How to Start a Popcorn Business
Popcorn has been a popular snack for over a century and has evolved into a gourmet snack that comes in every flavor imaginable. If you love popcorn and being creative, a popcorn business could be an opportunity for you to be your own boss and make a great living.
Whether you plan to start a gourmet popcorn shop or sell kettle corn at festivals, check out our guide to starting a popcorn business to help you get started.
A popcorn business makes various flavored popcorn from simple butter, cheese, or caramel to more adventurous buffalo, salt, and vinegar, or any combination of spices and sells them in single servings or bags. The business may operate out of a shop, a kiosk, or sell online only. Often, the popcorn is also available packaged as a gift in tins or other decorative packaging.
According to Allied Market Research, the global popcorn market was $9,060 million in 2016. According to IBIS World, the market size as of 2021 is $2 billion. Interestingly, the popcorn industry boomed during the pandemic due to people staying at home and “binge-watching” shows and movies.
Healthy eating trends help to drive the popcorn market because popcorn is considered a healthier option than other salty snacks. As the pandemic winds down, discretionary spending on snacks is expected to increase with the increase in income and more time spent on leisure and sports watching.
Your target market will be popcorn lovers and those who prefer healthier snacks.
Skills, Experience, and Education Useful in Running a Popcorn Business
There are several specific skills that you will need to open a popcorn business.
- Experience. Experience in making different kinds of popcorn and the ability to come up with creative flavors is extremely helpful.
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Popcorn Business
If you’re thinking about starting a popcorn business, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write your Business Plan
After coming up with the business idea, the next step in starting your popcorn business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect gourmet popcorn business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Structure
A business structure (also referred to as a business entity) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business structure is best for a popcorn business shop, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Finding a location with high foot traffic and visibility is ideal for a retail location. A concession stand, kiosk or popcorn cart in shopping malls, retail outlets, or other locations that bring lots of people can be a more inexpensive way to start versus deciding to purchase or rent a storefront.
Mobile popcorn carts that are set up at fairs and festivals are another way to get started without needing a large initial investment.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
You may need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located. Check with your state for specific license and permit requirements for your popcorn business. Some other common local, state, and federal registrations a popcorn business may include a food handlers license, cottage food laws, sales tax permit, and Employer Identification Number.
Step 6: Find Financing
Fortunately, the cost to start a popcorn making business can be low, however, if funding is needed, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A popcorn business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a popcorn business include social media platforms like Facebook and Instagram, in addition to online advertising. Developing a website can be a significant expense, but it can also give your popcorn business greater visibility online.
Step 9: Get Business Insurance
A popcorn business should consider a few different types of insurance to protect the business. A couple of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost of insurance for a popcorn business will vary based on a number of factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You may need employees to help you run your popcorn business. Make sure that you select people with appropriate experience and training.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your popcorn business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a popcorn business?
Here are the typical costs you will face when you open a popcorn business. You could choose to open a franchise at a cost of $150,000 – $400,000 as an alternative.
– Commercial-grade popcorn machine $2,500 +
– Initial ingredients $500 – $1,000
– Packaging (popcorn boxes, tins, supplies, etc.) $2,000 +
– Store or kiosk rental downpayment $500 – $5,000
How profitable is a popcorn business?
Popcorn sells for around $20-25 per pound. If you sell 20 pounds of popcorn per day at $22 per pound, you will make $160,600 in annual revenue.
Are there grants to start a popcorn business?
It’s extremely rare to find a grant to start a popcorn business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a popcorn business?
The NAICS code for a popcorn business is 311919, which is classified under Other Snack Food Manufacturing.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.