How to Start a Candy Business | SkillsAndTech

Starting a candy business can be a great idea to cash in on America’s love for candy. However, laying the foundation for a flourishing candy business isn’t as straightforward as it sounds.

In this post, we’ll take you through the 13 steps you need to follow when starting a candy making business from the ground up.

The idea is to help you avoid common pitfalls, enabling you to achieve success a lot faster. Let’s get started.

Table of Contents

Decide if the Business Is Right for You

Start by determining if starting a candy store is a good idea in the first place. At this point, you’ll want to know the following:

Pros and cons

Gauging the downsides of a candy business will enable you to know the challenges you’re likely to encounter. Evaluating the upsides of the business will provide the motivation you need to start.

Below are the pros and cons of making candy:

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Pros

It feels good to satisfy a candy lover’s cravings while making money at the same time.
Low initial capital required.
It is easy to create brand loyalty and therefore the business has a high customer retention rate.
Regular income thanks to the consistent demand for candy.

Cons

Competitors can easily copy your recipe.
It can be challenging to run a candy business, especially if you’re a solo entrepreneur.

Candy industry trends

The National Trade Federation says 65% of the US population were expected to participate in Halloween activities in 2021, and 66% planned on handing out candy. US households with children (82%) are much more likely to celebrate Halloween.

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Industry size and growth

Industry size and past growth – Candy production in the US is valued at $12 billion in 2022, after a steady annual growth of 1% over the past five years.
Growth forecast – As consumer expenditure continues to increase, US candy production is expected to grow at least 5% per year through 2025, according to Grand View Research.
Number of businesses – More than 1,400 candy production businesses are operating in the US.
Number of people employed – The industry employs nearly 25,000 people.

Trends and challenges

Trends in the candy industry include:

Continuous product development and innovation
Rising demand for sugar-free and gluten-free candies
Many consumers believe chocolate and candy boost emotional well-being

Challenges in the candy industry include:

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Growing health concerns about diabetes and obesity
Fluctuating prices of raw materials

Consumer spending

Average consumer spend – US consumers spent $3 billion on candy for Halloween in 2021.
Potential customer base – Almost all (99%) US households buy chocolate or candy at least once a year.
Average prices – In 2019, candy was sold for $2.27 each for chocolate and $1.88 each for non-chocolate.

What kind of people work in a candy shop?

Gender – 78% of shop managers are male, while 22% are female.
Average level of education – 38% of shop managers hold a bachelor’s degree and 24% have an associate degree.
Average age – The average age of a shop manager is 42 years old.

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How much does it cost to start a candy making business?

It costs $2,000 to $8,000 to start a candy business. However, most startups in this industry spend about $5,000.

Most of the initial capital goes toward marketing, creating your online footprint, and buying equipment.

On the lower end, the capital is enough to enable you to create a basic website and launch a local marketing campaign to generate leads. On the higher end, you can create a full-blown ecommerce website and launch an online and local marketing campaign.

You don’t need a lot of equipment to start a candy business. However, you must have basic office equipment like chairs, a laptop, a table, and a telephone. Also, you will need the following equipment for candy production.

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Molds
Icing
Food coloring
Decorator tools
Decorating bags
Candy thermometer
Candy flavoring
Decorating pens
Lollipop sticks
Packaging (e.g., cellophane bags, boxes, and ribbons)

Start-up Costs	Ballpark Range	Average
Licenses and permits	$300 – $1,200	$750
Insurance	$125 – $300	$213
Marketing and advertising	$500 – $3,000	$1,750
Website	$200 – $1,500	$850
Software	$200 – $400	$300
Equipment	$500 – $1,300	$900
Raw materials	$100 – $200	$150
Miscellaneous	$75 – $100	$87
Total	$2,000 – $8,000	$5,000

How much can you earn from a candy making business?

Candy was sold for $2.27 each for chocolate and $1.88 each for non-chocolate in 2019, or an average of $2 per unit.

Scenario 1

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If you’re a sole proprietor, you could work from home in your first year or two. Assuming you make 15,000 chocolate and non-chocolate candies in a year, you could bring in $30,000 in annual revenue and $24,000 in profit, assuming an 80% margin.

As your brand gains recognition, your production could climb to 50,000 units a year. At this stage, you’d rent a commercial space and hire a couple of staff, reducing your profit margin to around 50%. With annual revenue of $100,000, you’d make a tidy profit of $50,000.

Scenario 2

If you run your business from a commercial facility with three employees from the start, you could make 60,000 chocolate and non-chocolate candies in your first year or two. You could sell these at wholesale and retail prices, with a profit margin of around 40%. With annual revenue of roughly $100,000, you could make a profit of nearly $50,000.

As your brand gains recognition, you could ramp up production to 20,000 units per month, or 240,000 units a year. At this stage, you’d rent a bigger commercial space and hire more staff, reducing your profit margin to around 20%. With annual revenue of almost $480,000, you’d make a tidy profit of $96,000.

What barriers to entry are there?

The biggest barriers to entry for a candy-making business are the strict legal and regulatory requirements at the state and federal levels.

You’ll need to get a food permit from your state and have your packaging approved by the FDA.

Also, you must register your production facility as required by the FDA. On top of that, you’ll need to obtain several permits and licenses. You can read more about these requirements on the FDA’s website.

Other barriers to entry include:

Stiff competition from already established local and regional candy makers.
Some brands have a loyal customer base which is almost impossible to win over for a new entrant.

Hone Your Idea

Now that you know what’s involved in starting a candy business, it’s a good idea to hone your concept in preparation to enter a competitive market.

The insights can help you create an offering that suits your market segment needs and place you on the right path to winning your first paying customer.

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Why? Identify an opportunity

You can identify a business opportunity to sell candies in your area by narrowing down on local market research. You can understand local consumers by studying their buying behavior and interest in candy.

You will be selling your candies to supermarkets, local convenience stores, and specialty food stores. You shall, therefore, visit these places and gather their input.

While you’re at it, research the best-selling candies to understand what makes standout. Also, find out about your competition to help you figure out what you’re up against.

Other strategies you can use to identify an opportunity include analyzing big companies and their products and drawing a parallel between two major competitors to understand what they share and how you can be different.

What? Determine your products and services

Candies come in a variety of textures, from soft to chewy, brittle, and hard. They are also available in different sizes.

Deciding the type of candies you want to sell is essential because, by extension, it enables you to define your target market.

Some popular candy options in the United States include caramels, brittle, chocolate, gumdrop, jelly tots, hard candies, licorice, lollipops, sours, chewing gums, Skittles, toffee, and cotton candy.

How much should you charge for your candies?

Candy prices vary depending on the size and type. The average price of chocolate candy is $2.752. Non-chocolate candy goes for an average of $1.41 per piece3.

Who? Identify your target market

Pinpointing your target market enables you to concentrate on the market segment that’s likely to purchase your candies. It also allows you to allocate your marketing budget to prospects with the highest profit potential.

For a candy making business, you can target B2B and B2C prospects.

B2B customers include convenience stores, hypermarkets, supermarkets, specialty food stores, bakeries, candy distributors, and online candy stores. B2C prospects are your neighbors and other local residents. Further, you can partner with wedding planners, event organizers, florists, and bridal shops to hook you up with customers who may want to buy candy to be eaten during celebrations and festivals.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a physical storefront. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

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When choosing a commercial space, you may want to follow these rules of thumb:

Central location accessible via public transport
Ventilated and spacious, with good natural light
Flexible lease that can be extended as your business grows
Ready-to-use space with no major renovations or repairs needed

Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
Name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “screen printing” or “custom T-shirts”, boosts SEO
Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
Avoid location-based names that might hinder future expansion
Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
Product and Services: Describe your offerings in detail.
Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan before, it can be an intimidating task. You might consider finding and hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

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Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to screen printing.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your screen printing business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that most new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you might have.

Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities.
Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
Personal: Self-fund your business via your savings or the sale of property or other assets.

For a screen printing business, your best bet is probably going the personal route or reaching out to friends and family. Although, if you have a great concept, you could give crowdfunding a shot as well.

Apply for Licenses/Permits

Starting a screen printing business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

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Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your screen printing business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use graphic design tools such as Affinity Designer, Adobe Illustrator, and CorelDRAW for photo editing, typography, and more.

Accounting

Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:

Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
Instagram: Same benefits as Facebook but with different target audiences.
Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

Signage – Put up eye-catching signage at your store and website.
Flyering – Distribute flyers in your neighborhood and at industry events.
Sponsor events – You can pay to be a sponsor at events that are relevant to your target market
Post a video – Post a video about your product. Try using humor and maybe it will go viral!
Limited edition – Offer a limited edition of your bestselling T-shirt or mug.
Seek out referrals – Offer incentives to generate customer referrals to new clients.
Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
Create infographics – Post infographics and include them in your content.

Develop your website

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Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your screen printing business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your printing business could be:

The hottest, coolest T-shirts in town
Mugs, tablets, desks, posters — your whole business branded
Custom screen printing at great rates!

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a screen printing business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in screen printing for years and can offer invaluable insight and industry connections.

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in printing. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Build your team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a screen printing business would include:

Screen Printers
Designers
Marketing Lead
General Manager

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Start Making Money!

Now that you’ve put a strong foundation in place, it’s time to get out there and grab your slice of the $8 billion US screen printing industry!

To ensure your business starts off on the right foot, here are some key tips to keep in mind:

Meet your deadlines: Whether it’s the deadline for a printing project or your bills, make sure you meet your time commitments—your stakeholders will appreciate it!
Provide more value than you take: Ensure your clients and stakeholders get more value from you than you take from them, and they’ll stick with you for life.
Always implement quality control: A simple quality assurance check will reduce product returns and customer dissatisfaction.
Engage the local community: You know the local community and have a direct connection with them, so it’s better to serve their needs before you market your products on a state or national level.
Address complaints with humility: Always listen to your clients, especially their negative remarks as these are areas where you can improve. And even if a complaint is illogical or unfair, address it calmly and professionally.
Keep improving your production capacity: You don’t know when a big client will come out of the wood work. Make sure you’re able to seize the opportunity when the time comes.
Attend events: Ensure your participation in industry events and trade shows. Bring your best designs as samples and prove yourself as a creative and capable printer.