a profit of around $27,000 for just five months’ work.
After a few years, you might be able to open a storefront and operate three carts. This will bring your profit margin down to 50%, but with year-round sales at the shop (more than $100,000) and three carts’ worth of warmer-months sales ($90,000) you should have annual revenue of nearly $200,000. This would give you a tidy profit of $100,000.
As with any food business, snow cones face stringent FDA regulations regarding the processing and handling of food products. There is also a lot of competition within the food industry, not only from other snow cone entrepreneurs, but also from rival frozen dessert vendors, such as the ice cream truck.
The other major barrier to entry is that the snow cone business is both seasonal and mobile. This makes it hard to build customer loyalty and encourage repeat business, as well as retain permanent staff and a consistent income.
Now that you know what’s involved in starting a snow cone business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research snow cone and shaved ice vendors in your area to examine their products, price points, and customer reviews, as well as what sells best. You’re looking for a market gap to fill. For instance, maybe the local market is missing low-sugar snow cones.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as unique flavor profiles, like blueberry-mango.
This could jumpstart word-of-mouth marketing and attract clients right away.
To pinpoint the best location for your snow cone business you should research the local market. Is there a demand for snow cones in your area? And what are the seasonal trends? Google Trends is a great tool to help you find out.
Clearly, the best locations for a snow cone business are those where the climate is hot and dry, which also tend to be the ones in which summer lasts longer and the winters are milder. If you want a really profitable snow cone business, you may want to consider relocating to these areas.
Snow cones are just ice flavored with syrup. The two most common types of syrup are bought in concentrated form or ready-to-use, and both come in a wide range of flavors. Industry leader SnowCone.com offers more than 50 flavors! They run the gamut from simple peach and lemonade to strawberry cheesecake and egg custard.
This allows you to create a menu, offering something for every palate, and rotate your product offerings. One week you might focus on berries, the next, island paradise.
The average price of a snow cone is $3.00, while the cost of ingredients to make a snow cone is less than 40 cents. This results in a healthy 85-90% margin before overhead.
Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the price you use at launch should be subject to change if warranted by the market.
The majority of your customers are likely to be families enjoying their leisure time in the sunshine. Individual adults and older children socializing with their friends are also potential customers.
To find customers, consider where families and friends tend to congregate. Parks, beaches, malls, festivals, and sporting events are all good potential vending spots.
You could also target people holding events whose guests might enjoy a snow cone. This would include birthday parties, school events, weddings, carnivals, music festivals, and church events.
In the early stages of your business, you’ll operate a mobile cart and run the business from home. But as your business grows and you hire vendors, you may want to rent a facility to store the carts, or open your own snow cone shop.
You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices. When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states, particularly warmer states, could offer real advantages when it comes to snow cones.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your snow cone business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a snow cone business. You might also try crowdfunding if you have an innovative concept.
Starting a snow cone business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your snow cone business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You could use a leading point-of-sale system, like Toast, Harbortouch, or Clover, to process customer payments, manage inventory and perform basic sales analytics.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your snow cones meet their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your snow cones could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a snow cone business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in frozen desserts for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in snow cones. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a snow cone business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
The major concern for snow cone vendors is how to keep the business afloat during the off-season. Some snow cone vendors turn to other types of temporary work and return to snow cones once the season kicks off. You might consider operating a different business in the colder months, such as turning your truck into a snow plow.
Another option is to switch your cart to cold-weather products during the winter, such as hot tea, or hot cider, and find a high-traffic spot.
Armed with the right knowledge, you’re now ready to start your entrepreneurial journey and start building a snow cone empire!
Snow cone businesses are seasonal but highly profitable businesses. The cost of goods sold only accounts for 15% of sales, generating a strong gross margin of 85%. As a mobile cart business, it does not have any major overhead expenses, making it highly profitable.
Snow cone machine price depends upon the manufacturer and its brand reputation. However, you should expect to pay around $500 or for a high quality snow cone machine.
You can make 3 cones with 4 oz of syrup. Accordingly, a gallon of syrup can make up to 80 cones.
Shaved ice is very light and fluffy, similar to the texture of snow, whereas snow cones have crushed ice that have relatively larger granules.
To make your snow cone business stand out, consider offering unique flavors or toppings, experimenting with different textures or consistencies, or using eye-catching packaging or branding. You could also consider offering a loyalty program or partnering with local events or organizations to increase visibility.
To make your snow cone business stand out, offer unique flavors, customization options, eye-catching presentation, exceptional customer service, and unique add-ons. These strategies will help differentiate your business from competitors and create a memorable experience for customers.
Creative ways to market your snow cone business include leveraging social media platforms, partnering with local organizations, participating in community events, offering online ordering and delivery services, and creating seasonal promotions. These approaches will help you reach a wider audience and generate excitement around your snow cones.
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