Basic Steps To Start Your Ice Cream Business – Part 1

by | Sep 29, 2016 | Ice Cream Consulting

This is Part 1 of 3 in the ice cream consulting series Basic Steps for Starting Your Business.

Part 1 – Business Plan 

Part 2 – Making It Legal

Part 3 – Marketing Plan

As a ice cream consultant you wouldn’t think that I would bring up the topic, but the reality is, creating a business plan is a subject I highly recommend discussing when I speak with to start-ups. It’s can be a painful topic of discussion, especially to entrepreneurs who see themselves as artists and creative visionaries. Why? A business plan is what I call a reality check; it is the non-emotional side of business.

The emotional side of business

You have been making amazing ice cream flavors for many years — at home — and your concoctions are always a hit with friends and family. You’ve been told multiple times that the products and flavors are amazing and that your treats would be an overnight business success; this is the emotional side of the business.

The non-emotional side of business

Profit, loss, gross margins, cost of goods, pretax income, depreciation, operating cost, shrink, some of the most dry and boring topics, but one of the most important parts to the business. However the reality, if you don’t take the time to understand this component of the business, chances are your business won’t last long. My explanation of the business plan: take a closer look and make a realistic prediction of the concept. Is your vision sustainable and will it at some point in the future profitable?

When I ask a client about the cost of their product and the overhead to make it, the response shortly uncovers some unknown cost factors; this is the reality check. Just because you are busy, doesn’t mean you’re making a profit. You start the business and are very busy with the daily tasks and may not recognize that no significant income is being made.

Money is coming in and going out and you may not understand that the business is running on cash float. However, when there is a lag in the business like seasonal slow down, then you realize that there’s no money in the bank to pay this month’s bills or the quarterly tax deposit. A business plan won’t guarantee this from happening, but done correctly it could minimize any “surprises” and help ensure you have sustainable and available cash for operating expenses.

A couple years back, I was considering opening a small ice cream “test kitchen.” Not an ice cream shop, but rather a place where people could learn how to make dairy and non dairy frozen products, voice their flavor favorites and make purchases. The criteria for me in order to  invest in the operating: Open 5 days/week, 8 hours/day, one part time employee and charge only $1 for any flavor in any category with a satisfying serving size of slightly larger than a golf ball — and be profitably.

I worked on a business plan and guess what, under those parameters, the business would be fun (emotion), but would never make a profit (reality). That’s the power of the business plan; you can see whether your concept can be profitable and all before spending a dime.

Organization such as SCORE.org, or Small Business Administration (SBA) are among many online resources that offer a business plan template so you can create your own and all at no charge or obligation. Even though the template guides you through each required information step, it will still be necessary for you to investigate and insert each important aspect of the business. Filling it in accurately will  produce comprehensive, realistic results. Set aside 10 – 20 hours to complete the plan and also invite a friend who understands business accounting and best business practices to assist.

The effort and work will be well worth your time. If you’re planning to seek out friends, family and fools to ask for money, then all but the fool will be requiring a business plan, so thorough and realistic content will be critical. A stranger should be able to read through your plan and clearly understand the business model and profit return without any explanation from you.

Here are the basics that constitute a business plan that represents your business concept.

    • Table of Contents
    • Executive Summary
    • Explain Your Business
    • Financial Forecast
    • Supporting Data

Included in the above 5 sections:

  1. Startup Funds for equipment, build out, inventory, design and infrastructure requirements
  2. Wages for staff, owners and tax on wages
  3. Fixed Operating Costs for insurance, rent, licenses and advertising
  4. Projected Sales over 1 – 3 years for income to keep up with expenses

Contact Darryl for help in contributing information to your business plan in order for you to understand your ice cream or non dairy frozen business before the door opens.

Darryl David
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