Americans love ice cream — consuming 23 pounds per person each year — and that’s not going to change anytime soon. As a result, opening an ice cream shop is a smart business move, especially if it’s something you’re already passionate about.
Of course, starting a business takes hard work and considerable know-how. Thankfully you’ve come to the right place, as this step-by-step guide will walk you through the launch and development process all the way to scooping out that first cone!
Step 1: Decide if the Business Is Right for You
Before you start your ice cream business, you should look at the industry as a whole to help you identify the right opportunity.
Pros and cons
Before moving forward with your ice cream business, let’s look at the pros and cons, so you know what to expect.
- Unleash your creativity by offering unique flavors
- Profit margins are good
- Learning ice cream making is simple
- Build your own brand
- Food businesses are strictly regulated
- Need to offer a quality product to stand out
- Seasonality affects sales
Ice cream industry trends
Consumers still scream for ice cream, but they are also becoming more health-conscious about their choices.
A look at Google Trends reveals a clear seasonality to ice cream interest. You can see this demonstrated over the last five years.((https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=ice%20cream%20US))
Industry size and growth
Trends and challenges
The latest trends in the ice cream industry include:
- Health-conscious consumers prefer natural flavors, low-fat, and handcrafted ice creams made with organic local ingredients.
- Other hot ice cream trends include savory and dairy-free products, functional benefits such as protein- or CBD-loaded ice cream, and sophisticated flavor profiles like turmeric-infused honey with candied ginger.
Some challenges faced by the industry are:
- Tough competition
- Keeping costs down
How much does it cost to start an ice cream business?
The investment needed for your ice cream business will depend on the type you choose, among other factors such as equipment. To open an ice cream shop, you will likely need between $40,000 and $100,000, with the average cost being $80,000. A large-scale manufacturing operation will likely need much more than this, while you could probably start a home-based online ice cream shop for as little as $15,000.
Here’s a cost breakdown example for an artisanal ice cream shop, excluding the cost of the shop:
|Start-up Costs||Ballpark Range||Average
|Setting up a business name and corporation||$150 - $200||$175
|Business licenses and permits||$100 - $300||$200
|Insurance||$100 - $300||$200
|Business cards and brochures||$200 - $300||$250
|Machines and equipment||$30,000 - $70,000||$50,000
|Supplies||$3,000 - $5,000||$4,000
|Website||$1,000 - $3,000||$2,000
|Total||$34,550 - $79,100||$56,825
How much can you earn from an ice cream business?
Artisanal ice cream costs about $10/pint in the US, more expensive than the regular ice cream.
In your first year or two, you could make artisanal ice cream from home and sell 150 pints a week, bringing in nearly $80,000 in annual revenue. This would mean over $30,000 in profit, assuming a 40% margin. As your brand gains recognition, sales could climb to 500 pints a week. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 25%. With annual revenue of $260,000, you’d make a tidy profit of $65,000.
On the other hand, Cold Stone Creamery franchisees average $415,000 in annual sales. That said, 42% of stores were at or above this level and the rest, of course, were below. While this is for an ice cream franchise, an ice cream manufacturing business will generate much more in gross sales and have smaller profit margins.
What barriers to entry are there?
Now before you start dreaming about your potential $400,000+ in annual sales, there are some barriers to consider:
- Shelf space in a supermarket or convenience store
- Cold climates
- Food licensing laws
- Local competition
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 it’s time for the exciting part, clarifying your idea! Let’s dive into choosing your niche first.
Why? Identify an opportunity
It’s important to become familiar with your competition. Knowing as much as you can about them will help you differentiate your company and create a more valuable product.
Your competition will vary depending on the business model you choose. For example, an ice cream shop will only have local competition. In contrast, ice cream manufacturing will put you in a much bigger pool of competitors with names such as Ben & Jerry’s and Haagen-Dazs.
Here are some questions to ask about your competition:
- What products do they offer?
- Why do consumers buy their products?
- Who is their target market?
- What is their unique selling point?
What? Determine your products or services
There are three main types of ice cream businesses: impulse ice cream, take-home ice cream, and artisanal ice cream.
- Impulse ice cream products are single serving sizes — think of ice cream pops and ice cream sandwiches — typically sold in gas stations and convenience stores. Depending on your manufacturing capacity, you could target large chains or stick with locally owned stores.
- Take-home ice creams are the kind you buy in supermarkets, like Edy’s or Ben & Jerry’s. These are often sold in larger buckets and require significant manufacturing capacity. While a business can offer both impulse and take-home ice cream, in the beginning it’s best to choose a specialization.
- Artisanal ice cream is generally made in small batches with high-quality ingredients and uncommon flavors, such as raspberry cheesecake or salted caramel fudge. If you want to make artisanal ice cream, you will either need your own ice cream shop or a top-notch website, in order to be able to sell directly to the public.
Choosing one of these is crucial for setting up your business the right way. Because if you try to do everything at once, you’ll likely burn out.
Which type appeals to you the most? Do you want to create a nationwide brand that your customers recognize in the supermarket? Or are you more inclined to open a local ice cream parlor where you can experiment with flavors and create a unique experience for your customers?
Use these answers to determine what your next steps will be.
How much should you charge for your ice cream?
How much you charge will depend on the ingredients you use, operating costs, location, and your target customer. For example, artisanal ice cream maker Salt & Straw charges around $5 for a single scoop and $10 for a pint. On the other hand, franchises like Baskin-Robbins charge around $5 for a pint.
To find the right prices, you’ll need to estimate your cost of goods sold and add on a healthy profit margin to make your time worth it. Then, compare these prices to your competition to see if they’re viable.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Next, you’ll need to define your target market based on who your best customers could be.
Here are some questions you should ask yourself:
- How old are my ideal customers?
- How much money do they earn?
- Who do I want to resonate with my brand?
- Which customers will benefit from my product?
Once you have your answers, you’ll be able to narrow down your ideal customer and tailor your brand toward them.
Where? Choose your business premises
If you want to get into ice cream manufacturing, location is not terribly important. As long as you have access to quality ingredients, reliable transport and ample space, you’ll be good to go.
On the other hand, if you want to open an ice cream shop, then location is crucial. You’ll want a location with lots of foot traffic or traffic with higher conversions, such as by the beach.
If your area has cold winters, then you could find a location that matches that seasonality, like near a park. In summer and spring, you’ll likely have a lot of foot traffic, and when the traffic slows down in winter, you may be able to negotiate lower rents with the lessor.
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 “ice cream” or “dessert”, 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 could offer real advantages when it comes to ice cream.
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 ice cream 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.
- General 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 needs 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.
- Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
- 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, the sale of property or other assets, and support from family and friends.
Bank and SBA loans are probably the best options, other than friends and family, for funding an ice cream business. You might also try crowdfunding if you have an innovative concept.
Step 8: Apply for Licenses/Permits
Starting an ice cream 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 (DBA), health licenses and permits 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 ice cream 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 may want to use industry-specific software, such as Nextar POS, Kyte, or Gofrugal to manage flavor batches, track staff performance, generate sales reports, and simplify point-of-sale operations.
- 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.
Some of your business will come from the casual passerby or online visitors, 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:
- Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as a free scoop on the 5th visit.
- 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 ice cream at local markets, trade shows
- Post a video – Post a video about your ice cream business. Use humor and maybe it will go viral!
- Seek out referrals – Offer incentives to generate customer referrals to new clients.
- Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
- 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 set 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 ice cream business meets 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 ice cream business could be:
- Premium subscription, so customers never miss their favorite flavors
- Offer unique flavors found nowhere else
- Promote your products/shop with a mobile ice cream truck or cart
- Partner with local farms, dairies
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 an ice cream parlor, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in ice cream 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 ice cream. 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 home, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an ice cream business would include:
- General Manager
- Marketing Lead
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!
Now that you know how to start an ice cream business, you’re ready to take the first step in your entrepreneurial journey. Keep in mind that you’ll be able to attract customers and build your brand fast if you can offer enticing new flavors or adventurous combinations of existing flavors. Having a unique concept for your ice cream shop can also do the trick.
Ice cream production is a $9 billion market in the US. You can still get in on the action and capture a share of this lucrative market. So, get ready to roll and start scooping!
Ice Cream Business FAQs
Why start an ice cream business?
Starting an ice cream business is relatively simple, and it’s also a well-known frozen treat across the U.S. In fact, the average person in the U.S. eats more than 23 pounds of ice cream in a single year. So as long as you’re selling a quality product and have enough customers, you should have a profitable business.
Do ice cream shops make money?
If you have the right location and employ effective marketing, it’s possible to make money. An ice cream shop owner, Mr. Shipley, says that you will need to get heavily involved in your ice cream parlor, as running it remotely will increase the chances of failure.
What is the profit margin on ice cream?
The profit margin depends on your costs, such as ingredients, and the price that you sell your ice cream at. On average, though, a locally owned parlor could expect between 20% to 50% if the business is run effectively.