Snow cone business plan for your own stand
Are you thinking about starting a shaved ice business? Shave ice, also known as Hawaiian shave ice, is a popular ice-based dessert served throughout the US. Shave ice is especially popular with American teens and children, and considering its popularity, it won’t be wrong to say that this business can yield immense profit provided that you plan it successfully.
The first thing you should do before starting your shave ice business is to develop a comprehensive business plan for it. The business plan will not only help you in startup but it will also help you in taking important decisions for your company over the next years. In case you don’t know how to write a good business plan for selling snow cone, we are providing a detailed business plan of a shave ice business startup ‘Brownsville’s Ice Stop’ to help you avoid the trouble of making a plan yourself.
2.1 The Snow Cone Business
Brownsville’s Ice Stop will be a shave ice shop located beside the King’s Mall in the main commercial market of Brownsville.
2.2 Management of Snow Cone Shop
Brownsville’s Ice Stop will be a sole proprietorship owned by Sam Kin, an ambitious high school graduate. Sam’s fun nature, his innovative snow cone business ideas , and his passion for business led him to start a business in this industry.
2.3 Customers of Snow Cone Stand
Our customers will primarily be the residential community, working community and the passers-by in Brownsville. We will offer high-quality, delicious and economical shave ice to our esteemed customers.
2.4 Target of the Snow Cone Shop
Our main business targets are summarized in the following column chart:
3.1 Company Owner
Brownsville’s Ice Stop will be a sole proprietorship owned by Sam Kin, an ambitious high school graduate.
3.2 Why the Snow Cone Business is being started
Sam has always been least interested in studies and more interested in starting a business. Sam’s fun nature and his love for shave ice desserts led him to start a business in this industry. Now, he can have all the fun, can eat lots of his desserts and, of course, can also make profits.
3.3 How the Snow Cone Business will be started
The business will be launched in a small shop adjacent to King’s Mall in the main commercial market of Brownsville. The store business was previously used as a tea shop so a little work will be needed to start a cone business in that shop. The company’s financial experts have forecasted following costs for the startup:
The detailed startup information is as follows:
|Research and Development||$32,750|
|TOTAL START-UP EXPENSES||$187,300|
|Other Current Assets||$232,500|
|Start-up Expenses to Fund||$11,875|
|Start-up Assets to Fund||$15,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$18,750|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$18,750|
|Cash Balance on Starting Date||$21,875|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$695,000|
|Loss at Start-up (Start-up Expenses)||$313,125|
|TOTAL CAPITAL AND LIABILITIES||$251,875|
Services for customers
Some businesses are easier to launch but difficult to run and make profits. Shave ice business is also one of them that’s why it is wiser to plan your services before you think about how to start a shaved ice business . Planning of your menu prior to opening a snow cone business is also important since it will help you with the planning of subsequent things. Brownsville’s Ice Stop will offer following products to its customers:
- Shave ice in different flavors including guava, pineapple, passion fruit, coconut cream, lychee, mango cherry, kiwi fruit, grape, blue strawberry, raspberry, lemon-lime, watermelon, and banana.
- Soft drinks
The most important component of an effective shaved ice business plan is its accurate marketing analysis and a good shave ice business plan can only be developed after this stage.
Marketing Analysis of Snow Cone Business
If you are starting your shave ice shop on a smaller scale, you can do marketing analysis yourself by taking help from this sample business plan. The success or failure of a business totally depends upon its marketing strategy for the business which can only be developed on the basis of accurate marketing analysis. Therefore, it must be considered before you develop your snow cone business plan .
5.1 Market Trends
A good snow cone stand business plan must include an accurate picture of market and industry. If starting on a smaller scale, you can just go online for researching the market and industry trends. As a general fact, an ice cream business can never fully fail since nearly every other person loves to eat ice creams. In the US, it is a thriving industry which contributes to more than $8 billion in annual revenue. Although the number of licensed and registers ice cream companies is just around 370 yet the biggest chunk of sales is contributed by small-scale unregistered business like ice stops and trucks. Overall, the industry employs around 18,500 people and has been estimated to grow at a rate of 0.3 percent from 2011 to 2016. If we were to say it in a single line, this industry has a lot of potential and even a small shave ice shop can yield immense profit provided that you successfully plan it and target your customers.
5.2 Marketing Segmentation
An effective business plan for snow cone stand must also contain the marketing segmentation of the target audience which can become the potential customers of your shave ice shop.
The detailed marketing segmentation comprising of the company’s target audience is as follows:
5.2.1 Residential Community: The first group of our target customers will be the community residing in the vicinity of our shave ice shop. Shave ice is one of the favorite desserts of American children and teens so we hope to have a lot of sales due to them. Not only teens, adults and middle-aged people also love to have cold shave ice so as to counter the hot weather of Brownsville.
5.2.2 Working Community: The second category includes the workers and employees who work in the businesses or offices located in the vicinity of our tea shop. This group also includes the people who work in King’s Mall, situated beside us.
5.2.3 Passers-by: The third category includes those people who do not live or work near our shop but have come to the area for any business purpose or commercial activity. This group mostly include the people who have come to visit the King’s Mall. Our ice shop will be the perfect place for these passers-by to take a relief from the hot weather of Brownsville.
The detailed market analysis of our potential customers is given in the following table:
|Potential Customers||Growth||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5||CAGR|
5.3 Business Target
Our business targets are as follows:
- To recover the initial investment within next one year of launch
- To start an ice cream truck within one year of launch
- To open two more shave ice shops by the end of the second year of launch
5.4 Product Pricing
After considering the market demands, we have priced all our products in slightly lower ranges as of our competitors. Our product pricing is as follows:
- Small Serving (6 oz): $0.99/cup
- Regular Serving (9 oz): $1.49/cup
- Large Serving (12 oz): $1.79/cup
Strategy of Snow Cone Business
Sales strategy is also an important component of a good shave ice business plan so it must be properly developed before thinking about how to open a shaved ice business .
6.1 Competitive Analysis
We have a really tough competition because there are a lot of ice cream retailers as well as unregistered small businesses in the locality. This competitive environment was the primary reason behind the low pricing of our shave ice. In addition to our competitive prices, our location will also be one of our competitive advantages. We are situated adjacent to one of the biggest Mall in Brownsville and our location is ideal for starting a snow cone stand. The power and dedication of our team will also help us thrive and Mike’s fun nature will undoubtedly serve as a valuable asset.
6.2 Sales Strategy
We will target our customers by following three ways:
- We will give away free shave ice desserts to the people around us during the first three days of our launch.
- We will install our sign boards on all strategic locations around us.
- We will offer a 20% discount on shave ice for the first month of our launch.
6.3 Sales Monthly
Our monthly sales have been forecasted as follows:
6.4 Sales Yearly
Our yearly sales have been forecasted as follows:
6.5 Sales Forecast
Our forecasted sales pattern is given in the following column chart:
Our detailed sales forecast is given in the following table:
|Unit Sales||Year 1||Year 2||Year 3|
|TOTAL UNIT SALES||3,494,170||4,588,370||4,807,410|
|Unit Prices||Year 1||Year 2||Year 3|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Direct Cost of Sales|
|Subtotal Direct Cost of Sales||$1,294,100||$1,699,400||$2,104,700|
It is highly advisable to prepare a personnel plan before starting a snow cone business since it will greatly help in your budget allocation.
7.1 Snow Cone Stand Staff
Mike will act as the CEO of the company and will initially hire following people:
- 1 Cashier for receiving cash from people
- 1 Accountant for maintaining financial records
- 2 Sales Executives responsible for marketing and advertising the shop
- 6 Assistants for preparing and serving the products
- 2 Cleaners for ensuring the cleanliness of our shop
7.2 Average Salary of Employees
The following table shows the forecasted data about the salaries of the employees for the next three years. These salaries are just an estimate and can deviate but the overall expenses will nearly remain the same.
|Year 1||Year 2||Year 3|
The final thing to do before you think about how to start a snow cone business is to develop a comprehensive financial plan which will cover the detailed costs of startup. The financial plan will outline all financial aspects of your startup and will also give you an estimate of the shaved ice business profit you can make on average. It is advisable that you seek help from financial experts for developing the financial plan of your startup. The financial plan of Brownsville’s Ice Stop is as follows:
8.1 Important Assumptions
The company’s financial projections are forecasted on the basis of following assumptions. These assumptions are conservative and can also slightly deviate but the deviations are not expected to affect the company’s major financial strategy.
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||11.00%||12.00%|
|Long-term Interest Rate||10.00%||10.00%||10.00%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5530|
|Monthly Revenue Break-even||$159,740|
|Average Per-Unit Revenue||$260.87|
|Average Per-Unit Variable Cost||$0.89|
|Estimated Monthly Fixed Cost||$196,410|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$15,100||$19,153||$23,206|
|TOTAL COST OF SALES||$15,100||$19,153||$23,206|
|Gross Margin %||94.98%||94.72%||94.46%|
|Sales and Marketing and Other Expenses||$1,850||$2,000||$2,150|
|Total Operating Expenses||$188,766||$220,744||$252,722|
|Profit Before Interest and Taxes||$105,205||$146,040||$186,875|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
The following column diagram shows the projected cash flow:
The following table shows the projected cash flow:
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$7,023||$8,610||$9,297|
|SUBTOTAL CASH FROM OPERATIONS||$47,143||$53,651||$59,359|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$47,143||$53,651||$55,359|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$35,296||$39,549||$43,582|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$35,296||$35,489||$43,882|
|Net Cash Flow||$11,551||$13,167||$15,683|
8.5 Projected Balance Sheet
The following table shows the projected balance sheet:
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$201,259||$237,468||$273,677|
|TOTAL LONG-TERM ASSETS||$980||$610||$240|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$9,482||$10,792||$12,102|
|TOTAL LIABILITIES AND CAPITAL||$198,839||$232,978||$267,117|
8.6 Business Ratios
The following table shows data about business ratios:
|Year 1||Year 2||Year 3||Industry Profile|
|Percent of Total Assets|
|Other Current Assets||1.75%||2.02%||2.29%||27.40%|
|Total Current Assets||138.53%||150.99%||163.45%||54.60%|
|Percent of Sales|
|Selling, General & Administrative Expenses||74.29%||71.83%||69.37%||65.20%|
|Profit Before Interest and Taxes||26.47%||29.30%||32.13%||2.86%|
|Total Debt to Total Assets||2.68%||1.04%||0.76%||67.10%|
|Pre-tax Return on Net Worth||66.83%||71.26%||75.69%||4.40%|
|Pre-tax Return on Assets||64.88%||69.75%||74.62%||9.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||19.20%||21.16%||23.12%||N.A.|
|Return on Equity||47.79%||50.53%||53.27%||N.A.|
|Accounts Receivable Turnover||4.56||4.56||4.56||N.A.|
|Accounts Payable Turnover||14.17||14.67||15.17||N.A.|
|Total Asset Turnover||1.84||1.55||1.26||N.A.|
|Debt to Net Worth||0||-0.02||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$120,943||$140,664||$160,385||N.A.|
|Assets to Sales||0.45||0.48||0.51||N.A.|
|Current Debt/Total Assets||4%||3%||2%||N.A.|
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