Everyone loves a snow cone – those sweet, flavor-packed mountains of shaved ice in a cup. But have you ever considered running a snow cone business? Snow cones represent a sizable segment of the massive $53 billion US frozen desserts market.((https://www.ibisworld.com/united-states/market-research-reports/ice-manufacturing-industry/)) With low overhead and startup costs, you could provide countless people with tasty treats while grabbing a slice of that market and making a good living.
Of course, starting any kind of business takes hard work and a good deal of knowledge. The hard work part is on you, but this step-by-step guide has got you covered on the knowledge aspect, laying out everything you need to know to start your entrepreneurial journey into shaved ice.
Step 1: Decide if the Business Is Right for You
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.
Pros and cons
We’ve compiled a list of pros and cons of starting a snow cone business.
- Fast, easy, inexpensive to get started
- No experience necessary
- Mobile business provides flexibility
- Fun work – everyone loves dessert!
- Work whenever you want
- Demand is seasonal in most areas
- Stringent regulations
- Repetitive, even tedious work
Snow cone industry trends
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.
Industry size and growth
Trends and challenges
Trends in the snow cone market include:
- Growing consumer preference for artisanal flavors
- Higher demand for healthier, low-sugar versions of shaved ice
Challenges faced by the snow cone industry include:
- Supply chain disruptions
- Seasonal and highly competitive
How much does it cost to start a snow cone business?
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
|Marketing and advertising||$500-$1,500||$1,000
|Cart and Equipment||$2,500-$4,000||$3,250
How much can you earn from a snow cone business?
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.
What barriers to entry are there?
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.
Related Business Ideas
If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
Step 2: Hone Your Idea
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.
Why? Identify an opportunity
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.
What? Determine your products or services
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.
How much should you charge for snow cones?
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.
Who? Identify your target 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.
Where? Choose your business premises
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:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- Name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “shaved ice” or “snow cones”, boosts SEO
- Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
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. 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.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your offerings in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.
Step 5: Register Your Business
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!
Choose where to register your company
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.
Choose your business structure
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:
- Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
- Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
- C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
- S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
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 ZenBusiness’s 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.
Step 6: Register for Taxes
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.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
- Personal: Self-fund your business via your savings or the sale of property or other assets.
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.
Step 8: Apply for Licenses/Permits
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.
Step 9: Open a Business Bank Account
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.
Step 10: Get Business Insurance
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:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
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.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Much of your business will come from the casual passerby, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
- Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Signage – Put up eye-catching signage at your store and website.
- Flyering – Distribute flyers in your neighborhood and at industry events.
- In-Person Sales – Offer your snow cones at local markets and trade shows.
- Post a video – Post a video about your snow cones. Use humor and maybe it will go viral!
- Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
- Influencer marketing – Pay people with large followings to promote your snow cones. You can find micro-influencers with smaller followings and lower rates.
- Testimonials – Share customer testimonials about how they love your snow cones.
- Create infographics – Post infographics and include them in your content.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They 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.
You can create your own website using services like WordPress, Wix, or Squarespace. 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.
Focus on USPs
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:
- The wildest flavors you could ever imagine
- The healthiest shaved ice in town!
- Spread smiles with snow cones at your next big event
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.
Step 12: Build Your Team
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:
- Snow Cone Vendors
- Marketing Lead
- General Manager
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.
Step 13: Start Making Money!
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 Business FAQs
Is a snow cone business profitable?
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.
Do you need a business license to sell snow cones?
Just like any other food businesses, the snow cone business is also a regulated space. You need to fulfil the local, state and federal requirements to legally run a snow cone business.
How much is a snow cone machine?
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.
How many snow cones does a gallon of syrup make?
You can make 3 cones with 4 oz of syrup. Accordingly, a gallon of syrup can make up to 80 cones.
What's the difference between shaved ice and a snow cone?
Shaved ice is very light and fluffy, similar to the texture of snow, whereas snow cones have crushed ice that have relatively larger granules.