1. You can start a snow cone stand debt-free
Often the main barrier to entry for a potential entrepreneur is having the cash or being afraid to take out loans and take on debt. The new entrepreneurs are afraid of not being able to pay it back. There is always the possibility of failure and no entrepreneur wants to fail and go bankrupt. Even simple businesses, like a coffee shop, small restaurant, or boutique, will require the average person to take out loans and debt.
It’s realistic to start a booth for as little as $5,000, although this number can exceed $20,000 for a new booth and business equipment. All this will depend on how thrifty you want to be. Almost anyone can save up to $5,000 in a relatively short period of time. For potential entrepreneurs, this is a great way to try your first business without spending every penny on your behalf or taking out excessive loans.
2. Snow cone stalls have scalable business models
Less than $10,000 to start your first business is the lowest barrier to entry you can find. It’s completely reasonable to start a snow cone stand for an amount that even a high school student could save for a year or two. Like many fast food owners, snow cone stand owners are able to continue to fund new locations with profits from current ones. In fact, it’s often easier to do it with a snow cone stand than any other business I’ve seen.
It is possible in a typical summer to show net earnings between five and twenty-five thousand. This is especially possible if you plan to operate the stand yourself and avoid high labor costs. If you’re thrifty and smart about the stands you buy, you can open one or more new snow cone stands each year. With some time and experience, it’s possible to open multiple new locations in a season.
3. Snow cone stalls have a simple business model
The business is both financially scalable and operationally scalable. Snow cone trailers are easy to operate and with little supervision, you can hire high school kids for 90% of the work. A couple of dependent employees of an entrepreneur can run multiple locations with the same effort as one. The owner must ensure that they take care of making and delivering ice, mixing and delivering syrup, as well as handling money. The owner must collect the deposits and do the payroll. These jobs are just as easy to do for one location as they are for multiple locations. When an owner already has to make ice and mix syrup, it doesn’t take a lot of extra time to do this on multiple racks.
4. It’s a business you can run in your spare time.
Although you may not want to have your own snow cone empire, the above point can be applied in a different way. This business model allows you to operate it in addition to your regular job. If you have a normal 40-hour-a-week job like many, then this can be a great part-time project. Once your booth is up and running, it shouldn’t be too difficult to hire kids to work during the day and then you can handle the other work at night. My most recent snow cone stand had high school kids working during the day and on weekends, and I split the profits with a friend so he could make ice and syrup, pay rent and payroll, and make deposits. I ran this business putting in less than 5 hours a week.
5. Snow Cone Stands Have Excellent Cash Margins
Snow cones typically cost between $2 and $5. The cost of goods sold for one includes ice, syrup, cup, spoon, straw, and napkin. This number would not include things like labor, rent, utilities, or any other fixed costs.
If you buy these items in bulk, these costs should not exceed 20-30 cents per snow cone. Gross profit can easily exceed $1.75 to over $4 per snow cone. Now your job is to maximize sales to cover your operating costs. Rent, utilities and labor will not really change if you have 1 client or 100 clients in an hour.
A solid rule of thumb provided by 1-800-shaved-ice is to multiply each ounce in a cup by 2 cents. So a 12-ounce cup would have COGS of about 24 cents.
Summary
These are just a few of the reasons why you should consider a snow cone holder for your first small business. I encourage you to check out other reasons and the various information we provide.