Start an ice cream parlor by following these 10 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 ice cream parlor. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Ice Cream Parlor Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your ice cream parlor is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
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.
Is this Business Right For You?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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
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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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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.