Going Over Ice Cream Shop Startup Costs? DoNotPay Compiles Top Info
Ice cream stores across the U.S. command a market size of six billion dollars, and the industry is expected to keep growing in the foreseeable future. Both ice cream parlors and trucks are in high demand in neighborhoods and tourist spots, but what is the initial capital requirement for such shops?
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The total investment in an ice cream shop mostly depends on your target scale of operations and the range of delicacies you plan to offer, but some other factors may also impact your initial outlay. This table will give you estimates for the total investment under different circumstances:
|Basis||Type of Ice Cream Shop||Total Average Cost|
The franchise fees, preset establishment standards, and equipment costs give rise to high setup costs, but such shops benefit from an existing customer base, which helps them breakeven quickly
The investment is lower due to no franchise fees or presentation commitment
Most seasonal stores operate through trucks. There is no additional expense for maintaining a brick-and-mortar store
All-year-round shops have a diverse menu, which reflects in higher inventory and storage costs
Traditional shops can be self-operated, so they require minimal opening costs
New-wave concepts of self-serving or customized ice creams require higher investment for equipment and inventory but may have lower long-term employee costs
We have prepared a list of cost heads you can expect when opening an ice cream shop for the first time—check them out in this table:
|Cost Heads||Approximate Expenditure|
|Licensing and deposits||$1,000–$3,000 towards:
|Space||$3,500–$60,000, depending on whether you purchase, lease, construct, or rent a place. You may have to shell out more to secure a place with high traffic|
Purchasing and assembling the equipment set forms the bulk of your initial investment. Depending on your menu, you may have to get equipment like:
Since equipment are capital expenses, you cannot claim them for a tax credit
This includes the cost of:
Marketing expenses include:
While recurring expenses don’t impact your setup costs, you have to include them in your working capital budget because you won’t make a profit right away. Here’s an overview of the potential expenses for a medium-sized shop:
- Wages—The general payment rate is $10–$14 per hour, and your expenses will vary according to your number of hires
- Supplies and storage—$2,000–5,000
- Insurance—$1,000—$2,000, insurance premiums are usually paid annually
- Repairs, maintenance, and contingencies—$5,000 (this is also an annual estimate)
Many ice cream shop owners invest their own savings or borrow funds from friends and relatives. If self-funding is not an option for you, you can consider startup loans offered by banks, credit unions, and other financial institutions.
Let’s look into the types of loans at your disposal:
- SBA loans—The U.S. Small Business Administration links entrepreneurs to lenders and also guarantees 50–85% of loan repayment. You can also find long-term and short-term loan schemes with the SBA for special circumstances, like:
- Conventional loans—For conventional loans, you need to approach various private and public lenders with your business plan. You may be offered loans on varying terms, collateral requirements, and other compliance matters. If you have bad credit, you may have to make do with high interest rates and strict repayment schedules
- Temporary credit—If your cash requirement is small and you don’t want to go for a microloan, you can look into credit facilities offered by your bank
If you look into the way loans work, the process of application, scrutiny, and approval are both exhausting and time-consuming. To ensure your loans get sanctioned real quick, you need to:
- Have rock-solid credit scores
- Submit transparent financial statements
- Present your business idea with a well-written loan request letter
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- Upload your financial documents
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