Why Ice Cream Shops Fail?
Why Ice Cream Shops Fail
Your Ice Cream Business
Why Some Ice Cream Shops Fail
Opening an ice cream shop can be a worthwhile venture. Ice cream is one of the most popular products, and it has been known and loved by many people worldwide.
The steady demand for ice cream, its popularity among all cultures, and its ability to appeal easily to young and older generations make it an excellent product to sell anywhere.
And yet, some ice cream shops still fail.
Why is that?
In this post, we will discuss some common reasons why ice cream shops fail and, hopefully, how to avoid them.
Why Ice Cream Shops Fail?
Typically, there isn’t just one thing that leads to an ice cream shop failing. Often, the reasons are numerous and usually occur over a more extended period.
As a new ice cream retail business owner, you’ll likely make mistakes and sometimes fail. This is to be expected, as failing can be a learning experience that makes you better and your ice cream shop more profitable.
However, it’s failing over a long period of time – and not learning from your failures – that can have a devasting impact on your ice cream shop business.
I want to be clear: You will make mistakes. Mistakes happen – even to the best of us. But learning from mistakes and striving to be better can improve your long-term success.
So, let’s look at some of the top reasons ice cream shops fail.
Failing to Plan
Ice cream is easy, right?
Yes, ice cream is easy, yummy, and fun to sell. But starting and operating a profitable ice cream business takes planning, hard work, diligence, and follow-through.
Aspiring ice cream shop owners may get lured into thinking that starting an ice cream business doesn’t require real planning or thinking things through.
After all, it’s only ice cream, right? So how hard can it be?
But nothing can be further from the truth.
If you want to start any successful retail business – especially an ice cream shop business – you’ll want to make sure that you double down on the planning you do.
To Plan or Not to Plan?
Planning has its obvious benefits: it can save you time, money, and heartache. In addition, it can steer your ice cream business away from failure and help you better compete with your competition.
Not planning offers no real benefit.
Sooner or later, choosing not to plan your ice cream business will catch up to you. So be sure to err on the side of planning as much as you can.
Not Developing a Clear Vision
Any organization needs to develop a clear vision. Without a clear vision, the organization will struggle to move forward. But, again, you might think, “Hey, it’s just ice cream!”
The problem is that over time, a lack of vision may muddle your direction, profits, your branding, and your business management, leading to poor decisions and choices.
The poor choices can slowly erode the success of your ice cream shop.
Not Writing a Business Plan
Writing an ice cream business plan will be critical to the successful launch of your business.
It will help you better articulate your initial thoughts methodically and cohesively.
We often have many competing ideas when we start our ice cream businesses. Choosing among the best ones will help you to make the most effective business decisions and help you place your time, energy, and capital into your choices.
Additionally, your business plan will likely be needed by your property managers. This will help to ensure that they are making the right business choice in picking the right tenant for their space.
Finally, any investors or partners may also need a well-written business plan. A plan will help them decide whether your ice cream business is the right to invest in.
Unwilling to Learn or Get Help
Many entrepreneurs are “go-getters.” They love to do everything on their own. The problem is that doing things without the help and guidance of others can lead you to spend more time and money.
Consider getting the help you need – a broker, a plumber, an electrician, a marketer, or help writing your ice cream business plan. Saving money by trying to plumb your own restroom may not be the smartest choice. But investing in a bit of help can go a long way.
If you don’t have any prior experience in business, management, or accounting, you should do your best to learn as much as possible. Read a book to take an online course to get acquainted with the details of your successful ice cream business.
Signing a Poor Lease
Signing a bad property lease can devastate any retail business, especially an ice cream shop that depends on securing enough profit margins to keep afloat. In addition, a poor lease can restrict your menu, hours, and access to customers and obligate you to pay for many additional services and costs, including other taxes, security costs, pest control, trash, building maintenance, insurance, etc.
Therefore, you want to be prepared before your property lease signing. In addition, you’ll want to ensure that you add clauses to your ice cream shop property lease that benefit you and your operation.
Overspending on Equipment
When you start your ice cream business, you may want to invest in every shiny new gadget, display case, or piece of equipment you run across.
Equipment such as display cases, refrigerators, and other essential equipment that may include an espresso machine, coffee grinders, and any number of dispensers can all be expensive.
By over-stretching your finances, you could put yourself in risky territory and strip yourself from the much-needed cash flow you need.
Check out our post on choosing your ice cream shop equipment.
Not Picking the Right Location
Picking a suitable location will be critical to your ice cream shop’s success.
If you choose a poor ice cream shop location, you’ll end up struggling and puttering out of business.
A poor location can choke your ability to get walk-in customers and make all the difference between a successful ice cream business and a failed ice cream business.
Picking the right location depends on a myriad of factors. These include access to pedestrians, vehicle traffic, parking, street lighting, competition, costs, and the ability to secure a good lease.
You’ll want to carefully choose the location based on what is best for you and your customer base.
Not Having Enough Cash
Cash is the bloodline of most retail businesses. If your money is tied up in inventory, equipment, and other items, your ice cream business will grind to a halt.
To avoid a cash shortage, you’ll want to be sure to develop an appropriate budget, keep tabs on where your money is going, don’t overspend, and keep some cash reserves as a backup.
A cash reserve will allow you to pay your employees, keep the ice cream dispensers filled, and have the lights on.
Hiring The Wrong Employees
Your employees can impact your ice cream business in various meaningful ways. More often than not, your employees will be the face of your business, so choosing the right employees will make all the difference.
A good hiring choice can increase sales, improve your customer experience, and create goodwill. In addition, a good employee can save you money, support your vision, and watch out for your interests when you are not around.
On the other hand, a poor employee can wreak havoc on your ice cream business. They could steal, pass inventory to family and friends, and discourage sales. Additionally, training your staff will be essential. Just like coffee shop owners train their baristas, you’ll likely want to develop a training program that emphasizes your company goals and culture.
Poor Management
Success doesn’t come cheap or easy.
When it comes to retail, the best ice cream and marketing don’t guarantee success, primarily if the business is poorly managed.
Managing a successful business, including an ice cream business, takes a little practice, but with some help, guidance, and openness to learning, you’ll be right on your way.
To manage your ice cream shop better, you can rely on the data from your ice cream shop POS system. It can help to calculate the number of sales, forecast the inventory needs, get better at scheduling, and boost your marketing.
Too Much Debt
Too much debt can overwhelm any business, especially small ones like ice cream shops. In addition, debt can quickly accumulate for new businesses because there are a lot of upfront costs associated with starting a business.
When the bills come at once, they can quickly act like a financial tsunami – from which your business may never fully recover.
Over time, the debt, interest, and fees can quickly become too much for an ice cream shop, no matter how good the sales are.
Why Ice Cream Shops Fail? (Continued)
Forecasting Sales Incorrectly
Before you open your ice cream business, you’ll want to forecast your sales. Forecasts are, of course, estimates. And while they can be precise, they could give you a good barometer of what revenue to expect.
Yet, over-forecasting or over-optimistic sales can make you think you will have more cash than you do.
If you already have an existing ice cream business, you’ll want to forecast your sales based on your history. Then, you can create modest or realistic goals to improve your sales and revenues.
Ice Cream Shop Owner Burnout
Owning a retail business puts a lot of stress on owners and managers. There are many balls to juggle daily: employees, inventory, bills, repairs, and surprise expenses. Over time, this could wear down a business owner.
One easy way to fight burnout is delegating certain jobs. It’s hard to control everything alone, so you need to surround yourself with reliable people and learn to delegate and take time for yourself and your family.
Summary:
- Failing to Plan
- Not Developing a Clear Vision
- Not Writing a Business Plan
- Unwilling to Learn or Get Help
- Signing a Poor Lease
- Overspending on Equipment
- Not Picking the Right Location
- Not Having Enough Cash
- Hiring The Wrong Employees
- Poor Management
- Too Much Debt
Why Ice Cream Shops Fail
Action Steps to Avoid Ice Cream Shop Failure
1. Develop a Clear Concept
Before opening an ice cream shop, you will want to create a clear business concept. What kind of ice cream shop are you going to develop? What is your vision and mission for your ice cream business?
You might decide to be the best organic ice cream shop in your city or the most kid-friendly ice cream shop in your state. You might decide you want to serve authentic Italian gelato or be at the frozen yogurt shop visited by local gym-goers. Whatever vision you choose, make sure it is straightforward for you and appealing to your target customer.
2. Create a Realistic Budget
As you can imagine, your budget plays a significant role in your ability for you to get your ice cream shop business off the ground. You must develop a long-term budget that addresses two parts:
- Your startup budget
- Your operational budget
Getting realistic estimates will help you plan out your financial obligations and help you seek the funds you need before you start.
3. Write a Business Plan
Writing an ice cream shop business plan is one of the first steps you must work on. As you research, plan, and write your project, you’ll naturally discover the areas you need to focus on.
For example, you may have a budget in mind but need to figure out what type of branding or market position you want in your hometown.
A business plan will help you address many common ingredients that ice cream business owners need.
4. Understand Your Funding and Cash Flow
You’ll want to create your ice cream funding mix. This funding mix will help you ensure that you have all the money you need when you need it.
You need to clearly understand your startup costs and secure various financial sources (personal finances, bank loans, credit cards, family loans). As well as be aware of your ongoing costs and forecast your income before you start your ice cream shop.
5. Research The Right Location
You might want to rush into getting a location. But you’ll struggle every day your business is open if your location is the “wrong” one.
Therefore, you’ll want to take your time to thoroughly address the elements that make your location the right one. And remember, a location that may be good for one business may not be suitable for another. Your location needs to be accessible to your target customers and address your specific needs.
6. Understand Your Customers
Every successful business owner has garnered success by understanding their customer base. As we are primarily focused on starting a new ice cream business in a new location, you’ll want to spend time getting to know who your prospective customers will be.
First, walk the neighborhood, and visit your local coffee shops, restaurants, and parks. Next, walk by your future location to see how you like to have an ice cream shop at that particular spot. What would your customers be looking for? For example, maybe your customers will want coffee or sandwiches too.
Why Ice Cream Shops Fail
Consider checking out our ice cream shop business blog for more information on starting an ice cream shop. Read in-depth articles on how you can plan and start your ice cream business.
