When it comes to making the decision, your number one question includes the start up costs and business profit. We are addressing costs involved in starting a shaved ice business here. For a profit analysis and a complete start up guide, we suggest visiting Shaved Ice University to help you get started.
RENT
Sales for a typical shaved ice or snow cone business will average anywhere from $100 to $2,000 a day, depending on your location, competition and the length of your season. When you’re setting up your shaved ice business you’ll have to determine your location, preferably a high-traffic area with convenient access. Once you’ve found the perfect spot, rent will likely be one of your initial costs.
Rent prices may range from $50 to $500 a month, depending on your arrangement with the landowner and the particular location. Shop around for the best price and to have the terms of your agreement clearly spelled out in writing. Based on our experience, we recommend getting at least a one-year lease with the option to renew for one or two additional years. This allows you to get accustomed to the particular location before committing to a long-term lease.
LABOR
Most likely, you will not be operating your shaved ice business just by yourself. Therefore, labor will probably be your biggest expense and you should be well aware of the potential costs.
For example, during the warm weather we would recommend having at least two employees at the stand at all times. However, in gloomy weather you may have to send one of the employees home. This way, you're able to keep labor costs down and save hundreds of dollars.
In businesses where the owner is NOT the manager of day-to-day activities, labor costs should be around 30 - 33%, including manager’s wages. If the business IS owner-managed and the owner works a forty-hour workweek at the business, the cost of labor should average roughly 25 - 28%.
SUPPLIES
From preparation to serving, you’ll need all of the essential items to produce the finest quality shaved ice. This includes machines, ice, sugar, flavor concentrates or ready-to-use syrups, cups, utensils, and napkins. The location of your shop may also have an influence on the cost of these supplies. Here is a simple chart that illustrates the estimated costs in greater detail.
Note, for smaller businesses or less popular flavors, ready-to-use syrups are best, otherwise, it’s more cost-effective to use syrup concentrates, since the price per gallon and shopping costs are much cheaper.
INSURANCE
As is true with any business, insurance is an extremely important factor, as it helps you stay prepared for any unforeseen circumstances. There are four types of insurance that you will need in place, and of course, your insurance agent or attorney can help you determine what will work best for your business needs and budget.
- Product Liability – Protects you if your products harm a customer
- General Liability – Protects you if a visitor to your business is harmed or injured in any way
- Worker Compensation – Protects your employees, as well as the company, if they are injured while at work; usually required by the state and may or may not cover the owner of the business
- Property Insurance – Protects you in case of fire, theft or other type of damage to your business or equipment
If you run a mobile shaved ice stand or if you purchase supplies using your personal car, or use it to travel to and from your shop, you may be able to take a portion of mileage as a tax deduction on your yearly tax returns. You should keep a logbook of any mileage used for business in your vehicle, as proof for the IRS, come tax time. A legal or accounting professional can help you figure this out.
PRINTING & ADVERTISING
Once your business is up and running, you have to get customers in the door! In order to do that, you need to invest in a little advertising, including printing professional displays/signage, customer loyalty cards and coupons. You can also run newspaper or radio ads, however, these tend to be expensive. These forms of media are best used in instances like announcing your grand opening. When implemented correctly, social media can be an excellent and affordable way to promote your business, and give customers incentive to spread your message, thereby reaching an even greater audience.
OTHER EXPENSES
Finally, there are just a few other costs which you should take into consideration as well depending on your location—utilities, office supplies, legal and accounting, property taxes, trash pickup, repairs, and maintenance.
As you can tell, there are a lot of essential costs that you need to understand and account for when starting your shaved ice business. If you have any questions or concerns, please don’t hesitate to email us at customercare@hawaiianshavedice.com.
Download a complete shaved ice business guide for free by visiting our sister-site, 1-800-Shaved-Ice.com.
