Start a frozen yogurt business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your frozen yogurt business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a frozen yogurt business?
When it comes to equipment, you’ll need an industrial mixer, which can cost up to $15,000. A cash register can cost up to $1,000, and a display case can cost up to $7,000. A set of tables and chairs can run anywhere from $200 to $800. If you choose to franchise a company, such as Menchie's, you can expect to pay about $375,000 total. This covers everything though, and includes ongoing advertising benefits from the parent company for as long as you're open.
What are the ongoing expenses for a frozen yogurt business?
Those opening their own frozen yogurt business may have to budget for the following expenses:
- Equipment repairs
- Employee wages
- Permit renewal
Who is the target market?
The best client is someone who lives close to you, so you can develop a core base of customers who come to depend on your menu. Your clientele don’t necessarily need to be health nuts, but they may be people who are either watching their weight or looking to make more conscientious choices about their eating habits.
How does a frozen yogurt business make money?
Owners must set the prices for each menu item to cover business expenses and create a profit margin. People who are looking for fancy frozen yogurt are willing to pay a little more for quality flavors. Your prices will have to factor in all of the costs of the business (not just the cost of the ingredients.)
How much can you charge customers?
Typically, you can charge customers about three or four times the cost of the ingredients. So if one frozen yogurt serving costs $0.50, then you can charge the buyer around $2. If you’re in the major cities like LA or NYC, then you can likely charge closer to $4 or $5. You can also charge by the weight, which will include both the frozen yogurt and the toppings.
How much profit can a frozen yogurt business make?
Frozen yogurt had a revenue of $1.8 billion in 2014, and many people actually prefer this product over ice cream or gelato. Your profits are made up of the costs left over after you purchase ingredients and pay your employees. The exact amount you make will have to do with how well your run your business. Normally, about ⅔ of the revenue you make will be spent on ingredients and wages. Your leftover funds will be put toward rent costs and purchasing new equipment. If you sell 50,000 servings of frozen yogurt throughout the year at $3, then you can expect there to be about $50,000 to go towards rent and equipment.
How can you make your business more profitable?
Consider offering gourmet coffee to your customers, or setting up your own stand or food truck at different events (e.g., farmers markets, sports games, etc.) You can also offer specialty cakes, smoothies or pastries as well. Also, plenty of kids would love to use your space for their birthday party, so consider offering packages for parents looking for a unique gift for their children.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your frozen yogurt business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: You can get $300 when you open a Chase Total Business Checking® account with qualifying activities. Learn More.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a Eco tour business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office.
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A frozen yogurt business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a frozen yogurt business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your frozen yogurt business will be in compliance and able to obtain a CO.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a frozen yogurt business
Word of mouth will definitely be a major factor in how successful you are, but part of your success is also tied up in the location you choose. Being in a heavily trafficked part of the neighborhood will help immensely. Hold a major party for your Grand Opening, and take the time to get to know the people around you. Their requests will determine how you conduct your promotions and marketing.
You can also do standard advertising, such as internet, print, or television advertising. Keep your social media pages up to date, and give people incentives for following you on Facebook or Instagram. Post fun pictures, and keep people updated about any specials and discounts you're offering.
How to keep customers coming back
Attracting people is rooted in just how delicious your product is. Check out your competition and determine what you can do differently to keep people coming back. Constantly seek customer feedback, and respond to the most pressing concerns — whether they’re about the food or not. Terrible or even inconsistent service from employees will kill a new business quickly.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Frozen Yogurt Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Owners should have experience both with making and selling frozen yogurt. A specialty recipe and production methods ensure customers get a quality product. Owners should also have a good idea of the specialty flavors and toppings customers want. One neighborhood may want the classics, such as strawberry, cherry, and chocolate. Other neighborhoods may want to see more inventive flavors, such as bacon or churro.
What happens during a typical day at a frozen yogurt business?
To entice customers and keep them coming back, an owner should focus on the following daily activities:
- Ordering ingredients and non-food supplies
- Mapping out a budget
- Providing customer service
- Scheduling employees
- Updating company website
- Maintaining web presence
- Overseeing quality control
What are some skills and experiences that will help you build a successful frozen yogurt business?
Anyone hoping to get started in this business should have a decent amount of experience working in different positions in food service. This should include both customer service roles, as well as management. Entrepreneurs should also have a good idea of what their competitors are offerings, so they can highlight exactly why potential customers should switch their allegiance.
What is the growth potential for a frozen yogurt business?
A frozen yogurt business has a lot of room for growth, but certain areas may be difficult to expand in. For example, a market like Los Angeles is saturated with a variety of specialty frozen yogurt businesses. However, businesses can penetrate even the most saturated market by offering an experience customers can’t find anywhere else. This may be through new flavors, incredible customer service, or even through fun decorations.
TRUiC's YouTube Channel
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a frozen yogurt business?
Consistency is one of the first things to master when it comes to frozen yogurt. Your menu items should taste exactly the same no matter when they're ordered. Liquid mix (as opposed to dry) is generally the best way to ensure consistency.
Innovation is normally the second thing to consider. You’re looking at the popular flavors of today, and how you can incorporate them into your business. For example, when Starbucks introduces a new product like the Unicorn Frappucino, you should look for ways to work in your own similar offering to capitalize on the craze. Consider offering unlimited free samples as a way to get people interested in your flavors, and never let a customer complaint go unanswered (either in person or online).
How and when to build a team
You’ll want to build a team well before you’ve opened the store. Ideally, you’ll want employees who can stick with you for the long-term, but depending on where you are and the wages you offer, this can be a tall order. Look for people who genuinely enjoy customer service, and who want to make each visit a special experience.