How to Start an Ice Cream Parlor

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Video How to start an ice cream business

Start an ice cream parlor by following these 10 steps:

  1. Plan your Ice Cream Parlor
  2. Form your Ice Cream Parlor into a Legal Entity
  3. Register your Ice Cream Parlor for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Ice Cream Parlor
  6. Get the Necessary Permits & Licenses for your Ice Cream Parlor
  7. Get Ice Cream Parlor Insurance
  8. Define your Ice Cream Parlor Brand
  9. Create your Ice Cream Parlor Website
  10. Set up your Business Phone System

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.

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

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

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

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

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.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

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:

  • LLC Taxes
  • Sole Proprietorship vs LLC
  • LLC vs Corporation
  • LLC vs S Corp
  • How to Start an S Corp
  • S Corp vs C Corp

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

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Open net 30 accounts

Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.

NetMany net 30 credit vendors report 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.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business’ expenses all in one place.
  • Build your company’s credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

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 already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

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.

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.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

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. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.

Start a Ice Cream Parlor in your State

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