Starting an ice business is an exciting venture that combines production know-how and logistical planning with sharp business savvy. The commercial ice industry is a multi-billion dollar market, driven by steady demand from restaurants, special events, construction sites, and grocery stores.
This guide will take you through the practical steps of securing funding, acquiring equipment, obtaining necessary licenses, and selecting the right location to help you launch a successful ice business in the U.S.
Step 1: Create your business plan and validate your idea
First, gauge local demand by speaking directly with potential customers. Talk to restaurant managers, event coordinators, and construction foremen. Ask about their current ice supplier, their weekly volume, and what they pay. This direct feedback is more valuable than generic reports.
Once you have a feel for the market, analyze your competition. Use Google Maps and local business directories to find other ice suppliers. Note their service areas, delivery options, and any public pricing. This helps you find a gap you can fill, whether on price or service.
Estimate your startup costs
With an understanding of the market, you can build a realistic budget. A frequent misstep is to underestimate equipment costs. Your budget should account for several major purchases, and you should plan for these investments carefully.
- Commercial Ice Maker: $5,000 - $20,000+
- Walk-In Freezer: $10,000 - $30,000
- Refrigerated Delivery Van: $35,000 - $70,000
- Baggers and Heat Sealers: $2,000 - $5,000
- Licenses and Permits: $500 - $2,000
Some new owners try to use a standard van to save money, but this often leads to melted product and unhappy customers. A purpose-built refrigerated vehicle is a non-negotiable part of your budget.
Here are three immediate steps to take:
- Survey at least 10 local businesses to understand their ice needs and pricing.
- Identify all competing ice suppliers within your target delivery radius.
- Create a detailed startup budget using the cost ranges for key equipment.
Step 2: Set up your legal structure and get licensed
Choose your business structure
You might want to consider forming a Limited Liability Company (LLC). It protects your personal assets if the business is sued. Profits pass through to your personal taxes, which simplifies your accounting. An S-Corp is another option for potential tax savings once you are profitable.
The FDA classifies packaged ice as food, so your production facility must meet federal sanitation standards. You will also need to register your business with your state’s Secretary of State and get a federal Employer Identification Number (EIN) from the IRS, which is free.
Secure local permits
Your local health department is your most important stop. They will issue a food facility permit after an inspection. This process can take 30-90 days and cost between $100 and $1,000. Start this application early to avoid delays in your opening.
A frequent delay happens when a facility fails its initial health inspection. Before you apply, get the department’s checklist. Ensure you have washable surfaces, proper drainage, and a handwashing sink to pass the first time. This preparation saves weeks of back-and-forth.
Here are three immediate steps to take:
- Register your LLC with your Secretary of State.
- Apply for a free Employer Identification Number (EIN) on the IRS website.
- Request the food facility inspection checklist from your local health department.
Step 3: Protect your business with the right insurance
Your business needs several layers of protection. You should consider a package that includes general liability, commercial property, and commercial auto insurance. General liability covers customer injuries, while property insurance protects your expensive equipment from theft or damage.
Get the right coverage amounts
For general liability, a $1 million policy is standard and may cost $500 to $1,500 annually. Your refrigerated van is a major asset, so do not skimp on auto coverage. A personal policy will not cover business use. You need a commercial auto policy, which can run $2,000 to $5,000 per year.
If you plan to hire employees, you must also get workers’ compensation insurance. This covers their medical costs and lost wages if they get hurt on the job. Also, look for an agent who understands food production. Providers like The Hartford or Hiscox often have relevant experience.
Here are three immediate steps to take:
- Request quotes for a $1 million general liability policy.
- Confirm with an agent that your commercial auto policy covers a refrigerated delivery vehicle.
- Ask potential insurers if their policies cover equipment breakdown and product spoilage.
Step 4: Find a location and buy your equipment
Find the right facility
You should look for a warehouse or light industrial space between 1,000 and 2,000 square feet. Check that the local zoning allows for manufacturing or food production. A mistake some owners make is to overlook the floor. It must support heavy equipment and have proper drainage for water runoff.
When you negotiate your lease, ask about a Tenant Improvement (TI) allowance to help cover the cost of plumbing or electrical upgrades. A three-to-five-year lease term gives you stability as you build your customer base. Landlords are often more flexible on longer leases.
Purchase your core equipment
With a location in mind, you can select your machinery. Your ice maker is the heart of the operation. Look at models from brands like Manitowoc or Hoshizaki that can produce at least 1,000 pounds of ice per day to meet initial demand.
Your walk-in freezer must hold a temperature of -10°F or colder to keep the ice from clumping. For bagging, you can start with a manual bagger and heat sealer. An automatic system is faster but represents a much larger upfront investment.
You can find new and used equipment from local restaurant supply dealers. Buying used can save you 40-60%, but make sure you get a warranty or have a technician inspect it first. This precaution can save you from costly repairs down the line.
Here are three immediate steps to take:
- Identify three potential locations zoned for light industrial use.
- Request quotes for a 1,000 lb/day ice maker from two suppliers.
- Ask potential landlords about their policy on tenant improvements for floor drains and electrical work.
Step 5: Set up your payment processing
Most commercial clients like restaurants expect Net 30 payment terms, so you will invoice them monthly. For event sales or new customers, you should require payment upon delivery. This policy protects your cash flow while you build trust with your clients.
You need a flexible way to accept payments, especially on the road. Many processors charge between 2.5% and 3.5% per transaction, plus monthly fees. Look for a solution with transparent pricing and no long-term contracts or extra hardware costs.
For an ice business that needs to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit and digital wallets directly through your smartphone - just tap and done. At just 1.99% per transaction with no hidden costs or extra hardware needed, it's particularly useful for on-delivery payments.
Getting started is straightforward:
- Get Started: Download JIM app for iOS
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers
Here are three immediate steps to take:
- Define your payment terms for commercial accounts versus one-time sales.
- Compare the transaction fees and monthly costs of at least two payment processors.
- Download the JIM app to see how it works for on-the-go sales.
Step 6: Secure your funding and manage your finances
The SBA 7(a) loan is a popular choice for startups. Lenders typically want to see a strong business plan and a credit score over 680. For an ice business, loans often range from $50,000 to $150,000 to cover equipment and initial costs.
Another route is equipment financing. This type of loan specifically covers your ice maker, freezer, and van. Approval is often faster because the equipment itself serves as collateral. This frees up other capital for operations.
Many new owners focus on big-ticket items and run out of cash for daily operations. You should budget for at least six months of working capital. This means having $20,000 to $40,000 set aside for rent, fuel, and marketing before you have steady income.
While business grants exist, they are highly competitive and less common for this industry. Your best bet is to focus on local economic development programs. The bulk of your funding will likely come from loans.
Here are three immediate steps to take:
- Contact your local Small Business Development Center (SBDC) for help with your loan application.
- Calculate your working capital needs for the first six months of operation.
- Request quotes from at least two lenders for equipment financing.
Step 7: Hire your team and set up operations
Build your core team
Your first hire will likely be a Delivery Driver. This person is the face of your business, so look for someone reliable with good customer service skills. Expect to pay between $17 and $25 per hour. A Production Assistant will run the ice maker and bagger, a role that typically pays $15 to $20 per hour.
A mistake some new owners make is to hire a driver without a clean driving record. This can cause your commercial auto insurance rates to skyrocket. Always run a background check and review their driving history before you make an offer.
Establish your daily operations
Since packaged ice is food, your employees will likely need a Food Handler’s Card. These are usually available online for under $15 and take about two hours to complete. For scheduling, an app like Homebase or When I Work helps manage shifts and track hours without manual spreadsheets.
As you grow, a good benchmark is to have one full-time employee for every $100,000 to $150,000 in annual revenue. In the beginning, one driver can often handle production and deliveries until you build a steady client base of 15-20 regular accounts.
Here are three immediate steps to take:
- Draft job descriptions for a Delivery Driver and a Production Assistant.
- Check your state and local requirements for a Food Handler’s Card.
- Create a trial account with a scheduling app like Homebase to see its features.
Step 8: Market your business and get customers
Your first customers will likely come from direct outreach. Focus on high-volume users like restaurants, bars, and construction sites. A single restaurant can represent $200 to $500 in monthly revenue, so landing even a few clients provides a solid base.
Build your online presence
Set up a Google Business Profile immediately. This makes you visible on Google Maps when someone searches for "ice supplier near me." Many new owners skip this, but a professional online listing builds instant credibility with potential customers who vet you online.
A simple one-page website with your phone number, service area, and pricing is also effective. You can also build relationships with event planners and caterers. They can become a consistent source of referrals for weddings and corporate functions.
Use direct sales
With your online presence set, it is time for direct sales. Walk into local businesses during their off-hours, like mid-afternoon for a restaurant. Introduce yourself and leave a price sheet. This personal touch often works better than cold emails.
Here are three immediate steps to take:
- Create and verify your Google Business Profile with photos of your van and bags.
- Develop a list of 20 local restaurants and construction companies to contact.
- Design a simple price sheet with your contact information to leave with prospects.
Step 9: Set your pricing and profit margins
Choose your pricing model
Most of your revenue will come from per-bag sales. A standard 10-lb bag of ice often sells for $2.50 to $4.00 for one-time deliveries. For regular commercial clients, you can offer contract pricing, which might lower the cost to $2.00 per bag for a guaranteed weekly volume.
You can also add a flat delivery fee, perhaps $10-$20, or build that cost into your per-bag price. Some businesses offer free delivery for orders over a certain amount, like $50, to encourage larger purchases.
Calculate your profit margins
Your cost to produce one bag of ice, including water, electricity, and the bag itself, should be between $0.30 and $0.50. This gives you a gross margin of over 80%. A place where new owners often get tripped up is forgetting to factor in delivery costs, which can eat half your profit.
To find your true profit, subtract fuel, vehicle maintenance, and driver wages from your gross margin. After all expenses, a healthy net profit margin is between 20% and 40%. To find out what competitors charge, call them and ask for a quote for an event or a new restaurant.
Here are three immediate steps to take:
- Calculate your cost per bag by adding up your utility and packaging expenses.
- Call two local competitors to get their price sheets for commercial accounts.
- Create a draft price list with separate rates for one-time and contract customers.
Step 10: Maintain quality and scale your operations
You can use the International Packaged Ice Association (IPIA) standards as your quality benchmark. Their guidelines cover everything from water testing to sanitation. Adherence shows customers you are serious about safety and professionalism.
To measure service quality, track your on-time delivery rate and aim for 99% or higher. You should also log any customer complaints. A rate below 1% of total orders shows you are on the right track.
Plan your growth
A common mistake is to expand too fast. You should only add a second delivery driver once you secure 20-25 regular accounts or your first driver consistently exceeds 40 hours per week. This ensures the revenue supports the new hire.
When you regularly sell over 80% of your daily ice production, it is time to invest in another ice maker. For route management, software like Route4Me becomes useful once you have over 30 clients. It helps optimize delivery paths to save fuel and time.
Here are three immediate steps to take:
- Review the quality and safety standards on the IPIA website.
- Create a simple log to track your on-time delivery percentage and any customer complaints.
- Start researching a second ice maker once you consistently sell 80% of your daily capacity.
Starting an ice business is about more than just making ice; it's about reliable service. Remember that consistent quality and on-time delivery build the trust that turns one-time buyers into loyal clients. You have the roadmap, so go build your business one delivery at a time.
And as you make those first sales, a simple payment solution helps. JIM turns your phone into a card reader to accept payments on the spot, with no extra hardware and a flat 1.99% fee. It keeps your cash flow simple from day one. Download JIM.
