Value Added: An education in shaved ice

Thomas Heath
Reporter June 12, 2011

When my family could not afford my first choice for high school, I went to a cheaper school.

Not Adam and Jonathan Holland. The resourceful brothers started a business to help their parents cover the steep tuition at the elite Landon School in Bethesda.

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade. View Archive

These young capitalists, 15 and 14, are chief executive and chief operating officer of AJ’s Hawaiian Iceez, an ice-shaving enterprise (think snow cones) that expects to gross about $50,000 this year. The boys’ profits will run to about $25,000.

The brothers, who live in Prince George’s County, donate some of that money to charity. The rest goes toward tuition ($31,000 per student) and toward helping repay their parents for ice machines, a trailer and a truck.

The parents, LaShawne and Robert Holland, supervise and help with the accounting. Sister Zoe, 12, who attends Norwood (tuition in excess of $27,000), also pitches in.

“You have to make the sacrifice in order to reap the reward,” Adam said last week, talking on the phone while on his way to a football practice. “The people out playing ball aren’t making the money or getting the experience I am getting.”

Four-year-old AJ’s started slowly but grossed $30,000 in 2009 and $40,000 last year. Every weekend from April through October (and on Fridays in the summer), the Hollands hook up their custom-made trailer or portable ice machines and head to county fairs, art festivals, music jams and any other event at which people are gathered during hot weather. They do 40 to 50 events a year.

“We like it hot,” says LaShawne, the chief financial officer at a local nonprofit group. She comes from a family of entrepreneurs; her grandfather started the first black-owned grocery store in Charles County.

Robert is a manager at Raytheon UTD in Springfield. The parents schedule their workweeks such that each one has every other Friday free to help their sons. Cousins, uncles and grandparents also pitch in.

Already, the boys have gained some fame. They are Black Enterprise 2011’s young entrepreneurs of the year. President Obama wrote them a letter, honoring their enterprise. Adam is slated to speak on entrepreneurism at Morgan State University this summer.

The business started four years ago, when Rob and LaShawne called a family meeting to discuss the growing tuition bills.

“We were very open with them,” Rob said. “We said we would like to keep you guys at Landon and would like your sister to attend Norwood.”

Rob makes a six-figure income, and LaShawne does well. But the after-tax cost of the children’s educations was approaching $100,000 with transportation (it’s nearly two hours each way between home and school), books, sports and other stuff.

Adam and Jonathan didn’t want to leave Landon, so they came back a few weeks later with an idea: How about a shaved-ice business?

They loved the Clayboys Shave Ice cart, which is a staple in downtown Bethesda and at Landon’s summer camp.

“They enjoyed the product, saw the concept and figured it could be fairly easy to duplicate,” Rob said.

The husband-and-wife entrepreneurs, who dabble in real estate and other small businesses, delved into the subject. They researched everything, including plastic cups and the price of ice-shaving machines: $1,200 for a portable one. They found flavored syrup made in Hawaii: $20 for 32 ounces, which makes 10 gallons.

They borrowed from their retirement savings to cover $4,000 in start-up costs and later to pay for a $12,000 trailer with freezer, air conditioning and two service windows. They bought a used Dodge Ram pickup for $1,200 to haul ice and pull the trailer.

They bought coolers, a canopy, tables and chairs. They researched what other shaved-ice vendors charge. They found out how to buy annual permits from county health departments. An icemaker in Waldorf sells them 10-pound blocks of ice for $1.10 each. LaShawne buys $2 million in liability insurance for less than $400 a year.

Even with overhead, the margins are rich. A single $3 serving costs 25 cents for cups and for ice. The flavoring may add another quarter or so. With little or no labor costs — Landon friends and the boys make about $10 an hour — that still leaves a hefty profit margin of 50 to 60 percent, according to LaShawne.

When I referred to their “snow cone business,” Adam corrected me. Snow cones, he said, are crushed ice cubes. Shaved ice, known as “shave ice” in Hawaii, has a different consistency and holds the juice without letting it sink to the bottom.

AJ’s Hawaiian Iceez filed as a limited liability corporation in the summer of 2007. A and J stand for the boys’ initials, and “z” is for Zoe. Hawaiian is the source of syrup.

The kids invented the names: Tom and Cherry, Purple Rain, Adam’s Apple, Ballin’ Banana.

The prices are $3 for a small four-ounce (the biggest seller); $4 for a medium six-ounce and $5 for a large 12-ounce. Blazing Blue Raspberry is the most popular choice.

AJ’s started slowly, earning $11,000 in 2007. The family had one ice-shaving machine, a tent canopy and tables, chairs and coolers. They researched newspapers, weekend guides, billboards and Web sites to scope out the best opportunities.

Antique-car shows were duds because they are full of adults who bring their own refreshments. Birthday parties lack scale.

Country fairs and large outdoor events such as art festivals are hits because they attract younger crowds, especially in hot weather.

The biggest home run for AJ’s has been downtown Baltimore’s Artscape, billed as the largest arts festival in the country, covering 12 city blocks. The vendor fee, at $3,000, is steep but worth it; AJ’s grossed $8,000 at last year’s Artscape.

After earning $30,000 in 2009, the Hollands bought a used, custom-made concession trailer for $12,000, including windows, air conditioning and space for a shaved-ice maker. That gave them two ice machines, one in the trailer and another under the tent, allowing them to serve two events at once. They grossed $38,000 in 2010.

They have a Facebook fan page and a Web site. They have talked to a Ballston consultant about franchising the business. They expect to gross about $50,000 this year and are reinvesting some of that in four new portable ice shavers, at a cost of $5,000.

I stopped by the farmers market at the Agriculture Department parking lot early this month, where AJ’s had set up for business among fruit vendors, popcorn makers and bakers.

It was hot, and tourists were beginning to trickle in from the Mall a block away. Under a white canopy, Adam manned the front counter, taking orders and pouring the flavors. Jonathan was pulling ice blocks from coolers and shaving the ice.

Rob was hovering and handling the money. All three were decked out in tie-dye AJ’s Hawaiian Iceez T-shirts.

Rob later estimated that they went through 30 blocks of ice. With six to eight servings per block, that’s about 200 slushies. They might have grossed $1,000.

That would have paid almost two years of tuition at my first choice for high school — in 1968.

Follow me on twitter at addedvalueth.

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