Open a Candy Store
Over the last five years, candy stores have witnessed a resurgence. This sweet industry is responsible for generating almost $10 billion between 2015 and 2020, a 2.5% annualized increase. What’s fueling the renewed vitality of the candy industry? Research suggests more health-conscious options paired with a consumer’s nostalgia for childhood treats is behind the increase.
Plus, parts of the industry, like those selling chocolate, are actually seeing a boom in revenue due to the pandemic. If you’re an entrepreneur wondering how to open a candy store, our guide can help.
Benefits of Opening a Candy Store
One of the many benefits of opening a candy shop is the ability to create and sell sweet treats that everyone loves. Whether you sell traditional chocolate bars or Willy Wonka-inspired items like a Whipple-Scrumptious Fudgemallow Delight, a candy store provides edible pleasure.
Owners can also choose from a variety of different candy stores. You can start your own company or open a franchise. You can opt for a brick-and-mortar storefront or operate entirely online as an e-commerce shop. You can launch a store that only sells specialty candy, like Fowler’s Candy Shop in New York that’s known for its sponge candy, or open a five-and-dime candy shop where kids pick their treats from self-serve dispensers.
Candy store owners generally make a good living, too. Research shows a general manager or business owner can make upwards of $80,000 per year, according to Payscale.
1. Create a Business Plan for Your Candy Store
Your candy store, no matter its size or niche offerings, needs a business plan. A business plan is an extensive look at how the business will run and succeed. While it serves as an excellent reference for owners, it’s also necessary if you plan to seek funding from a bank or investor because it clearly outlines your goals and strategy.
Business plans typically include a company overview, a market analysis, and a competitor analysis. It’s important to also explain the company’s purpose, target market, and nearby competitors. If Schwietert’s Cones & Candy, one of the most notable candy franchise companies in the U.S., is in the area, for example, you’ll want to explain what sets your shop apart.
While writing a business plan, draw up your pricing strategy and how the company will generate profits. Since candy is usually inexpensive, thoroughly explain your profit margins and mention additional revenue-generators like gift baskets or candy-making classes.
2. LLC vs Sole Proprietorship: Choose a Business Structure
As you consider setting up a candy store, explore different types of business structures. A sole proprietorship and a limited liability company (LLC) are two options.
A sole proprietorship is free and easy to set up. If you plan to open a small online candy shop, this could be a viable option. If you’ll open a physical retail location with a few employees, consider an LLC. An LLC, as the name suggests, offers liability protection. If your candy shop goes bankrupt or is sued, for example, liability insurance provides protection for your personal assets.
The process to set up an LLC is different in each state. You need to file LLC formation paperwork, pay a filing fee, and submit paperwork to a state agency. That’s usually the secretary of state. You can complete the process yourself or you can streamline it by working with a business formation company.
3. Determine Your Business Costs
What kind of costs are associated with a candy store? Plan to pay for candy making equipment, displays, signage, and inventory.
An often overlooked expense is the cost to decorate the store. Candy stores are often vibrant, welcoming places with mesmerizing displays of treats. While you can draw a lot of inspiration by visiting candy stores or looking at pictures online, you might want to consider working with a designer or a consultant with experience in the candy industry.
Of course, there are ongoing costs to consider as well. One of the biggest costs is real estate. Some owners lease a space that includes enough space for a commercial kitchen and a retail area while others rent two separate spaces or even make candy in their home to save money.
Ongoing expenses can also include ingredients, packaging, labels, marketing efforts, and labor. Research shows the average candy store cashier makes about $10/hour, which provides a benchmark to calculate overall labor costs.
How do you fund your startup costs?
As your business ideas start to caramelize, you may be thinking of financial resources you can utilize. There are some government grants that you may be eligible for, though they’re limited. Grants.gov is a good place to start.
Most entrepreneurs will likely go a different route and request a loan from a bank or family. No matter who you plan to ask for funds, present a professional business plan and make sure the borrowing terms are clear.
Business credit cards can also provide startup funds for your candy shop, but it’s important to understand the APR and interest rates. It may also be helpful to have a payment plan in place.
4. Create a Business Name
What will you call your candy shop? Some of the most notable shops in the world have words like ‘candy’ or ‘sugar’ in the title, like SugarSin in London or The Candy Room in Melbourne. Whether or not you include a sweet descriptor in your company name, you’ll need to check its availability in your state through your local secretary of state website. If the name is unavailable, brainstorm new ideas.
It’s a good time to look into a company domain name, too. If you settle on the name SugarRoyalty, for example, you’ll probably want a matching domain name. Consider purchasing the domain at the same time you incorporate your business.
If you want a fun name for your candy store shop front and a more savory name for your business, look into filing a “doing business as” (DBA) name, too.
5. Register Your Business and Open Financial Accounts
Before you sell your first Jawbreaker, you need to register your selected business structure. A business formation company can file the necessary paperwork for you.
You will also need an employer identification number (EIN) from the IRS. These nine-digit numbers are necessary to pay your candy store employees, file taxes, and open bank accounts.
Look into state and local licensing, health code permits, and zoning permits, too. A candy shop will likely need a small business license, a seller’s permit, and a health code permit. In some states, the health department won’t permit home kitchens, which is something to be aware of if you plan to make treats in your house.
To keep your personal and business finances separate, consider opening business bank accounts. Remember, you need an EIN to do so.
6. Purchase Equipment for Your Candy Store
For those interested in learning how to open a candy store, take time to learn what kind of equipment is necessary to get started. Here’s a basic list of what you need:
- Ingredient bins
- Work tables
- Double boilers
- Commercial ranges
- Commercial mixers
- Pastry tubes and bags
- Display cases
- Display units and shelving
- Point-of-sale system
To find a full list of equipment, Katom has a helpful guide for chocolate shop owners specifically.
7. Market Your Candy Store
To effectively market your candy store, identify your ideal customer. Your target audience will dictate the marketing measures you use. For instance, if you plan to sell gourmet treats, you’ll likely target affluent adults on social media who tend to use LinkedIn. If you plan to sell hard, individually-wrapped candy aimed at kids, market to parents through Facebook groups.
If you plan to open a brick-and-mortar store, add your candy shop to a number of online directories like Google My Business and YellowPages.
Consider giving away free samples at local events as a way to increase brand recognition. Hand out baseball-shaped chocolate bars to winning little league teams or give away goodie bags during the town’s holiday festival. Make sure each treat has a business card attached or a label with contact information on it.
Examples of Candy Stores to Start
There are many different kinds of candy stores to start. You can start your own business or you can buy a franchise. Some of the most recognizable franchises include Schwietert’s Cones & Candy, Kilwin’s Chocolates & Ice Cream, and Fannie May Chocolates.
You can also decide whether or not to focus on specific types of candy, rather than trying to offer everything. You may focus on selling chocolate, for example, or bulk hard candy.
Opening a candy store is a low-risk opportunity with a potentially high reward. Entrepreneurs can start the business slowly, maybe even from their home with online sales, and grow into small retail shops. The potential for growth is there along with the chance to earn a solid salary.
Candy Store Business FAQs
- Where should I incorporate my Candy Store?
A business formation company like ZenBusiness can incorporate your new business for you. After your business is set up, you can rely on the company to offer other worry-free services like access to an operating agreement template or help to file your annual reports with the state.
- What are the biggest challenges to starting a Candy Store?
Perhaps one of the more overlooked challenges is making enough candy and storing it properly. You need to understand the demand and the shelf life of the treats you create. For instance, dark chocolate is good for 12 months but caramels are only good for three months. Read through this resource to help you plan your inventory.
- Where can I get money for my Candy Store?
There are a variety of avenues that can help fund a candy store startup. Some people may seek a loan or an investor while others will open a store with a combination of personal savings, business credit cards, and loans from family and friends. To explore more funding options for your candy store, check out this resource from the Small Business Administration.
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