Problems with the Shaved-Ice Business

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If you're exploring shaved ice or snow cone business ideas, you might be considering getting a shaved ice truck or shaved ice stand or setting up a temporary space to bring in some extra cash. Your shaved ice business can bring in the money if you choose a prime location, build yourself a good reputation and have plenty of hungry customers.

However, there are some problems of which you should be aware, including finding a good location, remaining profitable, dealing with competitors, working seasonal hours and handling the physical nature of the work.

Shave Ice Business Startup Costs

As is true with other small business ideas, the startup cost can become a problem for potential entrepreneurs. A shaved ice business will not only require some kind of structure to rent or buy, but there are plenty of initial expenses when it comes to equipment, ingredients and supplies. You'll also need to pay for the permits and licenses required as well as for insurance, labor and utilities.

Besides a possibly large initial rent or purchase cost for your stand, truck or other business location, another crucial and expensive investment will be your shaved ice machine. This can cost between $1,000 and $2,000. You can also expect to spend anywhere from $50 to $1,000 on a cash register to complete transactions unless you choose an alternate method like using a tablet to take credit card purchases.

If you're starting up a franchise, you can expect to add a franchise fee and possibly other expenses to your startup costs. For example, Kona Ice charges franchisees a franchise fee of $15,000. When you count the shaved ice truck and the initial inventory pack that you'll need to get up and running, the company lists the initial investment cost at a whopping $123,150.

Profitability vs. Ongoing Expenses

Another problem shaved ice business owners may face – especially when just starting out – is generating enough sales to pay for all the ongoing expenses. Hawaiian Shaved Ice gives a typical ballpark daily sales amount of $100 to $2,000, showing that factors like your location have a big impact on profitability.

From what you make, you'll need to be able to pay for your workers, any rental costs, fuel and maintenance (for trucks), advertising and supplies. Your need for supplies will ultimately depend on your customer demand, but you can count on regularly purchasing ice, syrups, flavorings, cups or cones, napkins, utensils and other supplies.

Choice of Location

Where you operate your shaved ice business is crucial for your success and profitability, and choosing the right location can be a problem to overcome. Prime locations might be expensive or might already have competitors operating there, making it more of a challenge to succeed. On the other hand, a cheaper location might be in an undesirable place where customers can't easily find you, thus hurting your business's growth in the long term.

For the most success, you'll want a location that is easy to access, gets a lot of traffic and is clearly visible to potential customers. Therefore, you'll often look for places in busy areas, especially those that attract tourists and local visitors to entertainment in the area. Some good places include those near parks, stadiums, concert venues, community centers and beaches. At the same time, you'll want to ensure your location has ample parking to encourage customers.

If you have a shaved ice truck or plan to set up temporary stands, you might run into more challenges when it comes to getting permission to set up shop at a place like a park. Zoning laws and city ordinances can prevent you from serving treats from your preferred location, so be prepared to seek multiple options.

Limitations in Operating Times

Like other restaurants that serve cold treats, shaved ice businesses have the problem of limitations when it comes to the times that customers want to eat such foods. While warm, sunny weather will bring out the patrons, you likely won't see as many customers when the weather is chilly or snowy. If you operate a stand with only outdoor seating, rain will be another hindrance that can keep customers away. Your business format and your geographical location's weather will be strong considerations for deciding whether to operate seasonally or year round.

Depending on where you operate, you may have restrictions on when you can actually operate. For example, if you have a shaved ice truck that travels to local events, then you'll have to operate within the event's hours, even if it means you don't get your desired revenue. Even a permanent stand at a place such as a park or community square can come with limited operating times.

Competition With Similar Businesses

Even if you initially set up your shaved ice business in a place without any competitors nearby, that doesn't mean competition won't become a problem down the road. Not only do you have to watch out for newcomers serving the same treats as you, but shops selling ice cream, frozen yogurt and other typical summer treats can draw customers away from you.

You should be prepared to use extensive local advertising and unique product ideas and build a solid reputation to stand out and minimize the impact of competition.

Demands of the Business

Shaved ice businesses require your willingness to do some hard work, very possibly in a hot environment. If you run the shaved ice stand or truck on your own, you not only have to make all the treats for customers but also clean and maintain the equipment and handle the transactions.

At the same time, you have to perform all your other business duties, whether it's handling the accounting, setting up an advertising campaign or ordering more supplies. To keep from becoming overwhelmed, you'll likely find that you need to hire help, even if you'd rather do it all alone to avoid those labor costs and be more profitable.

Choosing Independence vs. a Franchise

To set yourself up for success, you'll want to first think about whether an independent shaved ice business or a franchise (like Kona Ice or Tropical Sno) is right for you. There are pros and cons to consider for these formats. The decision will ultimately come down to your comfort in running a shaved ice business and your preferences for how you operate.

If you're comfortable with most aspects of business and prefer having nobody to whom you need to answer, an independent shaved ice business gives you the chance to create your own brand and change the business as you see fit later on. You can serve whatever treats you want, even expanding to offer ice cream or even hot treats. You can also freely move locations when your business grows or when there's a more promising place to seek customers.

While you'll likely have to pay more up front, owning a franchise can avoid some problems when it comes to name recognition and building your business's reputation. Customers will likely already be familiar with the brand, so you might find that you gain sales more quickly. You also get the support of the franchise company and startup packages that can provide you with most of what you need to begin operating. The downsides, though, can include paying royalties, operating based on the franchisor's rules and having less flexibility in changing the business in the future.

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About the Author

Ashley Donohoe started writing professionally about business topics in 2010. Having eight years experience running all aspects of her small business, she is knowledgeable about the daily issues and decisions that business owners face. She also has earned a Master of Business Administration degree with a leadership and strategy concentration from Western Governors University. Some other places featuring her business writing include JobHero, LoveToKnow, PocketSense, Chron and Study.com.