A cotton candy business is a business that makes and sells cotton candies most especially at children’s parties, parks, stadiums et al. Cotton candy, which is also known as fairy floss and candy floss, is a spun-sugar confection that resembles cotton.
Cotton candy has no fat, no preservatives, or sodium and is about 115 calories per serving. It usually contains small amounts of flavoring or food coloring. The U.S. candy market is expected to reach a value of USD 19.6 billion by 2025, according to a new report by Grand View Research, Inc.
So also, a report published by Fior Markets shows that the global candy market is expected to grow from $217.8 billion in 2020 to $290.7 billion by 2028, growing at a CAGR of 3.8 percent during the forecast period of 2022 to 2028.
Steps on How to Write a Cotton Candy Business Plan
Executive Summary
Super Lick® Cotton Candy, Inc. is an American-based and licensed cotton candy production business that will serve a wide range of customers. Our cotton candy production shop will be located in the heart of West Sacramento, California, and will also service outdoor customers.
Sarah Thompson is the founder and CEO of Super Lick® Cotton Candy, Inc.
Company Profile
a. Our Products and Services
Super Lick® Cotton Candy, Inc. will be involved in the production and sale of;
- Different flavors of cotton candies
- Different types and flavors of regular candies
Our products are designed to give our customers the satisfaction they need when they consume cotton candy.
b. Nature of the Business
Our cotton candy production business will operate the business-to-consumer model.
c. The Industry
Super Lick® Cotton Candy, Inc. will operate in the candy production industry.
d. Mission Statement
Our mission is to establish a standard and world-class cotton candy production business that will sell franchises all across the United States of America. We want to become a household name when it comes to cotton candy production.
e. Vision Statement
Our vision is to establish a cotton candy production business that will become the number one choice for children’s party organizers in and around our city.
f. Our Tagline (Slogan)
Super Lick® Cotton Candy, Inc. – Your Preferred Cotton Candy!
g. Legal Structure of the Business (LLC, C Corp, S Corp, LLP)
Super Lick® Cotton Candy, Inc. will be formed as a Limited Liability Company (LLC). The reason why we are forming an LLC is to protect our assets by limiting the liability to the resources of the business. The LLC will protect our CEO’s assets from claims against the business, including lawsuits.
h. Our Organizational Structure
- Chief Executive Officer (Owner)
- Shop Manager
- Accountant (Cashier)
- Cotton Candy Makers and Servers
- Cleaners
- Security Guard
i. Ownership/Shareholder Structure and Board Members
- Sarah Thompson (Owner and Chairman/Chief Executive Officer) 52 Percent Shares
- Asher Tyson (Board Member) 18 Percent Shares
- Jude Steveson (Board Member) 10 Percent Shares
- Carson Bright (Board Member) 10 Percent Shares
- Faith Lamb (Board Member and Sectary) 10 Percent Shares.
SWOT Analysis
a. Strength
- Ideal location for a cotton candy production business
- Highly experienced and qualified employees and management
- Access to a wide range of children’s party organizers and schools
- Excellent customer testimonials.
- A reliable, healthy, and efficient method of preparing cotton candy.
b. Weakness
- Financial constraints
- A new business that will be competing with well-established cotton candy production businesses.
- Inability to retain our highly experienced and qualified employees longer than we want
c. Opportunities
- As income rises, consumers are more likely to purchase nonessential goods, such as cotton candy
- Online market, new services, new technology, and of course the opening of new markets
- Increase in the number of children’s parties and schools.
i. How Big is the Industry?
Interestingly, the candy production industry is big and the industry is projected to grow to $290.7 billion by 2028.
ii. Is the Industry Growing or Declining?
Yes, the candy production industry is a growing industry and this can be supported by the fact that the industry grew at the rate of 0.7 percent between 2017 and 2022.
iii. What are the Future Trends in the Industry
The future trends when it comes to the cotton candy production business will revolve around technology that is meant to predict what customers want from a cotton candy production business, online stores, deliveries et al.
iv. Are There Existing Niches in the Industry?
Yes, there are existing niches when it comes to the cotton candy production business. Here are some of them;
- Drive through cotton candy business
- Kiosk cotton candy business
- Mobile cotton candy business (cotton candy carts or cotton candy trucks).
v. Can You Sell a Franchise of your Business in the Future?
Super Lick® Cotton Candy, Inc. has plans to sell franchises in the nearest future and we will target major cities with a growing number of children in the United States of America.
d. Threats
- The arrival of a new cotton candy production business within our market space
- Unfavorable government policy and regulations
- Health concerns may drive many consumers away from candy.
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
i. Who are the Major Competitors?
- McJak Candy Co LLC
- The Cotton Candy Co.
- Rainbow Cotton Candy
- Piedmont Candy Co
- Dandy Cotton Candy Co Inc.
- Cotton Candy Inc.
- Dillon Candy Company
- Hey Sugar Cotton Candy
- Warrell Corporation
- Lollipuff Gourmet Cotton Candy Catering
- Art of Sucre
- Spinning Wylde
- Nuage Cotton Candy
- Cloud Nine Cotton Candy Company
- Pandy Cotton Candy & Sweets
- The Jolly Sheep Cotton Candy
- Uranus Fudge Factory and General Store
- Puff Delights
- Natural Candy Store
- Fun Tyme Foods Inc.
ii. Is There a Franchise for Cotton Candy Production Business?
- Candy Connections
- Sugar Threads Gourmet Cotton Candy
- Pluffy Cotton Candy
- Fluffys Cotton Candy Creations
- Fuzziwig’s Candy Factory Inc.
- Candy Cloud Factory.
iii. Are There Policies, Regulations, or Zoning Laws Affecting Cotton Candy Production Business?
Yes, there are county or state regulations or zoning laws for the cotton candy production business, and players in this industry are expected to work with the existing regulations governing similar businesses in the county where their business is domiciled.
The regulations of the industry are shared by the FDA and the Treasury Department’s Tax and Trade Bureau. Essentially, every cotton candy production business must register with the FDA, and therefore any cotton candy production business is subject to random FDA inspections without warning.
Please note that in the United States, you are required to follow your own state’s foodservice code. Visit the FDA website for a list of food service codes by state. Use this to find the state authority handling restaurants and bars and view the laws that apply in your state.
Marketing Plan
a. Who is Your Target Audience?
i. Age Range
Our target market comprises children of all ages.
ii. Level of Educational
We don’t have any restrictions on the level of education of those we will sell our cotton candies.
iii. Income Level
There is no cap on the income level of those to who we will sell our cotton candies.
iv. Ethnicity
There is no restriction when it comes to the ethnicity of the people we sell our cotton candies.
v. Language
There is no restriction when it comes to the language spoken by the people that will purchase cotton candies from us.
vi. Geographical Location
Anybody from any geographical location is free to buy our cotton candies.
vii. Lifestyle
Super Lick® Cotton Candy, Inc. will not restrict any customer from purchasing cotton candies from us based on their lifestyle, culture, or race.
b. Advertising and Promotion Strategies
- Deliberately Brand All Our Vans and Trucks.
- Tap Into Text Marketing.
- Make Use of Bill Boards.
- Share Your Events in Local Groups and Pages.
- Turn Your Social Media Channels into a Resource
- Develop Your Business Directory Profiles
- Build Relationships with players in the event and party planning and catering services industry.
i. Traditional Marketing Strategies
- Marketing through Direct Mail.
- Print Media Marketing – Newspapers & Magazines.
- Broadcast Marketing -Television & Radio Channels.
- OOH, Marketing – Public Transits like Buses and Trains, Billboards, Street shows, and Cabs.
- Leverage direct sales, direct mail (postcards, brochures, letters, fliers), tradeshows, print advertising (magazines, newspapers, coupon books, billboards), referral (also known as word-of-mouth marketing), radio, and television.
ii. Digital Marketing Strategies
- Social Media Marketing Platforms.
- Influencer Marketing.
- Email Marketing.
- Content Marketing.
- Search Engine Optimization (SEO) Marketing.
- Affiliate Marketing
- Mobile Marketing.
iii. Social Media Marketing Plan
- Start using chatbots.
- Create a personalized experience for our customers.
- Create an efficient content marketing strategy.
- Create a community for our target market and potential target market.
- Gear up our profiles with a diverse content strategy.
- Use brand advocates.
- Create profiles on the relevant social media channels.
- Run cross-channel campaigns.
c. Pricing Strategy
When working out our pricing strategy, Super Lick® Cotton Candy, Inc. will make sure it covers profits, insurance, premium, license, economy or value, and full package. All our pricing strategies will reflect;
- Cost-Based Pricing
- Value-Based Pricing
- Competition-Based Pricing.
Sales and Distribution Plan
a. Sales Channels
Our channel sales strategy will involve using partners and third parties—such as referral partners, affiliate partners, strategic alliances in the event and party planning industry, and freelancers to help refer customers to us.
Super Lick® Cotton Candy, Inc. will also leverage the 4 Ps of marketing which are place, price, product, and promotion. By carefully integrating all these marketing strategies into a marketing mix, we can have a visible, in-demand service that is competitively priced and promoted to our customers.
b. Inventory Strategy
The fact that we will need supplies such as sugar, salt, pink food coloring, corn syrup, raspberry extract, and lollipop sticks or straws means that Super Lick® Cotton Candy, Inc. will operate an inventory strategy that is based on a day-to-day methodology for ordering, maintaining and processing items in our warehouse.
We will develop our strategy with the same thoroughness and attention to detail as we would if we were creating an overall strategy for the business. Super Lick® Cotton Candy, Inc. will make sure we work with “Just-in-time (JIT) inventory” – (JIT involves holding as little stock as possible, negating the costs and risks involved with keeping a large amount of stock on hand.)
c. Payment Options for Customers
Here are the payment options that Super Lick® Cotton Candy, Inc. will make available to her clients;
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Return Policy, Incentives, and Guarantees
At Super Lick® Cotton Candy, Inc., our customers are our top priority hence if you receive cotton candy that is different from what you paid for, we will sincerely apologize. You can call us as soon as you notice that there was an error in your order, and you may come to pick up the correct cotton candies.
For credit card payments, you will be refunded the sales price amount associated with the error and recharged for the new items’ price. For cash payments, you will be asked to pay the difference of the balance if the new cotton candies have a greater value than the one received in error.
Your order will be a priority if you come to pick it up. In all cases, please return the cotton candy order in the original container(s) to our host. Please, if you have any questions regarding the Return & Refund Policy, please call our customer care service.
e. Customer Support Strategy
Our customer support strategy will involve seeking customer feedback. This will help us provide excellent customer service to our clients. We will work with effective CRM software to be able to achieve this goal. Regularly, we will work towards strengthening our Customer Service Team and also Leverage Multi-Channel Servicing as part of our customer support strategy.
Operational Plan
We plan to expand our revenue by 45 percent in the second year and the plan will include a marketing, sales, and operations component. The operations component of the plan would include attracting partnership and retainer deals that will enable the firm to boost our cotton candy production business and support revenue growth.
a. What Happens During a Typical Day at a Cotton Candy Production Business?
- The business is open for the day’s work
- The serving area is cleaned and ready for the day’s business
- The cotton candy making ingredients are arranged and ready for use
- Customer’s orders are taken and they are served or their orders are delivered to them
- Cashiers collect cash and reconcile accounts for the day
- Administrative duties are carried out
- The store or warehouse is restocked when required.
- The business is closed for the day.
b. Production Process
The production process for cotton candy is simple. First, you add flavored sugar to the center of the cotton candy machine. Then the center, which spins, begins to heat up to 300 degrees and melts the sugar. When the threads are collected on a cone, they are packed loosely so that a certain amount of air gets trapped between the fibers. This increases the volume of the candy, giving it a light and fluffy texture.
c. Service Procedure
The service procedure for a cotton candy production business starts with a customer requesting cotton candy. Once the request is gotten, it will be processed and the customer will be served or the order delivered to a location as requested.
d. The Supply Chain
Super Lick® Cotton Candy, Inc. will rely on key players in the event and party planning industry to refer business deals to us. So also, we have been able to establish business relationships with wholesale suppliers of sugar, salt, food coloring, corn syrup, and fruit extract (can use other extracts, such as almonds, orange, or vanilla), lollipop sticks or straws et al.
e. Sources of Income
Super Lick® Cotton Candy, Inc. makes money from the sale of;
- Different flavors of cotton candies
- Different types and flavors of regular candies
- Franchise
Financial Plan
a. Amount Needed to Start your Cotton Candy Production Business?
Super Lick® Cotton Candy, Inc. would need an estimate of $180,000 to successfully set up our cotton candy production business in the United States of America.
b. What are the Costs Involved?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $1,300.
- Marketing, Branding and Promotions – $1,000.
- Business Consultant Fee – $2,500.
- Insurance – $1,400.
- Rent/Lease – $45,000.
- Other start-up expenses like commercial satellite TV subscriptions, and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $30,000
- Start-up Inventory – $15,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Furnishing and Equipping – $25,000
- Mobile Carts – $25,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. Do You Need to Build a Facility? If YES, How Much Will it Cost?
Super Lick® Cotton Candy, Inc. will not build a new facility for our cotton candy production business; we intend to start with a long-term lease and after 5 years, we will start the process of acquiring our facility.
d. What are the Ongoing Expenses for Running a Cotton Candy Production Business?
- Supplies (sugar, salt, food coloring, corn syrup, fruit extract (can use other extracts, such as almond or vanilla), lollipop sticks or straws)
- Utility bills (gas, internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
- Equipment and truck maintenance
- Insurance
- Marketing costs
e. What is the Average Salary of your Staff?
- Chief Operating Officer (Owner) – $45,000 Per Year
- Shop Manager – $30,000 Per Year
- Accountant – $28,630,000 Per Year
- Cotton Candy Makers and Servers – $23,100 Per Year
- Cleaners – $20,000 Per Year
- Security Guard -$20,000 Per Year
f. How Do You Get Funding to Start a Cotton Candy Production Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Source for soft loans from your family members and friends.
Financial Projection
a. How Much Should You Charge for your Product/Service?
The price of our cotton candy will start from ($0.41/Ounce).
b. Sales Forecast?
- First Fiscal Year (FY1): $250,000
- Second Fiscal Year (FY2): $350,000
- Third Fiscal Year (FY3): $450,000
c. Estimated Profit You Will Make a Year?
- First Fiscal Year (FY1) (Profit After Tax): $75,000
- Second Fiscal Year (FY2) (Profit After Tax): $100,000
- Third Fiscal Year (FY3) (Profit After Tax): $250,000
d. Profit Margin of a Cotton Candy Production Business
The ideal profit margin we hope to make at Super Lick® Cotton Candy, Inc. will be between 20 and 40 percent all things being equal.
Growth Plan
a. How do you intend to grow and expand?
Super Lick® Cotton Candy, Inc. will grow our cotton candy production business by first opening other outlets in key cities in the United States of America within the first five years of establishing the business and then will start selling franchises from the sixth year.
b. Where do you intend to expand to and why?
Super Lick® Cotton Candy, Inc. plans to expand to Boise – Idaho, San Francisco – California, Chicago – Illinois, Washington, D.C., Boston – Massachusetts, Miami – Florida, Seattle – Washington, Dallas – Texas, and Las Vegas – Nevada.
The reason we intend to expand to these locations is that available statistics show that the cities listed above have the highest and most thriving market for children’s events and parties in the United States.
Exit Plan
The founder of Super Lick® Cotton Candy, Inc. plans to exit the business via family succession. We have placed structures and processes in place that will help us achieve our plan of successfully transferring the business from one family member to another and from one generation to another without hitches.