How to Start a Snow Cone Business
If you’ve ever stopped by a snow cone cart at the beach, a fair, or at a sports game, then you already know how refreshing this favorite treat can be. Starting a snow cone business of your own can provide an exciting business venture, and when done on a smaller scale, startup costs are minimal. One of the advantages of this type of business is that it’s seasonal – it’s something you can do in the summer for extra income but doesn’t need to become a full-time, year-round business.
Business Overview
A snow cone business (also known as a shave ice or shaved ice business) offers delicious frozen treats at convenient locations, like beaches and fairs. These businesses may take on various business models, including a full-service model where cones are served up ready to eat, to more of a self-serve model where kids get to churn their own ice and add their own toppings. Some of these self-service models are a great addition to birthday parties, while the traditional models are better suited to quickly serve large amounts of people.
Snow cones are sometimes confused with shaved ice, their close relative. Shaved ice is much finer, resembling fluffy snow, while snow cones consist of larger pieces of ice compacted into shape. Many different syrup flavors are available, but snow cones remain a fairly simple product that buyers seek out because of their delicious taste and refreshing properties.
Industry Summary
According to Market Research Explore, the snow cone industry grew from 2014 to 2019, and that growth is expected to continue through 2026. Snow cone businesses can take on many forms, including pushcarts and more traditional food trucks. Because these carts and trucks often staff large events like sports competitions, fairs, and festivals, the snow cone industry is closely tied to the outdoor entertainment industry.
Industry Trends
Transparency Market Research highlights that snow cone popularity and consumption have also grown as disposable income has increased. With more disposable income, parents are more likely to hire a snow cone cart for a child’s birthday party, take their children to fairs and festivals where snow cone businesses are present, and buy their children snow cones during a trip to the beach.
A side effect of this increase in snow cone popularity is that some parents may decide to buy snow cone machines for home use, possibly passing over opportunities to buy snow cones while out at events as a result. Low-cost snow cone machines are available for home use, but they lack the convenience that snow cone businesses provide during outings.
Related Industries
Target Market
A snow cone shop typically market to families with children. Colorful graphics, entertaining music, and eye-catching signs can all help to catch the attention of children and their families. A snow cone business will travel to the areas where its target market can be found, and those locations might include beaches, parties, festivals, fairs, sports events, and more.
Checklist for Starting a Snow Cone Business
Starting a snow cone business can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) 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 entity is best for a snow cone business, 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 to minimize liability risk 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 that 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.
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Step 3: Name the Business
Finding the perfect snow cone business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 4: Select your Location
Finding a high-traffic area close to family events, schools, or kids is a must. The peak season for a snow cone business is from June through early July, so plan accordingly when signing contracts for your location.
A business that plans to sell at events like fairs and festivals may also need to pay vendor fees, which are similar to renting the space for the duration of the event. These fees will vary depending on the event and location within that event. It’s important to carefully consider the potential profits the business could see at the event when deciding if the event fee is worth the investment.
Don’t forget that the snow cone cart and other equipment will need to be stored during the winter months. If you have a home garage, this will eliminate additional rental costs.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
A snow cone business owner will need to obtain state and/or city licensing to prepare and handle food. According to Mobile-Cuisine, a snow cone business will need to obtain approval from the local health department. Many cities and states also require an owner or employee to take a food safety class and receive a food handler’s permit. Be sure to check license requirements for every city your cart will operate as in many areas, the health department licensing doesn’t transfer over.
There are also general business registrations that may be needed, such as a business license, sales tax permit, Employer Identification Number, and Occupancy Permit.
Related: Common business licenses, permits, and registrations by state
Step 6: Find Financing
Many people will personally come up with the investment to start their snow cone business due to its low cost, 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 small 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
Because snow cone businesses move around frequently, they don’t tend to market as traditional businesses do. A snow cone business might maintain a social media page on Facebook, Twitter, and Instagram to build awareness around its upcoming locations and events, but other marketing techniques may be more effective. Branded snow cone cups, paying for advertising at the events where the business is selling, and investing in eye-catching signage can be effective marketing techniques.
Related: Low-cost ideas to market a new business
Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a snow cone business. A few of these include:
– General liability insurance will help protect the business against expenses like medical bills that it could face if a customer is ever injured while ordering from the business or gets food poisoning from the business’ products.
– Commercial property insurance helps cover expenses that the business might face if its equipment or inventory were ever damaged in an event like a fire or other accident.
– Commercial auto insurance covers the business-owned vehicle and protects the business from expenses if the vehicle is ever involved in an accident.
The cost to insure a snow cone business will depend on many factors. It can vary from provider to provider, but the business’ vehicle and inventory value will also affect pricing. To get the most accurate idea of what to set aside for insurance costs, request quotes from multiple providers. When comparing the quotes, look not only at the difference between premiums but also at how deductibles, policy exclusions, and policy coverage limits compare.
Step 10: Hire Employees
A snow cone business operator can run an entire cart-based business without hiring employees. A larger operation involving a truck or a fleet of trucks will require staff. While data on the average snow cone vendor salaries isn’t available, Glassdoor reports that food truck cooks, a similar position, make approximately $21,092 per year. This would equate to about $1,758 per month.
Staff salaries are just one of the expenses that a business will need to be prepared for when hiring employees. Other common expenses include workman’s comp insurance, unemployment insurance, and paid time off.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system 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.
How much does it cost to start a snow cone business?
One of the snow cone industry’s major advantages is that it’s possible to start a small cart-based business with only a minimal investment. This can be a great way to get a sense of the industry and even test out sites for their potential to support a larger van-based business.
Buying and outfitting a small cart will carry far lower startup costs than outfitting a van will. Plan to budget $15,000 for a small hand cart and closer to $70,000 or more for a van operation.
Some common startup costs for a snow cone business include:
– Cart or van
– Snow cone making equipment like a snow cone machine, ice maker, cube or block ice shavers, freezers, etc.
– Supplies like cone cups, spoons, snow cone syrup, and napkins
– Signage
How much can a snow cone business owner make?
Snow cone business profits can vary significantly based on the business’s location, profit margins, and business model. Forbes reports that the mobile snow cone franchise, Kona Ice, topped $125 million in sales. While that level of success is uncommon in this industry, it does demonstrate that with an effective business strategy and plenty of hard work, a snow cone business can enjoy significant profits.
1-800-Shaved Ice provides a sample profit and loss analysis that can help you envision your business’s potential profits. Assuming a 12% cost of goods sold, $24 in overhead costs, and $65 in labor costs per day, a business that does $200 in sales each day would see a monthly profit of $2,610. Increase those daily sales to $500, and the monthly profit grows to $7,920. A business that does $1,500 in daily sales would earn $27,270 per month in profits.
It’s important to realize that the snow cone sales are seasonal, with most sales taking place during the warm summer months. Some businesses branch out into other offerings to compensate for this, providing snow cones during the summer and offering other foods, like ciders, that appeal during fall festivals. Offering cold drinks and snack foods can complement the snow cones during the summer, potentially leading to higher sales.
What skills are needed to run a snow cone business?
Running a snow cone stand doesn’t require a business degree, but certain skills and experiences can help to increase the chances of the business being a success.
Food service skills. Previous experience in the food service industry is an advantage and can give a business owner knowledge of safe food handling procedures, how to minimize service time, and more.
Customer service skills. Engaging with customers is a large part of this business. A warm, welcoming personality and strong customer service skills will go far, especially when a business repeatedly sells at the same location.
Mechanical knowledge. From troubleshooting cart or van issues to maintaining the snow cone machines and equipment, some mechanical knowledge can save a business owner from always needing to hire repair technicians.
Management experience. Previous experience hiring, training, and managing staff will allow a business owner to put together a team of great employees.
Creativity. Creative marketing and ideas for new potential locations can contribute to the business’ success and drive sales.
Networking skills. Securing permission to sell at certain events may require connections with the organizers. A business owner with strong networking skills can build up plenty of connections with business owners and other community professionals. This can lead to future opportunities for the snow cone business.
Organization capabilities. Snow cone businesses frequently travel to different locations, so strong organization and scheduling capabilities are important.
Are there grants to start a snow cone business?
It’s extremely rare to find a grant to start a snow cone 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 snow cone business?
The NAICS code for a snow cone business is 311811.
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.
Related: What is a NAICS code?
Resources:
National Food Truck Association
