To open an LFS... Or to not?

[ZoWhat]

Graybeard....those are some great stories. Thanks for sharing.

Imo to get to a successful biz one of three things lead to success:

1) in the case of your successful friends.....they found a niche in the market where there was a high need from consumers that no one else realized. They prob had cashflow within a few months and the cashflow exploded the biz and the biz grew like Aiptasia. Lol! So in this case, case #1 the consumer market was just waiting for someone to fill the gap. Every month purchase orders flowed in like water bc the consumer market WANTED IT, bad!

2) The 2nd case of success is exactly how your success fell into place. You are a HIGHLY SPECIALIZED person with skills rarely found among the general public. If the consumer market requires a highly specialized person they will be successful. Example, let's say me and only 500 other people knew how to cure Parkinsons. You bet me and the 500 other people are so specialized that success is a 1000% given

3) Then we have someone who wants to open a retail shop. Lots and lots of competition from other brick-n-morters and ONLINE competition. Your retail idea is nothing specialized and the consumer market already is SATURATED with options. Success will be hard to come by. Need lots of cash for start up and HOPE-N-PRAY people shop you that already have dozens of choices. Example: I personally would never open a hamburger restaurant bc the market is 1000% saturated with options. There's about a 90% chance I will fail bc I have to have some special reason for the saturated-consumer to walk thru my door. Everywhere I drive around my City I see StripMalls HALF EMPTY bc the retail market is soooooo saturated

So my advice if someone wants to open s Retsil Shop that sells products where the consumer already has 50 other buying choices...

DONT WASTE YOUR TIME BC YOU WILL LOSE ABOUT $100K when hardly anyone walks thru your doors bc of all the buying choices they have

Just like Shark Tank....." And for those reasons, IM OUT"

 

[jtl]

I have financed small businesses for over 30 years and owned a couple myself, not that any of this makes me an expert. I really don't see much of an upside for the amount of time and $$ started a brick and mortar fish store. Like others have said most do not make it, although a couple in my area have been open for many years. One that comes to mind has a higher end clientele and corals to match, another has a huge maintenance business and the 3rd one started in his garage selling his owned aquaculture corals before moving to storefront. He probably raises 90% of the corals that he sells, so little to no cost. The downside is his selection while great in numbers is limited to a few species that he is good at growing out. Growing out corals and fragging them in large numbers is no easy task, at least it would not be for me since I am still trying to get my own coral to grow.

 

[Rispa]

By the way as for adding a unique touch that makes your stand out, acting as a traveling salesman helps, particularly when looking for high end clientele that might want aquariums set up.

 

[Seminoles76]

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...[/QUOTE

The rich get richer because they understand how money works and the difference between assets and liabilities. It’s not because they have banks loaning them money.

 

[ikolbaba06]

It may be hard to source wild corals due to the Indo and Fiji shut downs. I really hope they open back up and ship out corals. Tonga won’t be able to keep up on hard coral demand for long. You may really look into aquacultured corals as a supply.

I looked into a fish store and it would be an awesome dream for me. If you do start up a brick and mortar store you must have an online presence or it just won’t work out long term. All the big stores that were around here went under because local
Business just dropped off due to all the online stores. You have to adapt or business will die off.

 

[Lowell Lemon]

So how about having a store that manufactures its own tanks, sumps, stands and related equipment and installs and maintains them? Then your dry goods selection is not challenged by others. You need a CNC machine of some capacity these days to help your designs become reality. Keep the livestock section on the smaller side and make sure to turn the livestock over with new arrivals comming out of quarantine and into your display tanks each week. I would tend to lean toward acrylic due to the low liability compared to glass tanks. Need a large market and do plan on maintainence as a major part of your business. Keep the overhead low and have limited hours for the retail side so you can build and install the custom systems your customers what. Make sure to build relationship into every transaction. Think long term in relationships and short term in cash flow. Keep the register ringing.
Keep the store clean and managible with a small staff. Pay yourself first and save for retirement. Have a plan of succession or a plan to wind down the operation when the time comes. Make it a business and not a hobby! Find suppliers you can count on and forget the distrubution chain and buy direct when at all possible. Do not buy from the same suppliers that are part of Petco or Petsmart you will never be able to compete with their buying power nor do you want to. If you see the product in a mass merchandiser avoid it like the plague. You are never going to make money with dollar a gallon tanks that cost you more than you can sell them for.
Write a business plan and do a SWAT analysis. Avoid credit or impulse buying let your customers do that not you.

 

[Reef Pets]

There’s still money to be made in LFS. It all come down to you, what you have to offer, your prices, your quality and so on.
But like any new business it can take years to establish a good customer base.
With that being said, make sure you have enough cash saved or whatever is needed to survive a good while without income.

 

[VR28man]

I've heard that the only money being made is either in sell from your home, or from selling service. It looks like you know that and are thinking of starting with the first (easier) and then going to the second (harder).

I think playing the fish hot potato and selling them before they die in your tank, the way fish stores used to be run, is not a viable business model anymore.

That being said, it seems to me, if you want to run upscale, is once you have an established service business you can set up a retail store in the right location, which is in actuality a showroom for your service business. You can offer 5-6 different (very carefully chosen!) model displays, and then sell them to people/businesses on a maintenance contract.

It would be nice also to have a super big, cool, and educational show tank. Or two. And maybe a coffee shop in the same room, to rake in a bit more $$$.

You could also do special orders for folks in your local reef club for a bit more side money.

Your young enough to fail 8 times before you make it.

This is true. Even if you fail, you will learn so much (if you stick with it at least a year) that you'll be very valuable to any future employer. Especially above the average just out of college kid.

 

[xroads]

You need to go work at a LFS for a few months, then work at another, then another.

Then you will have your answer.

 

[Leadfooted]

I stood back one day at my LFS and patiently waited while my water jugs we're being filled up for $5.00 a piece and it hit me. I'm waiting in another line just like I had an hour before at a Subway for my $5.00 footlong. I was watching jug after jug being filled up in front of me and I literally visualized cash flowing out instead of water. It was a tick after 4:20 but none the less, it hit me so hard I had to ask an employee what I was dying to know. Not wanting to pry or be rude, I took a back door approach and asked how "much water do you guys go through a week?" I didn't want to ask how much they made, I wanted to know volume. He said on a given weekend they turn 500 gallons and weeks are usually 200-300 gallons. That was for RO/DI water and Salt water. My LFS has in part built a reputation on water and it's perfect every time (tested throughout the day). It was his water and customer service and hassle free water testing that got me back in the hobby and it has for many others in my area. They pride themselves on always having a certified marine biologist at the store any given hour and they place a very very heavy focus on their customers water quality. I always hear "Bring me a sample of your water" echoing when I shop there. His store is booming and make me ponder your very question. He started 75% freshwater, couldn't give coral away. Now, no fresh water animals/fish, only Saltwater, great but narrow and affordable coral selection and now he's even stocking Acros! Huge accomplishment and anyone with the right knowledge and personality can do it.

I say 100% go for it but baby steps, baby steps, baby steps. I don't know how much profit Subway makes on their subs but I do know water's cheaper to make that a dang sandwich! Subway also makes money on soda's , and chips right, we'll you got that too with trace elements, supplements, Live foods like copepod , brine shrimp and such. Don't even get me started on how many frags he sells of GSP, Xenia/cloves, and Hollywood stunners and you know how fast that stuff grows. Lot's of good points and take the negatives people are saying and use that to avoid mistakes.

Do it, you're already on the right path and the hobby needs people like you! You can beat the internet I promise, just connect with each individual person that walks in and make sure your employees do too. Nothing beats a great LFS if you're in this hobby!

 

[Falcon53]

I stood back one day at my LFS and patiently waited while my water jugs we're being filled up for $5.00 a piece and it hit me. I'm waiting in another line just like I had an hour before at a Subway for my $5.00 footlong. I was watching jug after jug being filled up in front of me and I literally visualized cash flowing out instead of water. It was a tick after 4:20 but none the less, it hit me so hard I had to ask an employee what I was dying to know. Not wanting to pry or be rude, I took a back door approach and asked how "much water do you guys go through a week?" I didn't want to ask how much they made, I wanted to know volume. He said on a given weekend they turn 500 gallons and weeks are usually 200-300 gallons. That was for RO/DI water and Salt water. My LFS has in part built a reputation on water and it's perfect every time (tested throughout the day). It was his water and customer service and hassle free water testing that got me back in the hobby and it has for many others in my area. They pride themselves on always having a certified marine biologist at the store any given hour and they place a very very heavy focus on their customers water quality. I always hear "Bring me a sample of your water" echoing when I shop there. His store is booming and make me ponder your very question. He started 75% freshwater, couldn't give coral away. Now, no fresh water animals/fish, only Saltwater, great but narrow and affordable coral selection and now he's even stocking Acros! Huge accomplishment and anyone with the right knowledge and personality can do it.

I say 100% go for it but baby steps, baby steps, baby steps. I don't know how much profit Subway makes on their subs but I do know water's cheaper to make that a dang sandwich! Subway also makes money on soda's , and chips right, we'll you got that too with trace elements, supplements, Live foods like copepod , brine shrimp and such. Don't even get me started on how many frags he sells of GSP, Xenia/cloves, and Hollywood stunners and you know how fast that stuff grows. Lot's of good points and take the negatives people are saying and use that to avoid mistakes.

Do it, you're already on the right path and the hobby needs people like you! You can beat the internet I promise, just connect with each individual person that walks in and make sure your employees do too. Nothing beats a great LFS if you're in this hobby!

This really is not a lot of money and it probably doesn't even cover the rent. If we assume $0.10 a gallon in costs (the utility bill and mostly the salt), that is $0.90/gallon in profit. This is certainly a great margin, but not much volume. At 800/gallons sold a week, that's $720/week in profit. Not much to live on, even if you had no costs at all.

I know they are selling other stuff too, but every LFS owner I have ever met works 80 hours a week, and some of them were lucky to make $50k a year, while most of them lost money and went out of business. They also are taking on enormous risks.

Do the math, and the lucky ones are making $12.50/hour. But since most small business owners can (and do!) fudge their taxes, at least there's that.

This doesn't take into account the capital costs involved either.

 

[Leadfooted]

.

 

[Falcon53]

Looks like you re-did the math yourself

 

[JaimeAdams]

I work, and have been working full time at a LFS. It's a small store and we only deal with saltwater. It is a very clean, sleek modern looking store. We used to do well. Things have gone down hill in the last year because the owner opened another business and these days I might only see him once every week or two for a couple minutes. It seems that he just doesn't really care about this store enough to keep it stocked.

The dry good selection has gone down hill and we will be out of necessities for several weeks at a time, things like salt for example. I don't know why people say that they lose money on livestock, that is our biggest markup. Having a constant supply of your dry goods is important. Always sell the same salt and the same additives that people buy. The idea is to the first place that pops into the customers minds when they need something. If they come to get salt and you are out enough times, they simply stop coming.

Fragging coral and selling fish is where we make the biggest gains. Dry goods in my opinion is a tougher market. Small stuff is fine, but when people want new radios or something they can simply order it their house and save by not having to pay sales tax. WE have the same prices as BRS on dry goods and MAP priced items.

I agree with everyone about maintenance. Here is the thing; you don't know if anyone is going to come in and buy anything, but if you have weekly or monthly accounts, you know that money is coming in. Here summer is super slow in the hobby, but those maintenance accounts don't change. That is how you know your lease and utilities are going to get paid.

You need to keep the coral flowing through the place. Even if people aren't buying the bright colorful expensive coral everyone likes to look at them. Find a way to move out your stale stock. People used to come in on a schedule every week to see the new coral. You need to find a way to sell off the stuff that has been sitting there unsold for a few months and get your money back to bring in new stuff to keep the people engaged.

You have to have some sort of online presence. It does not need to be your primary focus but you need to at least have some. There is stuff that sits in the store that no one is buying that I know that I could sell instantly if I posted it online for double what I am using at the store.

I would find a great location, even if it is more expensive than an off the beaten path location. The places local to me that do well and have been established long term are located on busy roads and it is obvious to everyone driving past what they are. The pace that I work is off the beaten path in a small plaza. I still get people regularly who ask how long we have been here and respond by saying that they drive past every day and never knew we were here.

 

[Leadfooted]

This really is not a lot of money and it probably doesn't even cover the rent. If we assume $0.10 a gallon in costs (the utility bill and mostly the salt), that is $0.90/gallon in profit. This is certainly a great margin, but not much volume. At 800/gallons sold a week, that's $720/week in profit. Not much to live on, even if you had no costs at all.

I know they are selling other stuff too, but every LFS owner I have ever met works 80 hours a week, and some of them were lucky to make $50k a year, while most of them lost money and went out of business. They also are taking on enormous risks.

Do the math, and the lucky ones are making $12.50/hour. But since most small business owners can (and do!) fudge their taxes, at least there's that.

This doesn't take into account the capital costs involved either.

I guess the point I was trying to make was you can make a nice chunk of money to help cover cost on water alone. I also believe the LFS's having good consistent water in turn grows customer base and keeps them coming in frequently.

 

[Falcon53]

I guess the point I was trying to make was you can make a nice chunk of money to help cover cost on water alone. I also believe the LFS's having good consistent water in turn grows customer base and keeps them coming in frequently.

There's nothing wrong with what you said, I am just putting some reality behind the numbers.

That may seem like a decent amount of money, particularly to a younger person (like the OP), but in terms of the overall costs incurred in running this business, it's a tick hole in the snow. The OP will probably be paying almost that much in electricity alone each month.

The OP probably needs revenue of at least $40/k month just to keep the doors open.