Thoughts on opening a LFS..??

[mark2781]

Hello all! I just wanted some thoughts on opening a LFS/online and if in 2022 is it a good idea or would it be an up hill battle? The store would be fully funded. Would be only saltwater fish, dry goods, aquarium tanks, equipment and maybe coral. Any opinions would be appreciated!

Location: Arizona , Phoenix-Gilbert area.

 

[The Farmer]

I would wait and see where the Lacey bill is going

 

[BanjoBandito]

As someone that owns and operates a retail store (not fish related) with 2 locations and knowing a couple local owners here I can tell you a couple things -

1. PROFIT - shipping is a bear, but if you are going to get into fish/coral you'll need a good reliable transhipper. Box costs are around 400 here in western PA but have been creeping into the 600 range.

2. PURE PROFIT - you'll need to be fraggin' to make real money on corals. The overhead alone is daunting but without mother colonies you'll be stuck buying from other vendors for awhile.

3. Fish and coral are extremely delicate in that situation - you need to do something to seperate yourself....like QT your fish prior to purchase. So people could come in, request a fish then you would QT it for them if they wanted.

4. We are entering a "bear market" it's going to be extremely tough to find decent rent and customers for awhile, but you are in a good area. My stores are in the boonies.

5. Establish a business line of credit for the first couple months. It'll cost the loan origination fee but will allow you to siphon money out as needed. Don't expect to be profitable out of the gate.

6. Aquariums suck. The mark up is junk and getting them shipped/arrival in one piece can be tough. Used goods are viable. Do not snub your nose at selling lightly used gear. A good eye for equipment can go along way to help margins.

7. Selling online seems like it's the way of the future (I know, I'm 10 years too late). For maximum returns you may want to invest in this down the road.

8. EMPLOYEES. It's terrible to find them and most of them are "unemployable" in my opinion currently. The American productivity advantage has withered away.

9. Watch how you set it up, you may want to have a corporation, LLC, sole propriety setup...talk to an accountant.

10. FIND OUT WHAT YOUR BOTTOM LINE IS - what do you need to make a month in revenue to be successful? Do a business plan. Find out what other stores are doing. Find store(s) you really like, that are successful, and ask them how they do it and/or copy them. Original ideas don't happen much in retail.


If you have any other questions feel free to PM me. I don't know the ins and outs of running a LFS, but I know quite a bit about running a business successfully.


GOOD LUCK!

 

[Spare time]

You would definitely need coral if its a saltwater store. People buy far more coral than fish.

Also, you need to remember that its not a business that will make you lots of money. It is more of a business out of passion rather than a money making machine.

Its also quite an uphill battle until you have a sustainable customer base. Most people already have their favorite lfs. Many shop around, but you need to have a reason to go to your store rather than the others (be that your relationship wiht the customers, price, selection, etc.)

 

[Lowell Lemon]

Consider a tank maintenance side of the business and possible fabrication of your own acrylic aquariums. You have good supply of acrylic cell cast material close by and acrylic tanks are easier to get insurance for on the fabrication end. I can help you with equipment needs and technology if you go that way. You could build out your own store and save money over buying tanks unless you are satisfied with dollar per gallon tanks from Petco.

 

[Cell]

If it is only saltwater fish and no coral, the best way to set yourself apart is by offering QT-medicated fish.

 

[nereefpat]

Apart from the usual advice,

Have you worked in a LFS store before? If not, I would spend a year or so doing that part time.

 

[mark2781]

As someone that owns and operates a retail store (not fish related) with 2 locations and knowing a couple local owners here I can tell you a couple things -

1. PROFIT - shipping is a bear, but if you are going to get into fish/coral you'll need a good reliable transhipper. Box costs are around 400 here in western PA but have been creeping into the 600 range.

2. PURE PROFIT - you'll need to be fraggin' to make real money on corals. The overhead alone is daunting but without mother colonies you'll be stuck buying from other vendors for awhile.

3. Fish and coral are extremely delicate in that situation - you need to do something to seperate yourself....like QT your fish prior to purchase. So people could come in, request a fish then you would QT it for them if they wanted.

4. We are entering a "bear market" it's going to be extremely tough to find decent rent and customers for awhile, but you are in a good area. My stores are in the boonies.

5. Establish a business line of credit for the first couple months. It'll cost the loan origination fee but will allow you to siphon money out as needed. Don't expect to be profitable out of the gate.

6. Aquariums suck. The mark up is junk and getting them shipped/arrival in one piece can be tough. Used goods are viable. Do not snub your nose at selling lightly used gear. A good eye for equipment can go along way to help margins.

7. Selling online seems like it's the way of the future (I know, I'm 10 years too late). For maximum returns you may want to invest in this down the road.

8. EMPLOYEES. It's terrible to find them and most of them are "unemployable" in my opinion currently. The American productivity advantage has withered away.

9. Watch how you set it up, you may want to have a corporation, LLC, sole propriety setup...talk to an accountant.

10. FIND OUT WHAT YOUR BOTTOM LINE IS - what do you need to make a month in revenue to be successful? Do a business plan. Find out what other stores are doing. Find store(s) you really like, that are successful, and ask them how they do it and/or copy them. Original ideas don't happen much in retail.


If you have any other questions feel free to PM me. I don't know the ins and outs of running a LFS, but I know quite a bit about running a business successfully.


GOOD LUCK!

Thank you for the words of wisdom! I will definitely be in touch if I have questions through this process!

 

[mark2781]

Apart from the usual advice,

Have you worked in a LFS store before? If not, I would spend a year or so doing that part time.

No I haven’t but I have been in the hobby off and on for years and was looking to start a second career (passion). Your idea of working part time in a LFS is something I think would be beneficial thank you!

 

[flashsmith]

As a small business owner myself. Good luck on getting a small business loan of any kind. Just starting out trying to get a line of credit in your business name isn't going to happen with no financial history on the business. You'll have to use personal until you get some kind of numbers going. It took me 3 years to get a business line of credit to buy equipment. Good Luck

 

[mackbamf]

If you do start one up I would love to hear about it. I am in Chandler and always driving around the east valley to see what the other LFS have to offer.

 

[Lowell Lemon]

As a small business owner myself. Good luck on getting a small business loan of any kind. Just starting out trying to get a line of credit in your business name isn't going to happen with no financial history on the business. You'll have to use personal until you get some kind of numbers going. It took me 3 years to get a business line of credit to buy equipment. Good Luck

Almost all credit lines now require the principals to guarantee the credit line personally. I am president of a corporation and every credit company has now pierced the corporate veil. Read your contracts from the lender.

 

[BanjoBandito]

Almost all credit lines now require the principals to guarantee the credit line personally. I am president of a corporation and every credit company has now pierced the corporate veil. Read your contracts from the lender.

This is good advice, as an owner of two corporations we are constantly under attack for a signature on a "personal guarantee" which is against everything a corporation is for. Be mindful of what you sign and don't sign. A good accountant is worth his weight in acros.

 

[flashsmith]

Almost all credit lines now require the principals to guarantee the credit line personally. I am president of a corporation and every credit company has now pierced the corporate veil. Read your contracts from the lender.

Yes, But as a business starting out with no customer base to speak of and no sales history you're not going to get a dime either way. It's best to take a personal loan of some kind without even mentioning it's being used as business capital. I started with a 401k loan. Go to the SBA and they'll flat out tell you no unless you meet certain criteria. Unless you have a wealthy family member giving you seed money it's not that easy. There's a reason why 90% of all small businesses fail in their first year. That's why banks won't touch you until you proof of income.

 

[mark2781]

If it is only saltwater fish and no coral, the best way to set yourself apart is by offering QT-medicated fish.

As a small business owner myself. Good luck on getting a small business loan of any kind. Just starting out trying to get a line of credit in your business name isn't going to happen with no financial history on the business. You'll have to use personal until you get some kind of numbers going. It took me 3 years to get a business line of credit to buy equipment. Good Luck

As a small business owner myself. Good luck on getting a small business loan of any kind. Just starting out trying to get a line of credit in your business name isn't going to happen with no financial history on the business. You'll have to use personal until you get some kind of numbers going. It took me 3 years to get a business line of credit to buy equipment. Good Luck

The process of finding finances for any small business right now in these times I know would be stressful. I have a support staff behind me and thankfully savings that we have built up from previous jobs to hopefully get this off the ground! I’m glad this community is passionate about this hobby and small business as i’am.

 

[KIRBLIT]

I would also recommend to sell salt, test kits and other essentials at or cheaper than online prices. This is somewhere that many LFS gouge people and they really shouldn't because it keeps people coming in to look around. Your good profit margins will probobly be on the livestock anyway and impulse buys on coral are always a possibility with foot traffic.

 

[HuduVudu]

@mark2781 Aqua Touch was successful for years. They catered to a higher end customer. Kingsley (on Baseline in Tempe/Mesa) isn't around but I guess his kids are, is from Sri Lanka and had/has family that ran a collection station. Not sure how that is working now, but might be an interesting avenue to persue.

One thing I learned about successful business is that you have a customer and then you have people that buy stuff. ALWAYS treat your customers well. They are always right. The others let them buy from you if they don't make things difficult. If someone tells you that they are your customer they are not ... ignore them. You will get a lot of this type of person when you first start out. They are usually maintenance people. Before you start make sure that you have a VERY clear idea of whom your customer is. Never forget them. If you say everyone is your customer you are doing it wrong, and you will succumb to what most stores succumb to ... people that don't help you stay in business. People that are NOT your customers won't support you when you need them to. They are fair weather friends.

Most stores end up needing a maintenance arm to keep the money rolling. That area has grown a lot with affluent people from CA, so this might have changed. You will need to decide up front if you want to incorporate that into your business. I would suggest you make the decision before you open the store as to not be half fast about it.

My 2 cents.

 

[ZoWhat]

@mark2781 Curious at what dollar figure YOU THINK it will cost you for initial setup costs

 

[bnord]

your suggestions that this would be self funded

you also say this is your passion

if this is so, then it seems to me that you need to make sure that if you will operate at a loss for a significant period it will not crush you or family .

all the comments above are to the tee, especially whose business will you be draining from and how will you be taking it - end of There Will be Blood comes to mind?

seems that the big boom from covid lock ins has cooled down to those who are working from home office (for now) and need to make sure that the trends are in your favor - that said, when Bertram Capital decides its worth investing in, it just might be.

Other notion is the idea to start first in the service business, lower overhead, get to know the customers, understand niches to be exploited, less financial risk of failure. all the while starting your frag to colony farm for what will be a required source of margin for when and if you do open a store front

All in all best of luck in the decision making and if you decide, let us k now and we will all be rooting for you..

 

[Stigigemla]

There are 4 basic questions that have to be answered with yes before you even consider to start the business.

1. You.
Are you a person who likes to buy and sell?
Do you have knowledge enough about the stuff you are going to sell?
Do you have knowledge to do the bookkeeping and tax declaration?
Do you have money to set up all the stuff you need in the shop?

2. The market.
Do you have enough potential customers in the area you plan to cover?

3. Deliveries.
Do you have contact with companies for dry stuff, animals and more.
Animals is the branch that makes a lot of trouble until you have learnt how to handle them and where not to buy them.

4. Location.
You need to have a place thats not expensive and large enough to keep a reasonable wide of stock.
Are there other similar shops in the neigbourhood? If so. What can you do better than them?
Car parking.
Visibility. Customers must find your shop.
At some places you must have the same opening hours as other shops. If you rent the cellar under a supermarket or something similar. That means you have to be 2 to cover the whole week.