jimk60
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For starters I wouldn't limit my store to just fish and coral. Sell dog and cat food and supplies also. Seems more stable and your bringing in potential new customers when they see your fish and say that looks cool.
To open an LFS... Or to not?
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Rispa
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This. I haven't worked for a fish store but I did work for a bird store. They made most of their money on dry goods. You've got to find the big wholesalers and be able to hit their minimums and everything.
Also location location location. Be near a neighborhood, school, or business district, so people see your store and feel like wandering in.
It kind of feels like things are falling into place for me starting up one lol. It won't be for years, but I'm starting to see the pattern unfold.
SashimiTurtle
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I would rather buy coral from one of my local LFS... There are two sort of close(one is two hours and I have him ship coral to me, FedEx is cheaper than half a tank of diesel in my truck) that I like buying from. Really helpful and personable. They make you feel like a friend and not just another customer. To me, these qualities are what makes an LFS shine, or go out of business. If your experience in an LFS is no better than an online purchase, then why spend your time driving up to the store when you could purchase that coral online? Build a solid reputation for helping out and being friendly, and when you open your storefront, keep up with your online presence. The people that bought from you online and dealt with you in local forums, facebook, ect... will be the ones to visit your store. The LFS isn't dead, people just haven't adapted to the online market.
Cool idea and thinking out of the box if it is part of your business model, but in most cases you are jumping into another category of the business. You are now dealing with animals, most states require a pet dealers license, additional permits, and other requirements that must be met. This doesn't include your cost for purchasing the animal, housing, food, shots, additional inventory costs, etc.
We have 8 labordoodle puppies at the house right now and believe me, I wouldnt want to deal with that everyday! Lol.
Michael Naegeli
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I love ambitious- Go getters. I am one myself. I too have had an epic Love for the ocean and marine biology all the way to the everyday Reefing hobby for 23 years now. Ever since I first went snorkeling down at the Sombrero Reef in Marathon, fl Keys. I dove rt in full bore. Was my life’s ambition to spend my life working with and advocating the protection of our precious Reefs. I have spent many years indulging in the amazing fruits of our Oceans. I’ve also been very close to many other peeps w similar passion. I know of 11 friends that took their passion to the next level and actually did open up store fronts in the Sarasota fl area. I was wholeheartedly determined to help each and everyone of them succeed in their endeavor.
Rispa
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Oh also check out Aquarium Co-Op's YouTube channel. He does fish store tours which is valuable for ideas. He also did a video about how he started his own store It's long, but very worth watching. Also gets one about a store that has heavily planted tanks and consequently doesn't do water changes.
Greybeard
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I've seen two friends open a retail business... one, a LFS, the other, a gun shop. You'd think there was little similarity between the two. You'd be wrong.
The gun shop owner rented a decent little shop, in a strip mall, in a small Missouri town where hunting and shooting are popular. Stocked it with quality firearms and accessories, priced them reasonably. In two years, he'd lost a quarter of a million dollars, and closed his doors. On the positive side, my gun safe is full of excellent deals I got from him during his short run
The LFS owner initially opened in a location far too small to support him, and soon realized it. Moved an hour down the road, to a bigger market. Over the next year, despite his best efforts, the store slowly emptied his savings. He didn't make it 18 months. The very last transaction that store did was to take delivery of my custom aquarium from Planet Aquariums. I met the truck in the parking lot, we transferred the tank to my truck, and handed the keys to the shop over to the landlord.
Retail is a tough business, always has been, and with the pervasiveness of online shopping these days, it's getting more so with every passing day.
I've long dreamed of opening a shop of some sort in my retirement years... Something to keep me busy in my old age. These days, I think I'll just piddle around my workshop, enjoy my grand kids, and keep working towards my fondest goal: To have the phrase 'a well known local recluse' appear in my obituary
The gun shop owner rented a decent little shop, in a strip mall, in a small Missouri town where hunting and shooting are popular. Stocked it with quality firearms and accessories, priced them reasonably. In two years, he'd lost a quarter of a million dollars, and closed his doors. On the positive side, my gun safe is full of excellent deals I got from him during his short run
The LFS owner initially opened in a location far too small to support him, and soon realized it. Moved an hour down the road, to a bigger market. Over the next year, despite his best efforts, the store slowly emptied his savings. He didn't make it 18 months. The very last transaction that store did was to take delivery of my custom aquarium from Planet Aquariums. I met the truck in the parking lot, we transferred the tank to my truck, and handed the keys to the shop over to the landlord.
Retail is a tough business, always has been, and with the pervasiveness of online shopping these days, it's getting more so with every passing day.
I've long dreamed of opening a shop of some sort in my retirement years... Something to keep me busy in my old age. These days, I think I'll just piddle around my workshop, enjoy my grand kids, and keep working towards my fondest goal: To have the phrase 'a well known local recluse' appear in my obituary
Jboulerice
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Probably did not thoroughly read what I suggested if thats the take away...
I simply gave you similar opinions concerning physical store ownership; popularity of the hobby; and slight moral advice about implied animal deaths regarding store ownership.
And then suggested other paths to dream up that are more in line with the hobby than simply owning a store compared to the risks involved such as running a frag business in your house or donating time to local reef projects. . Sorry if you took it the wrong way but the advice is a sincere opinion knowing people who've owned stores, working in stores and helping around friends that ran frag operations from home. Usually when you start to want a business that would be a good strategy to ask someone that actually owned a store.
NeuroticAquatics
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I’ve seen a lot of established stores close in recent years. The common thread was that they did not do residential maintenance outside their LFS. I think that’s where the money is at both from service fees and the fact that those customers will likely purchase fish/equipment. If you aren’t looking to do that, then I’d be absolutely sure your local market will sustain a shop.
Michael Naegeli
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Sorry I cut short my point to have. Haha. Anyway. With the 10 peeps that did infact own shops locally there is only 2 left standing 10 yr later. The others all went down hard unfortunately. The key to operating any business is always gonna breakdown to actual capital you have to work with. Cash flow is another big factor. It can get very tough if the sales aren’t cuttin it. The amount of overhead I’m running a shop is very high... lots of loss, huge electric bills and many other determining factors. I would have loved to open a shop back in the day... I personally had kids very young and it forced my hand in not doing so. To much risk w two kiddos to feed and provide for. I went a different route and luckily it worked out very well for me. Now I just have a whole entire house filled w reeftanks. I spend Absurd $$ constantly. Feel like I am running a shop. Haha. Constant issues to deal with. I could only imagine if I did. I’m afraid I would have failed as most I know that did take the plunge did. On the other hand the two that did succeed are doing very well. With that said I’ve seen the odds real-time and am glad I didn’t go that route. Best wishes
EW_Fish
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To be honest running a garage shop is going to be your best bet. When you get a store front most of your money is coming from maint & custom builds n such. (at least that is the way it is around here) If you want to grow and sell coral maybe work with a store near you and just start to aquaculture and maybe they will deal with you for frags at a certain price.
Mikedawg
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One limiting factor affecting your business plan that I don't think has been addressed is the impact of the "closing" of several sources for fish, coral and live rock, e.g. Hawaii, Bali. I say that because some of my friends in the business are concerned about interruptions in their supply chains and the resultant inability to offer a wide variety of animals - their established customers are always wanting something new. My question is can they continue to grow their business under these conditions? And, does this factor potentially choke off new entrants in the LFS business?
As some have mentioned, before you risk your start up capital, you might want to consider working in a LFS to better learn the business end of our hobby and see what happens to the supply side. This would also give you the opportunity to better assess the demand for animals and services in your area from an insider's point of view.
Loving the hobby doesn't necessarily translate into a good business model; it is necessary but not sufficient IMHO.
Good luck and understand it is a big decision.
As some have mentioned, before you risk your start up capital, you might want to consider working in a LFS to better learn the business end of our hobby and see what happens to the supply side. This would also give you the opportunity to better assess the demand for animals and services in your area from an insider's point of view.
Loving the hobby doesn't necessarily translate into a good business model; it is necessary but not sufficient IMHO.
Good luck and understand it is a big decision.
jcl123
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Wow, I saw this topic and thought I would comment, because I worked in a LFS for 9 years from when I was 13 and could get a work permit. The first 6 months I volunteered to work for free because I was determined to work there, and they hadn't even opened yet.
But, the replies to this thread are excellent, everyone has said just about everything I wanted to say. So I will try not to repeat that, heed what people are telling you here, this is good stuff. Much of it would apply to anything you tried to do.
Here are some of my points:
- I don't think the LFS is dead, it is something affecting all retail in general, we are headed toward only having restaurants....and I am not sure what else will still be here in 10-20 years.... gas stations will probably become charging stations ;-)
- The pet industry is not about the animals, it is about profit, or at least that is the attitude you will see with people you deal with on the business side of things. There are people who care about the animals in the industry, but that is almost a separate issue.
- Also remember that retail customers, most of them, are the dumbest %$##$ out there.... sorry, just thought I would vent ;-) Seriously this will challenge you. I wanted to petition the government to require people to go through training and get a license before they could keep fish. I had the customers who would come in and literally say "I'll just wait until these fish die, and then come in and get some more, HAHAHA"....:mad:
- Me personally, I took great pride in my work. I had several hundred customers loyal to me, they were the one's who listened, and they were the one's with successful long-term aquariums. So I do take a degree of satisfaction from that impact I had on them. Many of them and their children probably are successful hobbyists to this day because of that. But, I was only able to do that because I had been keeping fish since I was 5, had 6 aquariums at home of all different types, got into fish breeding, was a member of my local fish club, etc. So they would bring me a water test and a description of what was going on, and I could rattle off a solution right away. I am not sure someone with only three years in the hobby would be able to do that. The first 3 years I was in the hobby I failed, failed, failed.... I don't even know why I kept going, my father even tried to get me to stop. Long story, even much longer than this post ;-)
- With only 3 years of experience you are at a disadvantage there, I think there are people here (myself included) with 20, 30, 40 years of experience , and they are all still learning ;-) That being said, if you have an MBA and come up with a solid business plan and approach an investor or bank, and then hire/partner with some people with more experience, you might be able to get that to work before you get there yourself.
- Attitude is everything. I think this is the most important thing to master in life and business, have the right attitude about things. It would be difficult to explain, but if you look back when you are 40 or even 30, you will know exactly what it means.
- I think it would be very difficult to make it with a single store, the only people I know who did really well had a chain of 10+ stores, and spent their time managing the managers and counting profit. So obviously that person wasn't cleaning poop ;-)
- The store I worked at is gone but our second location lives on to this day, almost 30 years later. They survived that long because one of the two guys who started it was a serious businessman and the other was not so much. It takes big stones to start a business like that, and 70+ hours a week with no vacation for years. I saw what it did to their morale and spirit.
- Get comfortable shoes, you are on your feet all day in retail and it takes it's toll
- Petco and Petsmart have wiped out many local pet stores as well as the potential for new one's in many areas, add that to the list of challenges listed in this thread. Amazingly, there is a Petsmart near me that is actually nice, has coral frags, and an OK selection of marine fish.... I was shocked.
- Almost all stores operate the livestock portion of the store at a loss, there is no profit in livestock. A neon tetra that costs $1.99 (no idea what they actually cost these days) cost the store $0.06 each from the wholesaler in lots of 100, and that is how much they need to mark up to make up for losses and overhead, and still won't make a profit. As others have said, it's the dry good and maybe services that are more lucrative.
- If I were serious about opening a LFS today, I would be sure to open it in a "rich" area full of people who can afford reef tanks, if there is such a place that does not already have a good place that you would be competing with.
- Before I took a break and went to college (I was starting to burn out anyways), I was starting to do a maintenance business on the side in cooperation with the store I worked for. Definitely a business to be had there. But the hardest part there will be managing expectations. The rich doctor won't want to hear the story about why the $3,000 worth of fish in his 180 gallon tank have Ich, he will just want it fixed.
- It is very hard to inform you about the realities of this idea and encourage you without it coming out sounding like we are discouraging you.
----------------------------------------------
All that being said, here is what I would really do. Buy a large warehouse, not a retail store, located right next to a UPS or FedEx distribution center / airport. Some towns will give you free property tax for years to start things like that. Setup hundreds of tanks in commercial fashion and become an Internet shipper of various things. But, embrace the Internet and build a robot that can roam around the warehouse floor with a camera / VR setup, and allow online customers to browse livestock and do WYSWYG (what you see is what you get), I think that is the future. Ways that you can get the benefits that a retail store gives you, but do it over the Internet. Only a matter of time before everything is adapted this way. You will try on clothes by having your body scanned and rendered, so that you can see what you would look like in the clothes before you buy them. That sort of thing.
And then there would be nothing stopping you from also doing a maintenance business on the side as well. Maybe some of your "select" customers would be given the privilege of touring your warehouse and buying things from it directly.
And yes, if we can't collect fish or coral from the wild because they are gone or outlawed, we will need massive farming to produce fish and coral in captivity to keep things going. I did mostly freshwater (Cichlids) over the years, and I can tell you there are already freshwater fish that only exist in aquariums around the world, there are no longer any wild specimens left.
-JCL
But, the replies to this thread are excellent, everyone has said just about everything I wanted to say. So I will try not to repeat that, heed what people are telling you here, this is good stuff. Much of it would apply to anything you tried to do.
Here are some of my points:
- I don't think the LFS is dead, it is something affecting all retail in general, we are headed toward only having restaurants....and I am not sure what else will still be here in 10-20 years.... gas stations will probably become charging stations ;-)
- The pet industry is not about the animals, it is about profit, or at least that is the attitude you will see with people you deal with on the business side of things. There are people who care about the animals in the industry, but that is almost a separate issue.
- Also remember that retail customers, most of them, are the dumbest %$##$ out there.... sorry, just thought I would vent ;-) Seriously this will challenge you. I wanted to petition the government to require people to go through training and get a license before they could keep fish. I had the customers who would come in and literally say "I'll just wait until these fish die, and then come in and get some more, HAHAHA"....:mad:
- Me personally, I took great pride in my work. I had several hundred customers loyal to me, they were the one's who listened, and they were the one's with successful long-term aquariums. So I do take a degree of satisfaction from that impact I had on them. Many of them and their children probably are successful hobbyists to this day because of that. But, I was only able to do that because I had been keeping fish since I was 5, had 6 aquariums at home of all different types, got into fish breeding, was a member of my local fish club, etc. So they would bring me a water test and a description of what was going on, and I could rattle off a solution right away. I am not sure someone with only three years in the hobby would be able to do that. The first 3 years I was in the hobby I failed, failed, failed.... I don't even know why I kept going, my father even tried to get me to stop. Long story, even much longer than this post ;-)
- With only 3 years of experience you are at a disadvantage there, I think there are people here (myself included) with 20, 30, 40 years of experience , and they are all still learning ;-) That being said, if you have an MBA and come up with a solid business plan and approach an investor or bank, and then hire/partner with some people with more experience, you might be able to get that to work before you get there yourself.
- Attitude is everything. I think this is the most important thing to master in life and business, have the right attitude about things. It would be difficult to explain, but if you look back when you are 40 or even 30, you will know exactly what it means.
- I think it would be very difficult to make it with a single store, the only people I know who did really well had a chain of 10+ stores, and spent their time managing the managers and counting profit. So obviously that person wasn't cleaning poop ;-)
- The store I worked at is gone but our second location lives on to this day, almost 30 years later. They survived that long because one of the two guys who started it was a serious businessman and the other was not so much. It takes big stones to start a business like that, and 70+ hours a week with no vacation for years. I saw what it did to their morale and spirit.
- Get comfortable shoes, you are on your feet all day in retail and it takes it's toll
- Petco and Petsmart have wiped out many local pet stores as well as the potential for new one's in many areas, add that to the list of challenges listed in this thread. Amazingly, there is a Petsmart near me that is actually nice, has coral frags, and an OK selection of marine fish.... I was shocked.
- Almost all stores operate the livestock portion of the store at a loss, there is no profit in livestock. A neon tetra that costs $1.99 (no idea what they actually cost these days) cost the store $0.06 each from the wholesaler in lots of 100, and that is how much they need to mark up to make up for losses and overhead, and still won't make a profit. As others have said, it's the dry good and maybe services that are more lucrative.
- If I were serious about opening a LFS today, I would be sure to open it in a "rich" area full of people who can afford reef tanks, if there is such a place that does not already have a good place that you would be competing with.
- Before I took a break and went to college (I was starting to burn out anyways), I was starting to do a maintenance business on the side in cooperation with the store I worked for. Definitely a business to be had there. But the hardest part there will be managing expectations. The rich doctor won't want to hear the story about why the $3,000 worth of fish in his 180 gallon tank have Ich, he will just want it fixed.
- It is very hard to inform you about the realities of this idea and encourage you without it coming out sounding like we are discouraging you.
----------------------------------------------
All that being said, here is what I would really do. Buy a large warehouse, not a retail store, located right next to a UPS or FedEx distribution center / airport. Some towns will give you free property tax for years to start things like that. Setup hundreds of tanks in commercial fashion and become an Internet shipper of various things. But, embrace the Internet and build a robot that can roam around the warehouse floor with a camera / VR setup, and allow online customers to browse livestock and do WYSWYG (what you see is what you get), I think that is the future. Ways that you can get the benefits that a retail store gives you, but do it over the Internet. Only a matter of time before everything is adapted this way. You will try on clothes by having your body scanned and rendered, so that you can see what you would look like in the clothes before you buy them. That sort of thing.
And then there would be nothing stopping you from also doing a maintenance business on the side as well. Maybe some of your "select" customers would be given the privilege of touring your warehouse and buying things from it directly.
And yes, if we can't collect fish or coral from the wild because they are gone or outlawed, we will need massive farming to produce fish and coral in captivity to keep things going. I did mostly freshwater (Cichlids) over the years, and I can tell you there are already freshwater fish that only exist in aquariums around the world, there are no longer any wild specimens left.
-JCL
Seminoles76
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I say go for it.
If it is your dream the pursue it. Put the work in with the required research. There are probably a million reasons why you shouldn’t.....but I wouldn’t let that line of thinking stop you.
If you do it and succeed...great! If it doesn’t work, my bet is you will be better off and more experienced when you give the next dream a go.
Believe and put the work in and see what happens!
If it is your dream the pursue it. Put the work in with the required research. There are probably a million reasons why you shouldn’t.....but I wouldn’t let that line of thinking stop you.
If you do it and succeed...great! If it doesn’t work, my bet is you will be better off and more experienced when you give the next dream a go.
Believe and put the work in and see what happens!
Your ability to be successful will depend on how well you can run a business, not run a reef. Also, your debt service... I saw somewhere that a small business is 40x more likely to be successful when started with cash than with credit. Your ability to be everything all of the time will be important - I run a small business out of my home in real estate and I am a CPA and tax professional for three months a year, car mechanic, errand runner, computer/IT guy, plumber, cleaning staff and everything else. Lastly, there are all kinds of people who run successful businesses that pay the bills and neither have saved enough for retirement nor have a succession plan to sell their business - do not be either of these people.
It took me only 2-3 years of writing software before I figured out that I wanted to work for myself. It took me another 10-12 years to fully get there. If you this enlightened already, then good... some people live a lifetime never knowing what they want.
I also figured out that employees suck. ...not all of them, but it only take a few bad ones to ruin it for the rest. Be sure you can handle the different jobs of leader, coach and manager if you want employees - you need to be all of these things, and no, they are not the same thing. I work mostly by myself but also with my kids as they are maturing who are trustworthy and hard workers. I did not mind employees when somebody else was paying them - I kinda enjoyed the coaching and leading (not so much the management), but I hated them when it was my own money that they were costing. The dynamic is different.
I you were my kid, I would totally encourage you to get your own business, but I would stress that there is nothing wrong with relocating to another part of the country and opening a McDonalds, Chick-fil-a, Realtor Office, U Haul franchise or other proven business model where you can still reap nearly all of the rewards and still have a support system. Then, retire and open a fish store where you do not care if you make any money... have fun then.
It took me only 2-3 years of writing software before I figured out that I wanted to work for myself. It took me another 10-12 years to fully get there. If you this enlightened already, then good... some people live a lifetime never knowing what they want.
I also figured out that employees suck. ...not all of them, but it only take a few bad ones to ruin it for the rest. Be sure you can handle the different jobs of leader, coach and manager if you want employees - you need to be all of these things, and no, they are not the same thing. I work mostly by myself but also with my kids as they are maturing who are trustworthy and hard workers. I did not mind employees when somebody else was paying them - I kinda enjoyed the coaching and leading (not so much the management), but I hated them when it was my own money that they were costing. The dynamic is different.
I you were my kid, I would totally encourage you to get your own business, but I would stress that there is nothing wrong with relocating to another part of the country and opening a McDonalds, Chick-fil-a, Realtor Office, U Haul franchise or other proven business model where you can still reap nearly all of the rewards and still have a support system. Then, retire and open a fish store where you do not care if you make any money... have fun then.
ZoWhat
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You got $100,000 in cash? A bank ain't gonna float you a loan for a LFS...sorry.
Starting up any small biz takes $75k-$100k for inventory, remodeling an empty retail space, marketing, payroll, insurance...and about 100 other things
If you're lucky you may actually make a salary by 2nd year. 1st yr you'll be hemorrhaging cash so you'll need family or a girlfriend to pay your living expenses cause you'll be broke beyond you wildest dreams.
I've got dozens and dozens of small biz ideas but dont have $100k to start any of thrm.
That's why the rich get richer bc they can front cash investments :mad:
Us working class shleps all have great ideas for a biz, the determination to work hard....but zero $$$ to draw from to make it successful. The rich have the "bank" to start really cool biz's. Money we don't have, so we got no-shot.
Rich get richer.....we work for others, pay taxes and die fairly poor when the State in which you live in, steps in and takes 50% of your wealth in healthcare Medicare costs.....
My dad had $500k saved when he retired, got Parkinsons. By the time he passed away....State of Ohio took all but $80k from my Mom.
Its depressing and sad...
Starting up any small biz takes $75k-$100k for inventory, remodeling an empty retail space, marketing, payroll, insurance...and about 100 other things
If you're lucky you may actually make a salary by 2nd year. 1st yr you'll be hemorrhaging cash so you'll need family or a girlfriend to pay your living expenses cause you'll be broke beyond you wildest dreams.
I've got dozens and dozens of small biz ideas but dont have $100k to start any of thrm.
That's why the rich get richer bc they can front cash investments :mad:
Us working class shleps all have great ideas for a biz, the determination to work hard....but zero $$$ to draw from to make it successful. The rich have the "bank" to start really cool biz's. Money we don't have, so we got no-shot.
Rich get richer.....we work for others, pay taxes and die fairly poor when the State in which you live in, steps in and takes 50% of your wealth in healthcare Medicare costs.....
My dad had $500k saved when he retired, got Parkinsons. By the time he passed away....State of Ohio took all but $80k from my Mom.
Its depressing and sad...
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You better have another 200k in cash to live on before you start to make any money. The rich can do this as well.
Greybeard
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I've got a friend, started selling cast lead bullets out of his garage. Now runs a very successful company, nice facility, employs a fair sized staff. Don't know that I'd call him 'rich'... the definition of that depends a great deal on where you're standing, but he's quite comfortable, financially. Another friend, building custom leather holsters, and living on the beach in Florida. I, myself, am quite comfortable as an independent industrial software engineering contractor, from my home, in the woods of rural Missouri.
The American dream lives on... but a retail store would not be the path I'd go to pursue it.
I wrote these two items in other threads:
"I've had a couple LFS ask me to buy into their businesses personally (I'm an investor for one of the largest fund companies in the world). When I looked at their books, I felt terrible for these people. The owners work 80-100 hours a week and make less than the nearly minimum wage employees do (on an hourly equivalent basis), while taking all of the risk. All of these eventually failed, by the way.
I would say that in most markets, an LFS is probably one of the worst businesses I have ever seen. They have relatively large start-up costs, razor-thin margins, a lot of overhead, and enormous risk - particularly on live inventory. Quite honestly they probably only survive (for the ones that do) because of the inept people in the hobby. I've had the fish in my current take for several years - I don't kill fish. Same for corals. In the last two years I have purchased salt, two-part, carbon, gfo, and replacement T5 bulbs - that's it. Stores don't survive on people like me, they survive on the person that can't keep a fish more than two months, and the person constantly upgrading/changing equipment because they are convinced their equipment is the problem rather than poor husbandry. And this isn't a knock on newbies...we've all been there. But if you've been in the hobby more than a year, you should not be having major issues. Grocery stores can survive on razor-thin margins because the inventory has velocity, i.e. the inventory constantly turns because you eat everyday. Most competent hobbyists don't buy much product."
"I have a 60 gallon SPS/LPS tank, so your cost should be lower. Here is what I spend:
Annually change 4 T5 bulbs = $80 (ATI)
Annual salt costs =$130 (10 gallons changed weekly, I use Instant Ocean)
Annual two-part costs =$60 (ESV)
Annual GFO = $40 (BRS)
Annual carbon = $20 (BRS)
Annual electricity =$240
Annual food = $20
Annual testing = $40
Bleach, Vinegar, other miscellaneous, annually = $30
Total annual expenses = $660
Everything here except electricity is a very accurate cost accounting, while electricity is more of a guess.
This is for ongoing operating costs only, obviously. If you are going to constantly change equipment and kill livestock, the hobby will become much more expensive. Try to avoid that...it's not necessary
One last thing, but costs do not seem to scale in a linear fashion, i.e. you can't multiply these costs by 2 for a 120 gallon tank. Most of these costs will scale linearly, but some might have economies of scale. It will also depend a lot on what you stock. For your softy tank, you don't need powerful lighting at all or as much two-part, as an example. Or if you have space for a refugium (I wish), you might not need GFO, but you will need another light.
If I bought this all at an LFS, they might be lucky to have an annual gross profit off of me of $97.50 - that assumes 25% gross margin on retail purchases of $390 (all of the above minus electricity and miscellaneous).
Of course gross profit is before all of their overhead, like rent, wages, electricity, taxes, etc.
Does anyone wonder why these LFS are going out of business and why their livestock costs are so high? Give them a break!"
I would also add that I live in one of the richest and most densely populated areas of the country. There is a thriving reef scene here. All of the demographics you need are present here, and this is what the business looks like:
The number of LFS that had saltwater within a 50-mile radius of me when I started in the hobby (in 2006) was about 10. Four of those were already in business for at least a decade. There is now 3 LFS in the same area, and a fourth about to open. Three of the four that were in business for over 10 years when I started no longer exist.
So I have one LFS that has been in business for decades - and has a massive maintenance business, BTW. I have two that are under three years old and one that is about to open. I am pretty sure that one of the newer ones is about to close.
The other newer LFS that seems to be better off financially specifically told me a few weeks ago that the store loses money and the maintenance business is where he makes everything.
The vast majority of hobbyists in my area either buy online or from other hobbyists. I've been to an LFS once in the last three years...for frozen food.
"Chasing your dreams" is an emotional statement, not a logical one. Chasing your dream can make sense if the dream makes sense. A visionary can make a seemingly crazy dream possible...opening an LFS is not visionary. Some dreams are stupid. If your dream was to start a drug cartel, would it be smart to chase that dream? There is a flaw in the logic that chasing dreams is always a good thing.
I'm not saying an LFS can't work, but you have to be realistic. You have to look at the demographics of the area you are planning to operate in. You need to learn how many hobbyists are in a reasonable driving distance. You need to know the competition. You need to have realistic assumptions about the amount of revenue you can generate per customer and what your market share will be.
You have to accept the fact that LFS is a rapidly shrinking (notice I did not say DYING - although it may be) business model. It does not matter how smart you are, or if you are the best manager on the planet, you cannot make an bad business model work well. Selling physical music media (at the label/distributor level - not the retail level) used to be one of the greatest businesses on the planet and it is now almost non-existent.
As others have alluded to, there are other models that may be more successful for someone that wants to have a business related to the hobby, but you specifically asked about an LFS, so that is where I focused my answer.
I wish you well with whatever you choose to do.
"I've had a couple LFS ask me to buy into their businesses personally (I'm an investor for one of the largest fund companies in the world). When I looked at their books, I felt terrible for these people. The owners work 80-100 hours a week and make less than the nearly minimum wage employees do (on an hourly equivalent basis), while taking all of the risk. All of these eventually failed, by the way.
I would say that in most markets, an LFS is probably one of the worst businesses I have ever seen. They have relatively large start-up costs, razor-thin margins, a lot of overhead, and enormous risk - particularly on live inventory. Quite honestly they probably only survive (for the ones that do) because of the inept people in the hobby. I've had the fish in my current take for several years - I don't kill fish. Same for corals. In the last two years I have purchased salt, two-part, carbon, gfo, and replacement T5 bulbs - that's it. Stores don't survive on people like me, they survive on the person that can't keep a fish more than two months, and the person constantly upgrading/changing equipment because they are convinced their equipment is the problem rather than poor husbandry. And this isn't a knock on newbies...we've all been there. But if you've been in the hobby more than a year, you should not be having major issues. Grocery stores can survive on razor-thin margins because the inventory has velocity, i.e. the inventory constantly turns because you eat everyday. Most competent hobbyists don't buy much product."
"I have a 60 gallon SPS/LPS tank, so your cost should be lower. Here is what I spend:
Annually change 4 T5 bulbs = $80 (ATI)
Annual salt costs =$130 (10 gallons changed weekly, I use Instant Ocean)
Annual two-part costs =$60 (ESV)
Annual GFO = $40 (BRS)
Annual carbon = $20 (BRS)
Annual electricity =$240
Annual food = $20
Annual testing = $40
Bleach, Vinegar, other miscellaneous, annually = $30
Total annual expenses = $660
Everything here except electricity is a very accurate cost accounting, while electricity is more of a guess.
This is for ongoing operating costs only, obviously. If you are going to constantly change equipment and kill livestock, the hobby will become much more expensive. Try to avoid that...it's not necessary
One last thing, but costs do not seem to scale in a linear fashion, i.e. you can't multiply these costs by 2 for a 120 gallon tank. Most of these costs will scale linearly, but some might have economies of scale. It will also depend a lot on what you stock. For your softy tank, you don't need powerful lighting at all or as much two-part, as an example. Or if you have space for a refugium (I wish), you might not need GFO, but you will need another light.
If I bought this all at an LFS, they might be lucky to have an annual gross profit off of me of $97.50 - that assumes 25% gross margin on retail purchases of $390 (all of the above minus electricity and miscellaneous).
Of course gross profit is before all of their overhead, like rent, wages, electricity, taxes, etc.
Does anyone wonder why these LFS are going out of business and why their livestock costs are so high? Give them a break!"
I would also add that I live in one of the richest and most densely populated areas of the country. There is a thriving reef scene here. All of the demographics you need are present here, and this is what the business looks like:
The number of LFS that had saltwater within a 50-mile radius of me when I started in the hobby (in 2006) was about 10. Four of those were already in business for at least a decade. There is now 3 LFS in the same area, and a fourth about to open. Three of the four that were in business for over 10 years when I started no longer exist.
So I have one LFS that has been in business for decades - and has a massive maintenance business, BTW. I have two that are under three years old and one that is about to open. I am pretty sure that one of the newer ones is about to close.
The other newer LFS that seems to be better off financially specifically told me a few weeks ago that the store loses money and the maintenance business is where he makes everything.
The vast majority of hobbyists in my area either buy online or from other hobbyists. I've been to an LFS once in the last three years...for frozen food.
"Chasing your dreams" is an emotional statement, not a logical one. Chasing your dream can make sense if the dream makes sense. A visionary can make a seemingly crazy dream possible...opening an LFS is not visionary. Some dreams are stupid. If your dream was to start a drug cartel, would it be smart to chase that dream? There is a flaw in the logic that chasing dreams is always a good thing.
I'm not saying an LFS can't work, but you have to be realistic. You have to look at the demographics of the area you are planning to operate in. You need to learn how many hobbyists are in a reasonable driving distance. You need to know the competition. You need to have realistic assumptions about the amount of revenue you can generate per customer and what your market share will be.
You have to accept the fact that LFS is a rapidly shrinking (notice I did not say DYING - although it may be) business model. It does not matter how smart you are, or if you are the best manager on the planet, you cannot make an bad business model work well. Selling physical music media (at the label/distributor level - not the retail level) used to be one of the greatest businesses on the planet and it is now almost non-existent.
As others have alluded to, there are other models that may be more successful for someone that wants to have a business related to the hobby, but you specifically asked about an LFS, so that is where I focused my answer.
I wish you well with whatever you choose to do.
