In 2009, Market-Research.com reported that the demand for the frozen dairy products grew by a whopping 16 percent. With a rapidly growing middle class, we will continue to see an ever increasing demand for frozen and fermented dairy products. This growth is very significant in the dairy industry. That is why we have developed this ice cream business plan to help the budding entrepreneurs who would wish to develop functional businesses that are guaranteed to succeed.
However, there are a few things you must put together before leaping into the current. You need a business plan among many other items you must have to succeed.
Factors to consider before you start an ice cream business.
Who are your customers?
Opening up a shop that no one knows about is like trying to make an eye contact with a girl you like in the dark. You know what you are doing but she has not the slightest idea of what you are doing.
Before opening up your shop, do your research and know if there is adequate demand to sustain your business. Ask around and see how people react to your business idea. Try to see if they are enthusiastic about it as you are. If they show you signs of no interest in your product/service, you may need to rethink it.#Customer analysis helps you understand the needs you should fulfill in the market #icecream Click To Tweet
While on the same note, try to find out if the neighborhood you intend to set up your shop has people with the financial ability to buy your products. Where do they work? How much do they earn? Do they have children?
In short, do what I call MAN test. MAN is an acronym for Money, Ability, and Need.
Try to see if your target customers have disposable income (Money), the ability to spend the money they have (they do not have to consult before spending their money), and a need to fulfil.
Whom are you competing with?
If you must succeed in a market with strong competition, you must know what your competitors are doing. Use that information to offer exceptional products that will set you above the competition.
Know what products your competitors are making and how much they charge for their products. Do they have after sales service? Do they do home deliveries? What flavors do they have?
This information will help you come up with a business plan that offers exceptional quality to customers. You are likely to have loyal customers when you have a differentiating factor.
What are the government requirements for your type of business?
You must have all the requisite permits if you are going to conduct a legal business. Profile all the permits and licenses you will need for the business. Get the local business permit and the food handlers’ permit from the public health offices (you must have this one because you are handling food that the public consumes).
Depending on your locality, you may need other additional permits, for which you should consult your local business bureau or the government agency concerned.
You must also know about the local tax rules so that you do not run into the bad side of the law. Register your business (there are very many categories of businesses; you can start as a sole proprietor if you do not have enough money to cover all the business registration requirements). However, you should plan to register your business entity as an independent unit.
Get all the paperwork in order before you open up the shop. You do not want to face harassment by the local authorities. You should know the local contract laws if you are going to hire help.
What are the startup costs?
Many people get all the prior steps in order but fail to surmount the challenges in this step. There is a very high probability that you do not have enough money to get everything you need. Over 80 percent of people who want to start business have nothing in their hands in terms of savings.
Business startup estimations by Entrepreneur magazine indicate that starting a proper business will cost you upwards of one million Kenyan shillings. Not many people have a million shillings lying in a chest somewhere waiting for them to put in a business they totally have no experience at even.
You will need money for renting a space, hiring employees, marketing your business, purchasing equipment and appliances, raw materials, water and electricity bills, etc. Just by looking at these figures, many people give up before they even begin the business.
Do your calculations and weigh options. Look at your revenue projections over time and decide if this s a worthy course.
Once you have all this data and information, evaluate where you can get money for the startup. You can approach a few friends and family members with your business proposal once you have a viable business plan in your hand. They are more likely to loan you the startup funds because they know you and they BELIEVE in you.
Your chances of getting funding from a bank are very low. Banks need security, which you do not have. However, there is no harm trying, you may be lucky.Starting a business on a bank loan is very risky. #icecream #startup #businessplan Click To Tweet
What you need to do to turn your idea into reality?
After answering those critical questions, it is now time to start working. Analyze your competition and know exactly what you need to do to beat the competition. Profile your customers according to their needs. The next thing to do is to contact the local authorities to know what permits you will need for the business.
This analysis is crucial in developing your business plan that will help you surmount challenges as they come. You need the business plan to provide you with a map that you will stick with as your business grows.
You should also decide if you are going to make your own products or buy from elsewhere. If you are going to make your own, we have plenty of guides that will help you through the process.
On marketing, you must decide the channels that you are going to use. Settle on those channels that yield maximum returns with least effort. Stamp your brand in the local market and maintain the brand leadership.
8 Things you need to start an ice cream business.
- Business license (you will need to register your business to get tax PIN for the business. Sole proprietors use their personal tax PINs).
- Tax identification number
- Liability insurance
- Retail license and other local permits
- Food handlers’ permit
- Product inventory (raw materials, manufacturing equipment, packaging/serving material, scales etc)
- Office/shop equipment (telephone, computer, stationery, tables, chairs, etc)
- Franchise fees (if you are buying one; quite expensive but the easiest model with a guaranteed success).
A Sample Ice Cream Business Plan
Dairyteq’s Ice Cream Bar will serve nutritious ice cream along Kenyatta Avenue in Nakuru, Kenya. This startup aims to establish an authoritative brand in Nakuru by offering the best ice cream scoops in the town. The entrepreneur owner of the business, Ms Jane Auma, plans to inject Kshs. 2,000,000 into the business as an initial startup capital that will go a long way in getting the business in motion. She plans to finance the business growth through debt.
Nakuru is considered a prime location for the business due to its predominantly youthful population with disposable income. The business will build a brand around an exceptional quality and affordability of its products. The product branding will be aimed at creating prestige around the product yet still affordable for the target market.
With the volume of initial investment pumped into the business, we project that the business will generate approximately four million shillings in revenue within the first year. This will be below the break-even point due to the heavy capital expenditure incurred in the first year.
We expect the revenues to gross over six million shillings by the end of the second year since the business shall have established itself and the brand will be well-known. Our market research data indicates that the business will experience a rapid uptake in the town and we should easily attain our sales targets.
We are looking at a long-term investment; therefore, we are patient enough to wait for the substantial returns when the business has established itself.
Our chief aim is to provide prestigious, rich and nutritious frozen dairy products from natural, fresh, and creamy ingredients.
We aim to achieve this through a number of strategies that include providing our customers with unrivalled customer service.
We aim to respond to our customer enquiries promptly.
Our customers will also enjoy the luxury of an open, fresh, friendly and a soothing atmosphere to enjoy their treats.
Our objectives are to:
- Achieve more than four million shillings in sales revenues during the first year of operations.
- Increase annual sales in the second year by 50% or more over the initial year.
- Increase our brand awareness to reach more than 150000 residents within the first half-year of operations.
- Establish our business as the ultimate frozen dairy store in Nakuru.
Dairyteq’s pillars of success will include the following:
- Highest quality products.
- Maintaining and growing relationships with customers to generate new and repeat sales.
- Spending on marketing to increase brand awareness.
- Reliance on professionals who will bring creativity and innovation into the business. This will help us stay ahead of our competition.
Dairyteq’s Ice Cream Bar will buy high quality frozen dairy products from Doinyo Lessos Company in Eldoret. However, in future, we are looking at manufacturing our own frozen dairy products to control all the quality parameters.
Once we have received the frozen products, we will use our freezers to bring down the temperatures and maintain the low temperatures to preserve quality. We will add fruit flavors to differentiate the product and create our prestigious brand.
Our natural fruit flavors will help us differentiate our product from the rest of the market since many people are moving towards natural foods. These flavors are our biggest secret that will help us build a unique product besides exceptional customer support.
Our ice cream servings will be dressed with fruit salad and displayed in attractive display units.
We chose Kenyatta Avenue due to the heavy traffic is has, which will increase our exposure in the market. This will help us cover the high rates for business spaces in the area. From the rates of 8 shillings per square foot per month, we project returns of about 50 shillings per square foot per month.
Fortunately for us, we do not have serious competitors in the area. We are only competing with supermarkets that sell take-away frozen dairy products. We project to beat them since they do not offer sitting place for their customers to enjoy their treats and they have shitty customer service.
Our customers are primarily young people ages 18-25, and families who have pre-teen children. These individuals seek flavorful sweet treats. We are currently on the planning stages of the business but we plan to incorporate the business into a limited liability entity to facilitate easy business operations.
Even then, the founder entrepreneur will retain majority shareholdings of the company. To achieve this goal, the company is seeking to raise two million from private equities and an additional two million from debt.
2.1 Start-up Summary
This business will need one million shillings to fund inventory, licenses and other initial expenditures. The equipment and premise improvement will cost 2.5 million shillings and an additional 400000 shillings will cover the legal fees.
Jane Auma will own the business with one or two more additional shareholders. She will contribute two million shillings (from debt and personal savings) while the other shareholders will contribute 1.6 million to fund the startup.
Jane will retain majority shareholder position in the business. An exit strategy for any of the shareholders will be set by creating a buy/sell agreement once the limited liability company is functional.
Dairyteq will sell prestigious frozen dairy products in Nakuru. The products will be made from the freshest ice cream under the highest standards of hygiene and food safety codes. Most local population get the all too common chocolate, strawberry and vanilla flavor ice creams.
We aim to create more options for the consumers and provide them with a relaxing environment to enjoy it. Dairyteq will be the “Java House” of ice cream in Nakuru.
Our numerous flavors and fruit salad dressings will create more options for the customers and set our brand apart from the rest of the market. We aim to pioneer this industry and offer an exceptional quality service that surpasses our customers’ expectations.
Customers can choose their own flavors of frozen yogurt through self-serve (original tart, vanilla, chocolate, strawberry, mango, peach, pomegranate, raspberry, blueberry and many more) and then choose their own toppings (over 46 new toppings daily).
Here is a list of some of our products:
- Has a rich flavor due to its egg foundation
- Less Fat and Sugar than Most Premium Ice Creams (low calories for you)
- We use only the highest quality ice cream, not one with these defects.
- Made fresh every day so that the customer has a nice experience each time.
- Heavier due to lesser volume of whipped air.
Whimz cream ice
- Very tiny crystals for a textured mouth feel. (with custom flavor)
- Made from sweet low-fat cream
- No egg foundation used
- Real fruit concentrate
Advantages of our products
- Carefully prepared from low-fat products and minimal sugar to reduce the amount of calories in your diet
- Contains essential minerals and vitamins such as protein, potassium, B vitamins thiamine, riboflavin, B6 and B12
- Pro-health due to the presence of bio-cultures that promote positive health through aiding of digestion and positive metabolism.
- Presence cultures will help those with lactose intolerance
- Better than other frozen dairy products in the market because we have made this product with you in our mind. Commercial manufacturers make these products with your money in their minds.
Our ice cream business plan is targeting Nakuru town, Kenya. This town is teeming with more than 1.5 million residents, majority of whom are university students and young working families and business owners. We have broken down the overall demographics for our target market as follows:
- 9% of the population are people over 65
- 23% are people between 45 and 64
- 27% are people between 25 and 44
- 26% are people between 18 and 24
- 25% of the population is under 18
(Data from KNBS).
The young population has disposable income to spend on instant gratification. The median annual income for the working class person in Nakuru is 300,000 shillings. We will target these young working class people, college students and young couples with pre-teen children.
Since young families have tight budgets die to school fee commitments, they do not have enough money to spend on vacations. We aim to give them an opportunity to bond together over a nice healthy frozen dairy product. We aim to make women our brand ambassadors since they tend to form brand loyalty to nice foods. Women also tend to indulge during parties or when stressed.
18-24 Year Olds
This group forms the bulk of our target market with disposable income. These are either single or college going, or they are freshly employed. They do not have many responsibilities yet and they can spare some money for a nice treat at a good joint. They are mostly dating and are very eager to impress their mates. This group tends to spend more than they can afford.
We plan to attract this group by accessorizing our premises with a powerful music system that will play current music that can serenade the heart of a lass. Our ice cream business plan is incorporating all these aspects to ensure that our first time customers eventually become repeat customers.
They have young babies with sweet teeth. Parents have few options but to get their children what they need. They can be doing it out either of love or to avoid an embarrassing situation. The parents are mostly working and/or running businesses ant they have the money to get for their families a nice treat.
Young families also prefer specialty joints such as an ice cream joint since it costs less than a restaurant and the parents can freely walk in with their children unlike in a liquor bar where minors are restricted. As we sell to their parents, we are also creating a business relationship with their children for the future.
Young families are busy since the parents are working and they hardly have time together. We are giving them an opportunity to get together in our premise and catch up over a nice ice cream treat. We also plan to market our brand by sponsoring junior sporting activities. The children will be our brand ambassadors and emissaries to their parents who have the money to spend with us.
We will also occasionally invite primary school children from within the area to come to our premise and see how we make our products. That way, they will develop interest in our products and remain loyal. A loyal customer is a life customer; we do not spend a dime in marketing our products to him again. Our main job is keeping him happy to spend his money with us.
Occasionally, those over 35 will want to have a nice place to treat their visiting friends and business associates. We are offering them an opportunity to walk into our premise and enjoy our pro-life treats as they discuss their businesses.
Nakuru is also a busy town teeming with activities such as school and college activities (musicals, sports), it is a very prime tourist destination and a very vibrant entertainment destination. We are giving the visiting patrons an opportunity to experience our exceptional service.
The dairy industry in Kenya contributes over 30 percent of agricultural GDP, which contributes 10 percent of the national GDP. Frozen dairy products contributes 18 percent of the total dairy income.
If you consider that Kenya’s GDP in 2015 was $63.5 billion, you can see that the frozen dairy products contributed over $342 million. This is a very significant figure that any forward thinking business cannot ignore.
(Un)fortunately, only a handful of major players in the local dairy industry are involved in frozen dairy products manufacturing. This reduces barrier to entry and reduces competition for new entrants. We have supermarkets as our major competitors but as we have noted in prior, we have a stronger competitive edge over them in the local market.
Luckily for us, we do not have a specialist ice cream joint as an established competitor. We aim to go into the market and claim our rightful position as the pioneers. We will lead uncharted waters and create an experience for our customers. Dairyteq will be the only brand that comes to mind whenever one thinks of frozen dairy products.
- Restaurants. They offer ice cream as a course in their menu. It is our main business and we will beat them based on that simple fact.
- Supermarkets. They sell retail containers from the manufacturers. They do not have a space for the customers to enjoy their desserts. We are creating an experience and giving our customers prestige, which they cannot get elsewhere.
These two have loads of customers but they do not give the customers the prestige associated with eating frozen dairy products. We aim to create an experience that our customers cannot resist. Furthermore, we are planning to give back to the community through sponsoring local sporting activities.
Dairyteq is committed to creating an experience that will surpass our customer’s expectations in terms of customer service and product quality. The competitive edge will set the brand above all competition and be a point of reference to many other startups in the country.
We aim to increase our brand awareness among the local community and expand to other parts of the country through franchising. Once our business stabilizes, we will be selling franchises to qualifying businesses and entrepreneurs across the country. We are going to be synonymous with frozen dairy products in the country.
Our brand comes as a package that contains the nice frozen dairy treats, the nice music, and the relaxing atmosphere. Our quality surpasses all other outlets in the country. We aim to offer our customers a service that they cannot resist; if they think about how we treat them, they come again.
Here are our competitive advantages:
- Our snacks are of the highest quality, creating prestige yet still affordable.
- Exceptional customer service. Our customers can eat at our joint or take away their frozen snacks.
- Prime location within town.
- Involvement in local activities will make our customers have more faith in us and set us ahead of our competition.
Contact us for a personalized ice cream business plan that will analyze your unique market. I will also add information about the other crucial sections including:
- Marketing Strategy
- Sales Strategy
- Forecasting Strategies
- Staff Plan
- Financial Plan
- Business Assumptions
- Break-even Analysis
- Profit and Loss Projections
- Cash flow
- Balance Sheet
- Business Ratios
If you need a comprehensive ice cream business plan for your business, contact us so that we can analyze your business idea. I will help you analyze your business idea if it is feasible and workable so that we develop a water-tight business plan.
Heck, I will even help you develop a business proposal (pitch), which you can use to seek for startup funding.