Marshmallow Business Plan, With a Projection

A marshmallow business plan is a plan for a cheap ingredient and a busy December. A gourmet marshmallow has about 12 cents of gelatin, sugar, syrup and vanilla in it; the cost is in the whipping, setting, cutting, dusting and boxing, and in the box. The year's money comes in winter, when people buy hot cocoa kits and gifts, with a smaller bump for Valentine's Day and s'mores in summer. In the example below, a marshmallow maker in Connecticut sells boxes direct and to shops, hot cocoa kits and s'mores kits, and ends an established year about $19,800 ahead on $66,400 of sales, with every hour paid at $20. Below is a description example, each part of the plan, the year month by month, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: the marshmallows, the flavors, who buys, the goals.
• Cost a box: marshmallows at about 12 cents each, the box and label, the minutes, the fees.
• Make big batches: a full sheet pan halves the time a box takes.
• Direct boxes earn about 59%; shops about 32%.
• Kits sell for more than their parts: cocoa mix and graham crackers cost little.
• Plan for December, and buy boxes and gelatin before the rush.
• TaroStack keeps the gelatin, sugar and boxes counted and makes kits from what's on the shelf. More below.

Part 1: the business description

Litchfield Hills Marshmallow Co., a made-up marshmallow maker in Torrington, Connecticut, I use in these examples, writes:

Litchfield Hills Marshmallow Co. makes small-batch gourmet marshmallows, vanilla bean, salted caramel, peppermint and maple, in a shared commercial kitchen, and sells them in boxes, hot cocoa kits and s'mores kits online, at markets and through about 25 gift shops and cafés. Its aim is to sell 300 boxes a month at its December peak.

Part 2: what each sale costs

A full sheet pan makes 96 marshmallows from about $11 of ingredients and 40 minutes of work, so a marshmallow costs about 12 cents.

The box costs more than the marshmallows in it. The making time halves with a full sheet pan instead of a 9-by-13 pan, which is why batch size matters more than the price of sugar. How to cost any confection by the batch is in candy business plan.

Part 3: customers and prices

In December the direct boxes bring $2,133 of the $5,122 of contribution, the hot cocoa kits $1,372, the s'mores kits $936 and the shops $681. A shop sells your box for about $14 and pays $7; the shops sell the most for the least, and they're where new customers find the name. Wholesale pricing is in how to price handmade items for wholesale.

Part 4: the year, month by month

Fixed costs are $1,295 every month: the shared commercial kitchen ($700), market fees ($200), the website and online shop ($50), insurance ($60), ads ($250), and software and card fees ($35). Month 1 is January; this is a year once the shops and markets know the name:

The year's sales are $66,378 and the profit $19,799, with every hour paid at $20. October to December bring 38% of the year's sales, so boxes, jars and gelatin are bought in September. How to plan stock for a season like this is in seasonal inventory.

Part 5: the startup budget

A new maker's first year starts smaller than this one. At the example's pace, the $4,250 spent before working cash is earned back by May of an established year.

Get the template

Download the marshmallow business plan workbook. Four sheets: your boxes and kits with price, variable cost and December's volume; the year, month by month, with sales, profit and cash, and month 1 set to January; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Four flavors made in sheet pans, boxes and jars bought by the case, cocoa mix and graham crackers for kits, 25 shops ordering before the holidays, and a December when everything sells at once. A notebook can't say how many cocoa kits the jars and marshmallows on hand allow, or whether there's enough gelatin for the week before Christmas.

How TaroStack does it

TaroStack keeps the gelatin, sugar and boxes counted and makes kits from what's on the shelf.

Batches from recipes. Each flavor is a recipe, so a batch takes the gelatin, sugar and syrup off stock, gets a lot and a date, and is costed from what they cost.

Kits from what's made. A hot cocoa kit is a recipe of cocoa mix, eight marshmallows, a jar and a tag, so assembling kits takes them off stock, and "what could I make right now" says how many the shelf allows.

Ready for December. Boxes, jars and gelatin come up on a reorder list in days of cover, with each supplier's lead time, so they're ordered before the rush, and each shop's order is a sales order on one picking list.

Recipes, batches, reorder lists and sales orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

Is a marshmallow business profitable?

It can be. In the example, a marshmallow maker ends an established year about $19,800 ahead on $66,400 of sales, with every hour paid at $20 and December the biggest month.

How much does it cost to make gourmet marshmallows?

In the example, about 12 cents a marshmallow in ingredients, and $4.89 for a box of nine sold direct, with the box, making time and card fees.

How much should I sell gourmet marshmallows for?

In the example, $12 for a box of nine direct, $7 to shops, $18 for a hot cocoa kit and $22 for a s'mores kit.

Can I sell homemade marshmallows?

That's a state question: some states' cottage food rules cover candy, so check yours, and the label still needs ingredients, including the gelatin. The example uses a shared commercial kitchen. How to start is in how to start a cottage food business.