Table of Content

    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.

    Executive Summary

    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:

    Shaved Ice Business Plan - 3 Years Profit Forecast

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    Company Summary

    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:

    Shaved Ice Business Plan - Startup Cost

    The detailed startup information is as follows:

    Start-up Expenses
    Legal $55,300
    Consultants $0
    Insurance $32,750
    Rent $32,500
    Research and Development $32,750
    Expensed Equipment $32,750
    Signs $1,250
    TOTAL START-UP EXPENSES $187,300
    Start-up Assets $0
    Cash Required $332,500
    Start-up Inventory $32,625
    Other Current Assets $232,500
    Long-term Assets $235,000
    TOTAL ASSETS $121,875
    Total Requirements $245,000
    START-UP FUNDING $0
    START-UP FUNDING $273,125
    Start-up Expenses to Fund $11,875
    Start-up Assets to Fund $15,000
    TOTAL FUNDING REQUIRED $0
    Assets $23,125
    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
    TOTAL ASSETS $0
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $0
    Capital $0
    Planned Investment $0
    Investor 1 $332,500
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $695,000
    Loss at Start-up (Start-up Expenses) $313,125
    TOTAL CAPITAL $251,875
    TOTAL CAPITAL AND LIABILITIES $251,875
    Total Funding $255,000
    Immigration Business Plan
    Document for passing government compliance requirements for immigration to the US, Canada, or the UK.

    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
    • Licuados
    • Snacks

    Note

    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.

    Shaved Ice Business Plan - Market Segmentation

    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:

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
    Working Community 45% 11,433 13,344 16,553 18,745 20,545 13.43%
    Residential Community 38% 22,334 32,344 43,665 52,544 66,432 10.00%
    Passers-By 17% 8,322 9,455 10,655 12,867 14,433 15.32%
    Total 100% 42,089 55,143 70,873 84,156 101,410 9.54%

    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

    Any questions? Get in Touch!

    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:

    Shaved Ice Business Plan - Sales Monthly

    6.4 Sales Yearly

    Our yearly sales have been forecasted as follows:

    Shaved Ice Business Plan - Sales Yearly

    6.5 Sales Forecast

    Our forecasted sales pattern is given in the following column chart:

    Shaved Ice Business Plan - Unit Sales

    Our detailed sales forecast is given in the following table:

    Sales Forecast
    Unit Sales Year 1 Year 2 Year 3
    Shave ice 1,887,030 2,680,320 2,588,240
    Soft drinks 802,370 815,430 823,540
    Licuados 539,320 770230 1,002,310
    Snacks 265,450 322,390 393,320
    TOTAL UNIT SALES 3,494,170 4,588,370 4,807,410
    Unit Prices Year 1 Year 2 Year 3
    Shave ice $140.00 $150.00 $160.00
    Soft drinks $600.00 $800.00 $1,000.00
    Licuados $700.00 $800.00 $900.00
    Snacks $650.00 $750.00 $850.00
    Sales
    Shave ice $2,149,800 $2,784,000 $3,383,200
    Soft drinks $120,050 $194,500 $268,500
    Licuados $50,110 $71,600 $93,000
    Snacks $139,350 $194,600 $249,850
    TOTAL SALES
    Direct Unit Costs Year 1 Year 2 Year 3
    Shave ice $0.70 $0.80 $0.90
    Soft drinks $0.40 $0.45 $0.50
    Licuados $0.30 $0.35 $0.40
    Snacks $3.00 $3.50 $4.00
    Direct Cost of Sales
    Shave ice $989,300 $1,839,000 $2,679,700
    Soft drinks $66,600 $119,900 $173,200
    Licuados $17,900 $35,000 $52,100
    Snacks $19,400 $67,600 $115,800
    Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

    Personnel plan

    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.

    Personnel Plan
    Year 1 Year 2 Year 3
    Cashier $66,000 $73,000 $80,000
    Accountant $45,000 $52,000 $59,000
    Sales Executives $145,000 $152,000 $159,000
    Assistants $410,000 $440,000 $480,000
    Cleaners $60,000 $63,300 $70,000
    Total Salaries $660,000 $707,300 $768,000

    Financial Plan

    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.

    General Assumptions
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0

     

    8.2 Brake-even Analysis

    Shaved Ice Business Plan - Brake-even Analysis

    Brake-Even Analysis
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159,740
    Assumptions:
    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
    Sales $309,069 $385,934 $462,799
    Direct Cost of Sales $15,100 $19,153 $23,206
    Other $0 $0 $0
    TOTAL COST OF SALES $15,100 $19,153 $23,206
    Gross Margin $293,969 $366,781 $439,593
    Gross Margin % 94.98% 94.72% 94.46%
    Expenses
    Payroll $138,036 $162,898 $187,760
    Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
    Depreciation $2,070 $2,070 $2,070
    Leased Equipment $0 $0 $0
    Utilities $4,000 $4,250 $4,500
    Insurance $1,800 $1,800 $1,800
    Rent $6,500 $7,000 $7,500
    Payroll Taxes $34,510 $40,726 $46,942
    Other $0 $0 $0
    Total Operating Expenses $188,766 $220,744 $252,722
    Profit Before Interest and Taxes $105,205 $146,040 $186,875
    EBITDA $107,275 $148,110 $188,945
    Interest Expense $0 $0 $0
    Taxes Incurred $26,838 $37,315 $47,792
    Net Profit $78,367 $108,725 $139,083
    Net Profit/Sales 30.00% 39.32% 48.64%

    8.3.1 Profit Monthly

    Shaved Ice Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Shaved Ice Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly
    Shaved Ice Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Shaved Ice Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    The following column diagram shows the projected cash flow:

    Shaved Ice Business Plan - 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 Sales $40,124 $45,046 $50,068
    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
    Cash Spending $21,647 $24,204 $26,951
    Bill Payments $13,539 $15,385 $170,631
    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
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
    Net Cash Flow $11,551 $13,167 $15,683
    Cash Balance $21,823 $22,381 $28,239

    8.5 Projected Balance Sheet

    The following table shows the projected balance sheet:

    Pro Forma Balance Sheet
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420

     

    8.6 Business Ratios

    The following table shows data about business ratios:

    Ratio Analysis
    Year 1 Year 2 Year 3 Industry Profile
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    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.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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