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 step guide to starting your ice cream parlor. 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 long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an ice cream parlor?
Ideally, you want a storefront that sees a lot of foot traffic and isn’t overrun with similar businesses. You’ll need 800-1100 square feet, depending upon the scope of your business. Rent can run anywhere from $1,800 to $3,000 per month. Standard leases require first and last month’s rent upon signing.
Once you have your location, you can start designing your shop and purchasing the necessary equipment. Just one piece of equipment can cost upwards of $8,000 used. Shop owners report an initial investment of $25,000, with many spending upwards of $50,000.
What are the ongoing expenses for an ice cream parlor?
Inventory costs vary depending upon the products you offer, typically averaging $5,000-$6,000/month. You’ll want to budget approximately $500 per month for advertising expenses. Labor costs, including cleaning services, payroll, worker’s comp, and taxes will run between $2,000-$4,000/month, depending upon how many employees you hire. Energy bills for similar businesses cost upwards of $600/month.
Who is the target market?
Many customers view ice cream as a special treat. Their visits are sporadic; so consistent quality is important in gaining loyal repeat customers. Your clientele will also be there to fulfill a craving or because they couldn’t resist the temptation. To ensure a steady influx of people, choose a location with a good amount of foot traffic.
How does an ice cream parlor make money?
Most ice cream is served by the scoop. Standard serving options include cups, cones, and specialty sundaes. Many parlors satisfy their customer’s sweet tooth by offering a variety of topping options, which are also paid for by the scoop.
The most important thing to note is that the ice cream industry is seasonal. A bulk of your revenue will be generated during the summer, whereas the winter months will be sparse.
How much can you charge customers?
The price you can charge should be largely dependent upon the demographic, but $2.50-$3 for a 4 oz scoop is a good place to start. In areas like New York, customers are paying up to $5/scoop.
How much profit can an ice cream parlor make?
If you’re located in a primarily cold region, off-season will be longer and will negatively impact your bottom line. The variety of products you sell also defines your annual profit. If opening a soft serve ice cream shop, customer options are limited and you could see a lower profit. Annual gross profit ranges from $19,900 to $49,000. With the proper vision and drive, entrepreneurs have the potential to make significantly more than that.
How can you make your business more profitable?
The following are examples of what other parlor owners have done to improve their annual profits:
- Participate in local events like a farmer’s market or fundraiser
- Get creative. Many ice cream lovers crave sundaes, milkshakes, root beer floats, and toppings
- Sell ice cream cakes and offer clients an opportunity to custom order for special occasions
- Let your customers take home ice cream by the pint
- Sell your product in local grocery stores and restaurants
What will you name your business?
Choosing the right name is very important. 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 ice cream parlor is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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.
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 an ice cream parlor business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits. In particular, most states require ice cream parlors to obtain a seller’s permit. A seller’s permit allows states to record and collect taxes from goods (and sometimes service) sales.
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 example, an ice cream parlor will need licensing from a local health department, which will vary from town to town. This is because ice cream parlors sell food; all establishments serving food are required to pass a health inspection.
Furthermore, ice cream parlors may be randomly inspected by the local health department on a regular basis. These inspections will check for compliance with local health laws, typically related to prevention of food contamination.
- Tips for faring well on a health inspections can be found here.
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.”
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 an ice cream parlor
Your goal is to get people in the door. After that, the product should speak for itself. Opening day is a special day for you, so you should share it with prospective customers! Host an opening day event, where customers can come in and taste-test your offerings. Make sure your signage is prominently displayed and properly represents your brand.
Social media should be included in your marketing strategy. You’ll reach a broader audience and can share specials with your regular clients. Be sure you’re listed in all local directories, as well as mobile app tools such as Yelp.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Location will have an impact on attracting customers. Keep them coming back by providing quality products and an enjoyable experience every time. Your space should always be sparkling clean and your staff should be fun and professional.
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 An Ice Cream Parlor In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Whether you decide to serve your own creations in-house or plan to serve a ready-made brand, an ice cream shop offers a great opportunity for those who love to get creative with food. The hours are long, but bringing people together over their love of something sweet makes the work you put in worth it.
What happens during a typical day at an ice cream parlor?
Your daily activities will depend on the type of ice cream shop you envision and how large your staff is. If you sell ready-made ice cream, your day will be spent placing and accepting deliveries and ensuring all inventory is fully stocked. If ice cream will be made in-house, the bulk of your day will be spent creating those sweet treats. Franchise owners will have the added duties of tracking sales and reporting to the main office.
No matter what type of parlor you open, be present in the storefront and get to know your customers. You’ll build a more successful business by understanding their likes and dislikes.
What are some skills and experiences that will help you build a successful ice cream parlor?
Like any successful entrepreneur, you should be business-minded and competitive. It’s also critical that you have strong interpersonal skills and a knack for listening and identifying your customers’ tastes and preferences.
An ice cream parlor’s success is defined by the quality and taste of the products. If homemade ice cream is part of your business plan, you should be creative and well-versed in what spices and foods complement each other.
The National Ice Cream Retailers Association (NICRA) offers members a wealth of information and networking opportunities to help you get started and realize long-term growth and success.
What is the growth potential for an ice cream parlor?
Many owners keep their shops small by choice. Those with a larger vision typically partner with a franchise. If you make enough of a name for yourself, starting your own franchise business is a viable option.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
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.
How and when to build a team
Many ice cream shop owners try to take on everything themselves. Your customers want to interact with a staff that is knowledgeable and excited to be there. If you’re burned out from doing everything yourself, you won’t be able to deliver that experience. High school students have the energy you’re looking for and are an affordable hiring option.